The Bank of England’s Monetary Policy Committee (MPC) has held fire on its quantitative easing (QE) programme and kept interest rates at the historical low of 0.5%. The MPC, which was widely expected to hold interest rates for the 34th consecutive month, maintained its asset purchase programme at £275bn, but economists have pencilled in a further round of QE in February amid the ongoing eurozone debt crisis. Minutes from the MPC’s December meeting indicated a further round of QE could be imminent. The last time the Bank extended its quantitative easing programme was back in October 2011, raising it from £200bn to £275bn.
January 12, 2012
January 3, 2012
House Prices Up 1% In 2011
House prices have proven to be ’surprisingly resilient’ in 2011, with an average rise of 1%. Figures show that the average property in the UK ended the year worth £163,822, a 0.2% fall from November when the figure was £165,798. However, prices have improved from the same point last year, when they were £162,249. The 1% rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011.
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December 22, 2011
Property Sales Jump To 2011 High In November
More homes were sold in November than any other month this year, figures from HM Revenue and Customs (HMRC) have revealed. Despite a struggling economy, some 85,000 properties were sold in the month, a clear improvement on October when 79,000 homes were sold and on November last year when 76,000 property transactions were completed. Last month’s figure was the highest recorded in the sector since July last year. But despite the short-term pick-up in the housing market, 2011 has still failed to match up to the previous 12 months. In the first 11 months of last year, there were 810,000 sales; well up on the 787,000 that have been sold so far this year.
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December 21, 2011
Darkening Economy Held Rates At 0.5% With More QE On Way
Fears over the deteriorating outlook, weakened labour market and strained credit supply unanimously convinced Monetary Policy Committee (MPC) members to keep rates and QE on hold at £275bn in December. However, the Committee also hinted at further Quantitative Easing early next year. In October, the Bank ramped up its QE scheme by £75bn amid turbulent economic conditions. Members resisted a new round of stimulus this month, but the minutes noted a further expansion of QE may be warranted soon. According to this month’s Minutes the euro continued to present substantial challenges for the United Kingdom. The members felt the worst risks had not materialised yet, but the possibility they will was reflected in continuing strains in bank funding markets and market volatility.
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December 19, 2011
Asking Prices Rise In 2011
Property asking prices have ended 2011 slightly higher than at the start of the year, despite falling by 2.7% in December. According to the latest data from Rightmove, average asking prices have increased by 1.5% over the past 12 months, although with retail prices inflation at 5.2%, this represents a fall of nearly 4% in real terms. Looking ahead to next year, the property website forecasts asking prices will rise by around 2% in 2012, thanks largely to an anticipated drop in the number of properties that will come to market. The shortage of new sellers in some locations, and improving investor yields on rental properties, will help underpin prices and stave off a price collapse except in exceptionally adverse market conditions.
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December 14, 2011
Buying Cheaper Than Renting In 94% Of Towns
Buying property is now more cost-effective than it has ever been compared to renting, proving cheaper in 47 out of 50 British towns, compared to 40 out of 50 this time last year, according to research. A study showed that renting is 15% more expensive on average than owning across the country, up from a 10% premium last year. Prices and rents were examined of 78,000 two-bed flats currently on the market, comparing rental costs to the payments on an interest-only mortgage at 5% a year. It was found that Swansea, Plymouth and Bournemouth were the only towns where renting was a better option than buying, with rents proving cheaper by 9.3%, 6.6% and 5.7% respectively. By comparison, renters in Milton Keynes are worst off, with rents 36% more expensive than the cost of owning, leaving them an average of £2,436 a year worse off. Warrington and Walsall came second and third with rental premiums of 33% and 32% respectively. In addition, renting in London is 31% more expensive than owning, despite the average cost of a two-bedroom flat standing at £442,036. Tenants in London will pay an average of £6,888 more a year than home owners.
Although buying may be more cost-effective than ever compared to renting, many potential buyers aren’t able to take advantage because they can’t access mortgage finance. The shortage of financing, especially to first-time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy.
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Mortgage Lending At Three Year High
Gross mortgage lending reached its highest level since the end of 2008 in the third quarter of the year, according to the latest lending data from the Financial Services Authority. The regulator revealed new advances amounted to £44 billion in the three month period, 19% higher than in the second quarter and 7% up on a year earlier. At the same time, the overall average rate on new advances fell back to a series low of 3.59%, compared with 3.81% in the previous quarter, with reductions seen in the rates for both fixed and variable rate products. The proportion of new lending accounted for by fixed rate mortgages fell back to 52% from 56% in the previous quarter, while less than 2% of new lending was approved at a loan-to-value of 90% or more.
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House Prices Climb Higher
House prices in the UK climbed higher during October but remained lower than a year ago, the latest data from the Department for Communities and Local Government has revealed. Although prices increased by 0.6% over the month, and indeed over three months to October, they remained 0.4% lower than in October 2010. Average prices have decreased during the year in all parts of the UK, with England dropping -0.2%. Elsewhere amongst the data it was revealed that prices paid by first time buyers were 0.4% higher on average than a year earlier, whilst prices paid by former owner-occupiers decreased by 0.7%.
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December 9, 2011
Bank Rate & QE Held
The Bank of England has confirmed that it has held interest rates at 0.5%. It also confirmed that it would not be adding any funds to its £275 billion programme of quantitative easing (QE). The programme was increased by £50 billion in October, with the MPC saying that it would take another two months to complete.
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November 28, 2011
Small 2012 Price Rise Predicted
The property market has been forecast to remain relatively flat in 2012, as the disparity between house prices in different regions continues to widen. House prices will rise by 3% next year, driven by continued strong performance in London and upmarket commuter hotspots in the south east. However, it is predicted that many parts of the country will see no growth and marginal price falls, with unemployment being a crucial factor. Areas which are reliant on manufacturing or the public sector, which are struggling with high levels of unemployment, will see very low transaction levels next year and an estimated fall in values of as much as 5%.
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