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News: Weekly News Round Up - Cautious Welcome For Green Shoots Of Recovery

Thu, 02 Apr 09

According to latest Bank of England figures mortgage approvals are on the way up.Its latest figures show that there were 38,000 approvals in February, up 6,000 on January’s figure.

But while indicating that low interest rates and reduced house prices are encouraging people back into the housing market the mortgage and estate agency sectors are not cracking open the champagne just yet.

The Council of Mortgage Lender’s economist Paul Samter said: “We will need to see a few more months’ figures before we can say with any confidence that market conditions are showing a fundamental improvement. 

“Transactions remain historically very weak, and this makes it harder than usual to adjust the figures for the normal upturn that happens in the spring."

The Royal Institution of Chartered Surveyors is similar cautious. Its chief economist Simon Rubinsohn, said: “Accessibility to the market still remains a problem with many first time buyers struggling to find the necessary deposit to compensate for the much reduced loan to value ratios now being offered by lenders.

“While it is likely that the numbers of mortgages being approved will continue to edge upwards over the coming months, the level of activity will still remain low by historical standards.”

Housing experts are also wary of predicting a turnaround in the market concerning latest figures from the Nationwide, which show the first monthly rise in prices since October 2007.

During March property prices rose by 0.9%, but this still leaves the annual rate of decline at 15.7%, says the building society.

Fionnuala Earley, Nationwide's chief economist said: “While the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached.”

Both RICS and the CML are repeating their calls on the Government to do more to build on these tentative signs of recovery and improve lending conditions.

The CML in particular has laid out three simple measures that the Government can take to improve conditions in its forthcoming Budget – see Home News 30 Mar 2009.

These are extending and simplifying low-cost home ownership schemes, a reform of stamp duty and improved support to home owners with financial problems.

Low cost home ownership schemes would increase demand in the housing market and help those trying to sell newly built properties. Increasing the threshold for stamp duty from £175,000 to £250,000 would also help stimulate the market.

In addition the CML wants to see the Income Support for Mortgage Interest scheme bolstered to help more people and ensure the money covers full interest payments.

Among those to support the scheme is Shelter, whose chief executive Adam Sampson said: “With the number of repossession expected to rise to 75,000 this year, the CML is right to call for better state support for struggling home owners.”
Meanwhile just weeks after The Ombudsman for Estate Agents reported a 20% increase in complaints against estate agents RICS has announced plans to tighten up standards in the sector - Home News 18 Mar 2009.

RICS has this week launched a consultation to develop an improved regulatory framework for valuation to, “raise professional standards, improve confidence for clients and help secure the accurate valuations that underpin most economic activity,” it says in a statement.

This will include regular monitoring of estate agents valuation competence and the introduction of an accreditation scheme for RICS valuers, “which will provide a recognisable ‘kitemark’ covering the method and practice of valuations and require re-accreditation every three years.” the statement adds. 

If approved the new rules will come into force as early as next year. RICS spokesman Mark Gerold added: “The value of property is the key component which underpins economic activity. It is vital that there is an effectively regulated gold standard for valuation across the globe, which inspires public confidence in the profession.

“The economic and social importance of all property assets can not be underestimated especially towards wealth generation in a functioning economy. The current financial turmoil highlights the need for raising standards to ensure a stabilising foundation for future economic development.”

Reform to improve the transparency of valuations is already taking place in Scotland, with the introduction of a new database that will provide homebuyers with prices of homes in the same area with a day of the exchange.

The Registers of Scotland (RoS) agency, responsible for registering all property sales, is to launch a new public database giving people instant access to every transaction.  Until now the information was only available from commercial websites, some of which charged, and prices were published only three months after a purchase went through – see Home News 30 Mar 2009.

A tightening of standards is also needed in the rental property market, according to a pressure group formed this week to protect tenants who are forced out of homes because their landlord has been repossessed – see Home News 30 March, 2009.

The group, whose members include the Citizens Advice Bureau, Shelter, Crisis and the Chartered Institute of Housing, say that even though the notice given to tenants forced to move due to repossession will rise from two weeks to seven weeks from next week, this period is still woefully short to secure new accommodation.

It is estimates that more than 8,000 buy-to-let properties could be repossessed this year, leaving 10,000 people looking for a new home at short notice.

Being called for is new court powers to defer repossession until the tenant finds a new home.

 

 

By Joe Lepper

See also  - Mortgages, House Price Indices Asking Price Index, House Prices and Trends

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