The average cost of a property in England and Wales fell by 0.1% during July to £158,700 with buyers deciding to sit on the sidelines for the time being. At a when time estate agents have reported a 1.3% drop in the number of new buyers showing interest in properties there has been a 3.6% increase in the number of properties for sale. As a consequence, many experts believe that downward pressure on the UK property market will continue for some time and prices could fall further in the short to medium term.
The National Landlords Association has this week issued a statement regarding rent arrears in the UK rental market. While there is still a significant number of tenants owing rent arrears, with a figure of around 20% quoted by the association for the second quarter of 2010, this is well down on the 24.5% during the first quarter of 2010. So is this a turning point for the UK property market?
At the start of 2010 there were high hopes for the UK property market with signs that the market was stabilising and looking to move ahead in the short to medium term. However, problems in the European economy, liquidity issues and concerns about the UK economy, in particular ahead of the budget, have had a massive impact upon sentiment. It now looks as though buyers are in the ascendancy although many remain on the sidelines under the impression that house prices will fall in the short-term.
Over the last few years it has become more and more apparent that the UK property market is effectively the tail that wags the dog of the UK economy. Every economic bailout, every fiscal policy and every government initiative aimed at the consumer market would appear to have the property sector in mind. The truth is that the vast majority of individual wealth in the UK is tied up in the UK property market and jitters in this investment arena can reverberate across the whole economy.
The location is the Chesil Beach at West Bexington, Dorset which is home to potentially the U.K.'s most expensive beach hut. The property, which is a 524 ft.² single-storey three bed wooden shack looks, on the outside, like a large garden shed but could in fact become a pot of gold for the property's owner. Despite the fact that we are in the grips of an economic downturn in the UK it would appear that despite being on the market for £300,000, offers could eventually hit £325,000!
A report by the Royal Institute of Chartered Surveyors has today cast doubt upon the recovery in the UK property market amid signs that demand is beginning to fall and an increase in the number of houses for sale could put pressure on prices. The survey for June found that on balance only +9% of surveyors questioned reported a rise in prices which was well down on expectations of +20. When you compare this to the figure of +21 for the month of May it is easy to see why concerns are growing.
The UK property market is forecast to increase by around 3.5% this year and 1.9% in 2011 despite the fact that many analysts appear to be concerned about the UK economy. As a consequence, it is highly likely that the UK property sector will avoid a double dip recession although there is possible scope for a further small downgrade of forecast growth next year.
Santander, the owner of Abbey and other UK banking brand names, has today issued a report suggesting there has been a fivefold increase in the number of property millionaires in the UK since 2000. Despite the fact that the credit crunch has impacted heavily towards the top end of the market, the bank estimates that there are around 132,000 "million pound" properties in the UK at this point in time.
A survey by Halifax has today confirmed that UK house prices fell by 0.6% in the month of June although this does contrast with an earlier report by the Nationwide which showed that house prices increased by 0.1% over the same period. The truth of the matter is that these property surveys have never moved in tandem although ultimately they are very useful in formulating trends for the short to medium term. So what can we expect in the second half of 2010?
Despite the fact that more and more people have been increasing their mortgage payments, to take account of low interest rates, over the last two years, there is concern that many pensioners in the UK have in fact been reducing their equity stakes to pay off debts. This is a worrying trend and one which the UK government is acutely aware of with concerns about the potential consequences in the longer term.
