The January data from Land Registry’s flagship House Price Index shows an annual price change of 5.2 per cent.
As per ‘What Mortgage’ magazine, it is reported that this is the second month in a row in which the figure has been positive and takes the average property value in England and Wales to £165,088. The monthly change from December to January is a rise of 2.1 per cent.
Seven regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 10.5 per cent. The region with the most significant annual price fall was the North East with a movement of -3.4 per cent.
London experienced the greatest monthly rise with a movement of 3.9 per cent. The North East was the region with the most significant monthly price fall with a movement of -1.3 per cent.
The most up-to-date figures available show that during November 2009, the number of completed house sales in England and Wales rose by 54 per cent to 55,715 from 36,091 in November 2008.
The latest report is that the
UK housing market is improving faster than most of Europe
Signs of recovery are already visible in some European housing markets, especially in sales levels and prices, says the latest RICS European Housing Review.
A significant number of European residential markets were starting to show signs of recovery as early as spring / summer 2009 and further revival is expected in 2010. Norway led the way with prices rising by 12 per cent, followed by Finland where they rose by eight per cent and then Sweden, who saw a seven per cent increase. In the UK, prices rose by one per cent in 2009 overall, but by 10 per cent since their lowest point in April.
Low interest rates and reviving economies helped to avoid housing market meltdown across much of Europe. In Germany, Italy, Netherlands and France, last year’s falls were relatively moderate (between -4 per cent to -6 per cent) and though today markets are still fragile, they are starting to stabilize and to see some price growth.
However countries with vulnerable economies will continue to experience depressed markets and falling prices. The worst performing markets of 2009 were Ireland, Spain, Greece, most central and eastern European countries, and especially the Baltic States where prices declined between -27 per cent to -53 per cent in 2009. Geographically, together they form an unlucky horseshoe around the edges of Europe.
The economies of Europe are only showing weak signs of growth and this will hold back housing markets, especially if unemployment continues to rise. Most European house building industries, with the exception of Germany and Switzerland, are also still suffering the impact of the global financial backlash and housing supply will need some time to recover.
The report’s author, Professor Michael Ball, said: “The shallowness of the downturn in core European housing markets has surprised many commentators. But Europe is not the USA, and the problems and policy responses have been different. Mortgage defaults have only risen modestly. Low interest rates and central bank support for mortgage markets have played key roles in bringing recovery.
“Huge problems remain unfortunately. Housing markets around the fringe of Europe are still dragging down economies in a vicious circle and all European housing markets continue to face credit constraints and great uncertainty. ”
Simon Rubinsohn, RICS chief economist commented: “A combination of extraordinarily low interest rates and a raft of government measures have helped to put a floor under residential property markets in most European countries.
“A firmer tone to the macro news flow is also providing a layer of support with clear evidence that an economic recovery is now under way. Indeed, in a number of cases the boost to liquidity has pushed prices back in the direction of previous highs. However, other housing markets are continuing to labor. In particular, the overhang of supply remains a drag in Spain and Ireland. ”
So, what I learned from this report is that in the UK the private rental market has risen dramatically in the last few years. By one million since 2001, from 2.1 million to 3.1 million in 2008 – 09.
So, that basically shows the increasing importance on the private rental sector. That means that there is a growing proportion of households relying on the private rentals sector for their housing needs.
The private rental sector now accounts for 14.2 per cent of all households in
England, that is up from 12.7% in 2007.
During that time period owner occupied households have declined since 2003, falling from 70.9% to 67.9% during the period.
So, what that means for investors, there is a good market for rental housing. Based on a government report 83% of private renters are either ‘very satisfied’ or ‘satisfied’ with their home, and 41% of private renters rely on the private rental sector for their long-term housing needs and have no intention of purchasing a home.
The private rental sector provides housing for a wide range of age groups, of which 48% are 34 or under, so as investors we can focus on the younger population, including the 22% in the 35 – 44 age group.
The private rental market also encompasses a wide range of economic status with 61% of households in full-time employment. There are 3.3 million properties in the private rental sector, with 48% of which are located in the suburban residential locations, and that is important for potential investors to be aware of.
Nigel Terrington, Paragon Group chief executive, said: “These figures highlight the diverse range of households who call the private rented sector home. The sector’s importance to the UK’s housing needs is growing annually as increasing numbers of people decide to rent – owner-occupation has been in decline since 2003 and we believe that this trend will continue as potential buyers are either unwilling or unable to step on the housing ladder. The UK’s population is forecast to grow from 61 million today to 71.6 million by 2033, but housing completions aren’t keeping pace with household formation and there is growing dislocation between people’s desire to purchase and their ability to do so.
“In addition, the UK is experiencing major socioeconomic and demographic changes. There are growing numbers of single person households, economic migrants and students, and these groups all have a greater propensity to rent rather than buy. People are also getting married and starting families at a later age, so the average first-time buyer age is creeping up, while affordability is a growing problem for most people that want to get on the housing ladder.
So, this is all important when we coach clients from the UK or those who want to invest in the UK.
Gerd Kiessling
Executive Coach
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