UK Property Market

On May 10th 2007, the Bank of England announced an increase in interest rates from 5.25 percent to 5.5 percent. This change was foreseen by experts, as the property market witnessed three similar moves since August 2006.  However, the reactions of real estate institutions are varied.

At the moment, the rise is likely to have a serious influence on struggling regional markets, as well as on first-time buyers. According to the National Association of Estate Agents, the property prices will gradually attain a natural level, with no dramatic rises in the near future. The Royal Institution of Chartered Surveyors noted that more pressure will be put on first-time buyers because of the higher mortgage bills. In spite of this recent rise, estimations point that it is highly unlikely for the interest rates to see further increases.

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Surveys point that in the course of a year London Home prices go up by at least 3 percent more in comparison with other cities in England And Wales. Last year, the average price of a property in London Increased by 11.6 percent, while home prices in England And Wales Rose by 8.3 percent.  On average, in March 2007 the actual property price in London Was £323,511, compared with £178,423 in the other two regions.

Specialists note that this is the highest annual rise over the last two years.  However, the most dramatic change was recorded in Brighton And Hove, where prices increased by 14.7 percent.  The smallest increase was registered in Nottinghamshire, where property prices went up only by 1.9 percent over the last year.

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Figures reveal that Wales Holds the second position behind East Anglia In the top of annual total investment returns from buy-to-let property.  Wales Generated a 25.6 percent return rate, only 3.4 percent less than the region of East Anglia.

According to specialists, landlords in Wales Will benefit from this increase twice more than their fellows from the rest of UK. Although buy-to-let returns went up in all regions, the North is still behind Wales As 23.9 percent, with South-east and South-west following in at large distance.

Moreover, in the last quarter rents in Wales Rose by 33 percent, accompanying an 18 percent increase in buy-to-let home prices. This trend, which has started with Cardiff, now continues with Swansea And Newport, as more international companies establish their businesses here.

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Surveys show that the cost of moving has decreased by some £500 last year due to the shortage in properties for sale on the market.

It seems that this situation has had a strong influence on owners, who now bargain for better conditions with estate agents and solicitors. Consequently, asking prices are currently reduced only by five percent tops in comparison with ten percent a year ago. Homes are also sold faster, with about 20 percent of properties changing owner within a month from being put on the market. A dramatic drop was also registered in the number of properties which are harder to sell. While a year ago this covered 50 percent of homes, nowadays this affects only 20 percent of them.

Experts point out that at the moment this translates into sellers being favoured by the market, as the demand for properties is higher than what is actually available.

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The city of Brighton Leads UK’s property price list with a 280 per cent gain since 1996, according to a study by Halifax.

The following positions in the top three are held by Truro In Cornwall, with a 270 per cent rise since 1996, and London, with 254 per cent. With £3,883 per square metre, London Homes remain the most expensive in UK, while Oxford At £3,010 and St Albans At £2,903 follow at close distance.

Northern Ireland, which has seen overall rises of more than 40 per cent last year, has cities such as Armagh, where property has gained 231 per cent since 1996. This ranks as the country’s sixth biggest rise, followed by Belfast With 229 per cent.

Halifax Chief economist Martin Ellis underlines that at 280 per cent, Brighton Has witnessed the fastest growth in price per square metre. From £673 in 1996, properties in the seaside city cost now £2,559 per square metre.

While ten years ago London came in second after St Albans in the list of UK’s most expensive cities, the capital ranks now at number one with its average £3,883 per square metre.

The capitals of Wales, Scotland And Northern Ireland Are also the most expensive cities in these regions. The Halifax Research shows that in 2006 the average property in Cardiff Came at £1,777 per square metre, in Edinburgh At £2,218, and in Belfast At £1,720.

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According to surveys, the cost of new homes went down by 3.4 percent last year.

The average price of a newly build property decreased by almost £10,000 last year, falling from £264,709 in March 2006 to £255,695 in March 2007, according to SmartNewHomes.Com.

This trend continued in the past three months, as the market witnessed a two percent drop in new-build homes’ prices.Experts claim that prices fell as a consequence of new developments in the north, where properties are sold for far less money.

In spite of this, detached new properties saw a price rise of 1.3 percent in March, reaching £317,424.Semi-detached newly build houses fell by 0.5 percent, and a drop was also registered in the prices of penthouses. SmartNewHomes stated that this fall, however, does not suggest a sharp drop like the one in 2006, but it can be linked to a positive reaction from the market.

In contrast, buyers are willing to pay more for a new home – this confidence will lead to a rise in new-build homes prices, the company followed. Regionally, new property in south-west increased by 3.7 per cent, while in

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