Housing Market Indicators: Difficult Housing Market Continues
2011 has been and continues to be a difficult year for home buyers and sellers across the board with high levels of uncertainty and instability within the housing market and the economy in general. As this year comes to a close, the predictions for the beginning of the New Year do not inspire confidence and belief in the market and the worry that 2012 will bring continuing troubles is ever-present.
Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and house sectors to gain an insight into where the market is and where it is heading.
House Price Index Halifax 1.2% (monthly change) -16.26% (fall since peak)
House Price Index Nationwide 0.4% (monthly change) -11.345 (fall since peak)
CML-Mortgage Lending £12.9bn +4% (annual change)
House Price Index Nationwide 0.4% (monthly change) -11.345 (fall since peak)
CML-Mortgage Lending £12.9bn +4% (annual change)
Interest Rates 0.7%
Quick Move FTI 29.58%
Inflation 5.2%
Inflation 5.2%
Economic Growth +0.5%
Unemployment 2.57million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 07/11/2011.
House Prices
House price changes are becoming increasingly more unpredictable with the prices themselves creating a mixed picture, fluctuating month-on-month and often altering a number of times within one month alone. Last month’s slight increase of 1.2% according to Halifax and 0.4% according to Nationwide masks the actual state of affairs within the market. In reality, there has been little change in house prices overall, fluctuations give an inaccurate picture and prices remain consistently low with the danger of further slumps in the coming months.
Repossessions
The number of properties taken into possession by mortgage lenders in the third quarter of 2011 was 9,200 compared to 9,100 in the second quarter. The worst affected areas include South Wales, Birmingham, Coventry, Peterborough, Canterbury, Luton and Northampton where some repossession claims are as high as 8 per 1000 householders. In addition to the higher cases of actual repossession, the volume of properties under threat and facing repossession in the near future has also increased which means that we could see even higher levels as we move towards the winter months and 2012.
Unemployment
Levels of unemployment have continued to rise over the last few months and are currently 2.57 million (up from 2.51 million in August 2011). More and more people face redundancy or are concerned about the future of their jobs which naturally influences conditions on the market. Buyers face a losing battle and are caught in an endless cycle because as it is becoming harder and harder to raise deposit funds, the level of deposit needed is increasing. Job uncertainty results in a lack of buyers and higher fall through rates once buyers have been found. Buyers can be reticent to follow through with offers or even to make offers in the current climate.
Fall Through Rates
October saw a Quick Move fall through rate of 29.58% with a variety of reasons causing the abortions from funding issues to chain collapses. Not only have Quick Move Now’s sale abortion rates increased since August 2011, the amount of sales agreed has decreased which shows that, as the year end approaches, less and less people are able to find buyers. Within a business, a fall through rate nearing 30% is difficult to manage; for a homeowner trying to sell, the impact is magnified and can cause even more worry, stress and delay. It can become increasingly more difficult to sell over the winter period so lots of homeowners may find themselves trapped on the market well into the New Year, unable to find a buyer and make the move or fresh start they desire. As homeowners experience fall through after fall through, they feel as if they are not in control of their future and are subject to the buyers and the market.
Mortgage Lending
Since August 2011, mortgage lending has fallen from £13.4bn to £12.9bn and thus more and more buyers find themselves unable to secure funding. Higher deposits are often required, lending levels are lower and, in general, wages are stagnating which means that less buyers are in a position to proceed, properties are on the market long periods of time and the number of sellers greatly outweighs the number of buyers. The situation has worsened over the last month as Santander, ING Direct and Northern Rock have all pushed up the interest rates on tracker mortgage deals for new customers. Barclays’ Woolwich subsidiary has increased the cost of its tracker deals by as much as 1.5%. CML chief economist Bob Pannell states that “Short-term economic prospects for the UK are not favourable. The housing market is very sensitive to wider household confidence, and this seems likely to weaken over the coming months in response to the latest spike in consumer prices and headline unemployment figures.”
The Economy
Many of the problems surrounding mortgage finance and economic unrest have been attributed to the ongoing Euro zone crisis: we are already experiencing some of the affects which include children remaining in their parents’ homes far longer and higher pension ages. The average age of first time buyers without parental assistance is predicted to hit 43 in the not-too-distant future! Interest rates have increased to 0.7% from 0.5% (August 2011) and, as a double blow, inflation is up from 4.5% to 5.2%. Consequently, the cost of living overall has rocketed and home sellers are finding themselves without buyers for ever increasing periods of time. A stalemate in the housing market is caused when hardly any buyers are able to proceed and, with problems in the economy set to worsen, the housing market is unlikely to pick up as we move into 2012.
Buyers’ market
The aforementioned unemployment rates, fall through levels, mortgage and deposit problems and economic troubles combine to create a buyers’ market. With so few people able to afford property and proceed with sales, cash buyers, or mortgage buyers in a strong position, are able to manipulate the situation to their advantage. We are seeing increasing cases of heavy negotiations and buyers pushing down the price of property with low offers. In addition, people tend to be offering on multiple properties, stringing sellers along and then choosing one property to buy before negotiating heavily again and leaving homeowners in an impossible position. Currently, there is no sign of recovery or improvement within the housing market or economy and homeowners are left to wait and see what next year brings.
Quick Move Now is the UK's leading home purchase specialist, purchasing houses for cash, often with 7 days, for those people needing a quick and certain house sale.
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