Analysis of the changes in house prices over the last three years in UK

Introduction:

A changed sense of malaise seems to hold developed over the lodging market analysts and economic experts I spent the past month researching. Attitude amongst has become glooming even as the market appears to hold lightened, with lifting monetary values and turning gross revenues volumes. Concerns over affordability and the post-election universe have shaped a new consensus sing the chance of a weaker market later this twelvemonth.

Property pricesin the UK are persistently altering. Since 1975, belongings monetary values have increased in the UK by about 3 % a twelvemonth. The recession of the early 1990s monetary values fell, but in 2008 monetary values had a singular autumn, quickly followed by a recession chiefly caused by the nefarious ‘credit crunch ‘ . After immersing 25 % since the extremum of 2007, UK house monetary values have ended a balanced growing for the period of 2009. The lifting value of houses has surprised a few people. But, following the statistics of turning house monetary values, it is evident we have non seen a return to a dining belongings market.

Harmonizing to a study belongings Sellerss are having 92.9 % of the monetary value demanded up from December 2009 figures. However, like other studies, they report the rise in monetary values, is happening despite a deficit of purchasers. The most of import thing which is forcing monetary values higher is a scarceness of supply. When the supply is low the monetary value goes up.

The monetary value recovery will carry more proprietors of their belongings on the market, many have been reduced during the detainment house. But at the same clip, many purchasers fall in portion from the purchase because of the rapid alterations in monetary values. When people feel that the worst sense of the house monetary value is over can merely so once more be tempted into the market.

Interest rates will travel up sometime as the rising prices is traveling up. For now, involvement rates of 0.5 % are doing mortgage outgoings cheaper and forestalling several from holding to sell. However, economic resurgence could turn out the agencies to higher involvement duty. However, resurgence may be elastic and involvement rates could go on low for an extended clip. So, except people are on tracker mortgages, many Bankss have non passed the full rate cut as some proprietors will non detect the full rate addition when it comes to.

Joblessness is likely to remain on surging throughout 2010 and 2011. The strength of the UK recession is glooming. It now has remained for 6 quarters – one of the lengthiest on the books. This leads to a soft lodging market

Housing Statistics FOR 2007- 2009

Year 2007

One-fourth

Year

QUARTERLEY CHANGE %

Average HOUSE Monetary value

ANNUAL CHANGE %

Q1

2007

2.30 %

& A ; lb ; 175,554

9.50 %

Q2

2007

2.10 %

& A ; lb ; 181,810

10.20 %

Q3

2007

1.60 %

& A ; lb ; 183,131

9.30 %

Q4

2007

1.00 %

& A ; lb ; 183,959

6.90 %

Year 2008

One-fourth

Year

QUARTERLEY CHANGE %

Average HOUSE Monetary value

ANNUAL CHANGE %

Q1

2008

-2.00 %

& A ; lb ; 179,363

2.20 %

Q2

2008

-3.40 %

& A ; lb ; 174,514

-4.00 %

Q3

2008

-4.80 %

& A ; lb ; 165,188

-10.30 %

Q4

2008

-4.40 %

& A ; lb ; 156,828

-14.70 %

Year 2009

One-fourth

Year

QUARTERLEY CHANGE %

Average HOUSE Monetary value

ANNUAL CHANGE %

Q1

2009

-3.70 %

& A ; lb ; 149,709

-16.50 %

Q2

2009

1.10 %

& A ; lb ; 154,066

-11.70 %

Q3

2009

3.70 %

& A ; lb ; 160,159

-3.00 %

Q4

2009

1.60 %

& A ; lb ; 162,116

3.40 %

Difference b/w informations suppliers

CLG

Land Registry

Halifax

Countrywide

2007

Q1

11.2

8.5

11.1

9.5

Q2

11.3

8.9

10.7

10.2

Q3

11.5

9.3

10.7

9.3

Q4

9.8

7.6

5.2

6.9

2008

Q1

6.5

4.6

1.1

2.2

Q2

2.7

0.7

-6.1

-4.0

Q3

-3.7

-5.7

-12.4

-10.3

Q4

-8.7

-11.9

-16.2

-14.7

2009

Q1

-12.5

-15.6

-17.5

-16.5

Q2

-12.3

-15.1

-15.0

-11.7

Q3

-6.0

-8.4

-7.4

-3.0

Q4

..

-0.2

1.1

3.5

Reasons Why House Prices Fall

1. Deficit of Mortgage Finance:

At the clip being, the deficient of mortgage support is one of the chief important factors in deteriorating demand for lodging. Harmonizing to the Council of Mortgage Lenders the mortgage blessings have fallen to the least possible degrees of all time since 1991. Up to July 2007, mortgage loaners were really economical and willing to pull clients in the thick of mortgage merchandises for illustration 100 % mortgages, self certified mortgages and high net incomes multiple mortgages. However, the recognition catastrophe has led to Bankss fighting to increase finance ; accordingly they have had to decrease their mortgage loaning. To fasten mortgages, they have discontinued many mortgage merchandises, particularly ‘sub premier ‘ mortgage merchandises. The Bankss or mortgage loaners have besides raised the cost of many other mortgages even though the involvement rates are at the record low degree. In peculiar, mortgage loaners are inquiring for brawny sedimentations. This makes it difficult for first clip purchasers to obtain a mortgage which contributes to less demand for houses.