Housing & mortgage round up: Two house prices surveys and mixed news for first time buyers

The house price surveys are coming thick and fast this week, with the Land Registry and the Nationwide revealing their latest figures.

In other news, mortgage approvals are up and their life seems to be getting a little easier for first time buyers, although finding a large enough deposit is still a problem

Land Registry house price figures revealed

The Land Registry published their final house price figures for 2012 this week and they make interesting reading.

In December both the Halifax and the Nationwide said house prices fell during 2012 by 0.3% and 1% respectively, however the Land Registry figures show a rise over the same period of 1.7%, quite significantly different and the fastest rise for two years.

The Land Registry figures also showed that house prices rose by 0.8% in December alone, taking the value of the average home to £162,080, broadly in line with the other major surveys.

You can read more about the Land Registry House Price Index for December by clicking here.

Nationwide House Price Index – January 2013

Quick off the mark as usual, the Nationwide released their house price figures for January, which showed a rise of 0.5%, but with no annual change on the same time last year.

According to the Nationwide the average home is now worth £162,245, close to the figures from the Halifax and the Land Registry.

The Nationwide’s Chief Economist, Robert Gardner, commented on the figures, saying: “UK house prices increased by 0.5% in January, though prices were unchanged compared with January 2012. While activity in the housing market remains muted by historic standards, there have been tentative signs of a pick-up in activity in recent months. The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick-up in lending activity.”

Gardner continued: “Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves. Progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in Q4 2012.”

You can read more about the Nationwide’s House Price Index for January by clicking here.

Mortgage approvals rise

New figures from the Bank of England, show that the number of mortgage approvals rose faster than had been predicted, spurred on by the Funding for Lending Scheme.

The figures show that mortgage approvals rose to 55,785 in December, up from 54,011 in November.

In other positive signs for the housing market, net lending, the difference between the amount borrowed and the amount repaid, increased by over £1 billion, the largest rise in eight months. Whilst interest rates on secured lending fell to their lowest levels since April 2012.

Despite the positive signs and ultra-low interest rates, mortgage experts have warned that the number of mortgage approvals is still relatively low compared to long term trends and that a ‘triple dip’ recession could cause significant problems for the housing market.

Stamp duty rakes in £6 billion for the government

In common with surveys, mortgage arrangement fees and solicitor’s costs, stamp duty is one of those things most of us have to pay when we move house.

Stamp duty is tiered, with nothing payable on purchase prices up to £125,000, 1% payable on homes worth £125,000 to £250,000 (although the tax is paid on the whole purchase price), 3% for purchases of £250,000 to £500,000 and rising to 15% on purchases over £2 million.

The average house price in the UK is around £160,000, which would cost a buyer £1,600 in stamp duty. However, the Chancellor, George Osborne has gradually increased the levels of stamp duty, especially at the higher end, and it’s now a nice earner for the Treasury, as new figures reveal.

This week the Guardian reported that the Treasury raked in £6 billion from stamp duty in 2011/12 and with the figure set to double over the next few years, as the higher stamp duty rates and potentially higher house prices take effect.

There is little that can be done by the average house buyer to avoid stamp duty, meaning that for the Treasury it is a relatively secure revenue stream, which is likely to become even more important in years to come.

The rental trap tightens

A leading housing charity has revealed that rising rents are causing hardship for many tenants and could see a whole generation unable to afford to buy their own home.

The Rent Trap report from Shelter says that a typical rent rose by 2.8% between 2011 and 2012, the equivalent to £297 per year, the problem is made worse by wages, which are rising at a lower rate than rents and inflation.

It is clear from the report that many tenants are finding it hard to save a large enough deposit to be able to buy their first home. Shelter interviewed 4,300 tenants, 55% of whom said that after paying rent and other essential outgoings, they only had £100 per month left; not enough to save the 10% 0 20% deposit often needed now by first time buyers.

Commenting on the figures, Rob Campbell, Chief Executive of Shelter, said: “Rising rents are leaving people with little or nothing to save at the end of each month, giving them little chance of ever saving enough to climb on to the property ladder.”

Campbell continued: “The renters we speak to have never been less hopeful. A relentless stream of rent rises means that most feel they will never move on from a life paying ‘dead money’ to landlords, in a home that they can’t make their own. And for some, rising rents have more immediate consequences, not enough money to spend on food, fuel or other essentials.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.

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