Thu, 18 Feb 10
The Government’s official property market figures are the latest to show that house prices rose during 2009.
The Department for Communities and Local Government figures, which are based on completed sales and take longer to collate, show that house prices rose by 2.9% last year.
According to the DCLG figures the cost of an average UK home was £200,307 at the end of the year.
A regional breakdown of the figures shows that prices rose by 3% in England and 3.8% in Scotland. London saw the biggest increase with price rises of 4.9% recorded in the capital by the end of 2009. However, Wales saw an increase of just 1% and in Northern Ireland prices slumped by 6%.
The DCLG figures are also far less upbeat than end of year property price statistics released by lenders such as the Nationwide and the Halifax. These suggested prices rose by around 6% last year.
In an interview with the BBC Howard Archer, chief UK economist at Global Insight, said: “Virtually all house prices measures, including the DCLG, indicate that house prices troughed in the early months of 2009 and have been firming ever since.
"The revival in house prices since the early months of 2009 is a consequence of buyer affordability and interest being lifted by sharply reduced mortgage interest rates."
According to Worldwide Property Group’s January confidence tracker survey 69% of respondents expect prices to continue rising in 2010.
When asked about interest rates 38% believed there would be no rises at all this year.
Kevin Wilkes, managing director of Worldwide Property Group, said: “Once again this survey shows evidence of increasing confidence in the housing market. The devastating price falls predicted early last year proved to be far more limited than at first thought, in fact the market has since grown further limiting the effects of any fall in prices. Property offers great investment potential and many people are still choosing to put their cash into bricks and mortar.”
According to Home.co.uk asking prices for homes on the market in England and Wales fell by 0.3% during the month leading up to its February Asking Price Index report.
Latest figures released by the Council of Mortgage Lenders (CML) show that gross mortgage lending fell markedly in January.
During January gross mortgage lending fell to an estimated £9.1 billion in January, a 32% fall from £13.4 billion in December and a 21% fall from £11.5 billion in January 2009.
Although the decline is typical between December and January these latest figures are the lowest monthly total since February 2000 and the lowest January total since 2000.
The CML says that part of the reason for the slump was that homebuyers were trying to complete deals before the stamp duty holiday, for homes worth between £125,000 and £175,000, finished at the end of last year.
CML economist Paul Samter said: “We remain in a period of uncertainty for the housing market and economy at large. The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted twelve months ago. More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year.
“However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession.”
Figures released by the CML last week relating to first-time buyer loans also indicated that the end of the stamp duty holiday had dramatically affected the property market. These figures showed that in December there were 24,900 loans to first-time buyers, the highest figure since November 2007 – see Home News 12 Feb 2010.
Lenders are facing a tough time, according to the Moody’s ratings agency. Over the next three years lenders will also have to pay back around £300bn worth of emergency government money handed out during the height of the credit crunch.
Moody’s predicts that some building societies will be forced to merge or seek new owners as they attempt to survive the impending financial crisis.
The ratings agency said in a statement: “We believe that as the UK government gradually disentangles itself from the extraordinary support of the banking system, many of the smaller lenders will have to either consolidate with stronger entities or be at the risk of break-up or distressed exchanges.
“Without access to cheaper government-backed funding, many societies will find it increasingly difficult to survive.”
By Joe Lepper
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