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House prices continue to rise across England and Wales while the number of transactions is down, the Land Registry has reported.

Nationwide this morning reported that house prices across the UK went up 0.6% this month, now at an average of £196,807 (every person looking to purchase a property in London just rolled their eyes) as the average price here is just under half a million pounds at £499,997.

The latest month for which transaction data is available, according to the Land Registry, in July –there were 81,696 sales, compared with 84,691 in July 2014, yet this was still the highest figure of the year so far, just as they were the year before.

Revealingly, sales transactions figures have been down every single month of this year compared with the corresponding month of 2014.

The biggest falls were in January and May, of 10%, many people have attributed this to the change in Stamp Duty thresholds and of course the run up to the General Election and the uncertainty over which government would come in to power.

If this trend continues, there will be fewer transactions this year than compared to 2014. The Land Registry says there were 914,909 sales competed in 2014.

Transaction figures decreased by 4% across England and Wales on an annual basis, in London, transactions fell by 10%.

The number of sales at;

- under £250,000 dwindled by almost half due to increases in value while sales of homes over £1m also fell hard in the wake of Stamp Duty reforms.

- between £1m and £1.5m were down 7%

- between £1.5m and £2m, fell 23%

- over £2m, fell 26%.

In only one region – the north-east – are prices down annually, by -0.3%. It was also the only region where prices fell monthly, down 0.3% between August and September, to stand at £99,559.

The average price across the whole of England and Wales in September was £186,553, up 5.3% annually and 1% on the month.

 

The region with the biggest growth both monthly and annually was London (up 1.8% and 9.6% respectively).

Land registry data from the first 6 months of 2014 compared to the first 6 months of 2015 shows a stark difference in the volume of property transactions between the London Boroughs.

 

London Borough

Transactions of H1 2014

TRANSACTIONS OVER H1 2015

% CHANGE

Haringey

1,355

1,095

-19%

Barnet

2,366

1,985

-16%

Enfield

1,825

1,577

-14%

Source: Land Registry: http://landregistry.data.gov.uk/app/hpi/hpi 

The lack of property for sale has increased competition between buyers who are looking for similar properties to purchase.

On a slight tangent, in my personal experience, it is not due to a lack of people wanting move home but their inability to find a suitable property to move to. In one example, an elderly lady living on her own in a large 5 bedroom house has been unable to find somewhere the matches her requirements in the areas the she wishes to reside in. A house such as her’s is highly sought after however, from a generation that would prefer to find first, then sell their home, it is not proving fruitful.  

“Chicken & Egg Scenario”

 

A phrase I am hearing a lot recently from motivated sellers but the property they are looking to purchase to make that next step, be it an upward or downward move either doesn’t exist, hasn’t been on the market for a long time (e.g. bungalows) or they themselves have been priced out. 

Mark Carney, Governor of the Bank of England said they were "focussed" on "raising interest rates" and the correct time to review monetary policy, he told the Mail on Sunday.

Low inflation, expectation that the US Federal Reserve will not raise rates until next year and China's economic slowdown mean markets do not expect the Bank of England to lift rates from a record low of 0.5% until April 2017.

The base rate is only expected to rise to 1.5pc by 2020.

Mr Carney urged UK households to prepare for tighter monetary policy now. ‘If we think there is a prospect, a possibility – that’s a possibility not a certainty – of rate rises, then that is far, far better to let the British people know so they can prepare."

However, he also suggested that rates could remain low for longer. "If events mean that does not happen and rate rises are not appropriate, then we will do the right thing and we will not adjust rates," he said.

Mr Carney emphasised that any increases would be "modest" and "gentle", reinforcing the Bank's expectation that rises will be gradual. The Governor also warned that hundreds of thousands of mortgage holders were vulnerable to increases in interest rates. Mark Carney said 4% of all mortgagors - or around 280,000 homeowners - could struggle to pay back their debts if the Bank raised rates. 

 

The Bank's annual survey of around 6,000 households, revealed; 

- a "substantial proportion" of UK households were still "carrying a lot of debt".

- around 480,000 borrowers could be at risk of defaulting on their mortgage if their payments increased by 2 percentage points, even if incomes rose by 10%

- around 4% of UK borrowers spend more than 40% (aka. vulnerable borrowers) of their gross income on mortgage repayments – this could increase by 50% to around 6%

 

Last summer, The Bank took steps to ensure lenders “stress test” borrowers’ ability to repay their loans if the mortgage rate were 3% higher than the representative rate at the time the loan was approved. 

 

Its next household survey is due to be published in December 2015.

 

Forward-thinking borrowers are already taking action to shelter themselves from an increase in the base rate. Bank data shows that 79% of new home loans taken out in the second quarter of this year were fixed rate mortgages, up from 38% at the beginning of 2008.

 

A statistical bulletin from the ONS was today released comprising the House Price Index for June 2015. 

The below summary along with further information can be viewed on their website; http://www.ons.gov.uk/ons/rel/hpi/house-price-index/june-2015/stb-june-2015.html? 

Main points

  • UK house prices increased by 5.7% in the year to June 2015, up from 5.6% in the year to May 2015.
  • House price annual inflation was 6.1% in England, 0.8% in Wales, 9.0% in Northern Ireland and -0.6% in Scotland.
  • Annual house price increases in England were driven by an annual increase in the East (9.2%) and the South East (7.7%).
  • Excluding London and the South East, UK house prices increased by 5.2% in the 12 months to June 2015.
  • On a seasonally adjusted basis, average house prices increased by 0.4% between May and June 2015.
  • In June 2015, prices paid by first-time buyers were 5.1% higher on average than in June 2014. For owner-occupiers (existing owners), prices increased by 6.0% for the same period.

 

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