Mixed news for home owners and buyers

The UK housing market appears to be in a fragile shape at the moment, despite some small signs of improvement.

House prices

House prices are continuing to fall, which is great news for buyers. However, some who own a property face negative equity and potentially huge losses if they sell now.

The latest figures from the monthly Nationwide House Price Index show that prices fell in April by 0.2%. Whilst this marks a small downward shift in prices, this only adds further anguish to those who trapped in negative equity.

Robert Gardner, Nationwide’s Chief Economist, commented: “The price of a typical UK home fell by 0.2% in April, following a 1.0% decline in March. This is the fourth time in five months that prices have declined. House prices were 0.9% lower than April 2011.

“Much of the recent softness in measures of housing market activity and house prices is likely to relate to the expiry of the stamp duty holiday in late March. This provided a temporary boost to house prices in early 2012 as buyers brought forward purchases that would otherwise have taken place later in the year.”

Mortgages

Just as lenders started to relax their high deposit demands, the UK has fallen into a second recession. Given that the market has not fully recovered since the housing crash of 2008, potential homeowners face a tough and expensive time ahead.

Mortgages could become more expensive, especially for first time buyers. Figures from Halifax show that fixed rate mortgages have already increased by up to 0.3%, adding an extra £27 to the average £150,000 loan.

Banks and lenders may also opt to increase rates not only to gain profit, but to fight off buyer demand from offering the most competitive rates. As a result, lenders are also asking for higher deposits.

Your divorce and your property

As the economy wrestles with the spectre of a second recession, you may be inclined to believe that cash-strapped couples would be keen to put off the high cost of divorce. However, this is not the case and a growing number of households are splitting up, which in turn means assets have to be divided.

Official statistics show that there were almost 120,000 divorces in England and Wales in 2010, which is a 5% rise on the previous year. Typically, couples who own a home would sell the property and use the cash to fund their divorce and start again.

However, as the housing market takes the strain of the recession, a number of homeowners have seen their property value dramatically shrink. Not only has this led to a rise in the number of Brits living in negative equity, but a number of divorced Brits are living in negative equity.

Fiona Sharp, a financial planner and specialist in divorce from Almary Green, told This is Money: “Splitting one household into two is becoming increasingly difficult. The capacity of newly divorced couples to get a new mortgage has gone down because there is less equity in properties and tougher lending conditions.”

Possessions

Possession claims have fallen according to the latest government figures.  Possession claims, which are lodged at court, don’t always lead to property repossession but can instigate the process.

This is a good overview of the current state of the market, as a growing number of people are able to continue making payments on their mortgages or find an alternative solution.

However, this comes after a peak of possessions in 2009, the largest level since 1991 according to the Ministry of Justice and Office for National Statistics (ONS). Possession figures have cooled off since 2009 and have continued to wind down since. Statistics show that 16,663 mortgage possession claims were issued in the first three months of 2012, which marks a 5% fall on the previous quarter.

The largest number of mortgage possession claims for the first quarter of 2012 came in the North West, with Burnley having the highest number of possessions which eventually led to an order.

The Council of Mortgage Lenders (CML) suggests that the dip for the first three months of the year only reflects the seasonal pattern, claiming: “the total was the same as for the first three months of 2011, indicating that the number of cases of possession appears to have stabilised for now.”

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Posted by: WarrenWilson Categories: Buying, Finance, Selling Tags: , , 2 Comments

2 Responses to Mixed news for home owners and buyers

  1. avatar Chris Longley says:

    Did Estate Agents Find Time Machine and Think it`s 2006?

    Estate agents are desperate to see the over inflated house prices continue so their commissions dont suffer. They have to be more honest to clients and not so greedy.

    Fact is in this climate of austerity and job losses houses are still over priced. Deutsche Bank recent assesment is that UK housing is 30% overpriced to earnings ratios. They are right and a second crash will follow soon.

    There is a stand off beween sellers holding out for prices they think the property is worth and buyers not wanting to get caught with negative equity again. The majority of sales going through are those with equity.

    The mad rush of illegal immigration is over, we have no jobs for immigrants thus the housing inflation pressures are over and gone too.

    All the signals are toward much lower house prices until earnings ratios are at more sensible levels.
    Some agents now advertise prices in bandings £175k – £215k for a property, a £40k difference is rediculous. Thats not a valuation, thats pin the tail on the donkey isnt it? Shows they do not know the value of housing even with their best friend Zoopla valuations onboard.

    I wont name the agents but houses originally on sale for £179K, have been going with my offer of £150k….and thats what I was increased to. Nigh on £30K difference due to the fact thats what I could only afford to pay.

    Anybody with a brain can see incomes in acceptable ratios to prices is what kept the housing market going in the past. We`ve gone past that point years ago. Dodgy mortgages are out so the only medicine is higher earnings (not going to happen) or lower prices.

    The corperates have been very clever at helping themselves to disposable incomes with Sky Tv, Mobile phone contracts, games consoles et al….and now households do not have any money left in the pot.

    It has been long overdue in my opinion but the property media outlets will still continue to big up the housing market to avoid their margins being eroded.
    Youre just extending your pain my friends!

  2. avatar michael t ryan says:

    nice 3 det house for sale no chain ready to move in at POOLE DORSET BY THE SEA