According to Hometrack, house prices fell for the third consecutive month in December by 0.3%, which was the largest monthly fall since January 2005.
The year-on-year rate of growth slipped back to 3% in 2007, which was the lowest annual rate of growth since June 2006. In addition, the average time to sell has reached 8.3 weeks, which is the highest level since the survey began in 2001.
Richard Donnell, Hometrack’s director of research, said: “There have been two distinct phases of activity across the housing market in 2007. The real impetus behind the headline rate of growth came from the central London market as well as the key commuter routes of southern England where values were being driven ahead by a lack of supply and strong demand. Indeed, our analysis shows that the boom of early 2007 was actually limited to just 30% of the market. Across the rest of the country house price growth was far more subdued and interest rate increases were already beginning to bite.
“The second half of the year saw a major reversal in confidence on the back of higher interest rates and concerns over the outlook for the financial markets. Many would-be buyers have stepped back from the market and the greatest short term casualty has been lower levels of market activity with sales volumes down by 18% over the last 6 months.”
Weakening in demand resulted in small house price falls, which primarily took place over the last three months of 2007. These have been concentrated in areas where the market has been generally weak over 2007. Last year, house prices in South Yorkshire, Nottinghamshire and North Lincolnshire fell by up to -1%. The strongest growth over 2007 was seen in the Central London and City area where values were up 9.4% but values fell by 1.1% over the last 3 months of 2007. Oxfordshire recorded the largest fall in values over the last 3 months (-1.5%) although values were up 4.2% over the whole of the year.
Donnell said: “Despite the recent cut in interest rates, levels of market activity are likely to remain subdued over the course of 2008, especially over the first half of the year. The housing market is in danger of facing its own liquidity squeeze in the first six months of 2008. High transaction costs, a weak outlook for prices and continued uncertainty among vendors creates the potential for a major lack of housing coming to the market in the first quarter of the year. Overall we expect average prices to rise by just 1% over 2008 with sales volumes projected to be down 17%.”
NLA launches first e-learning programme for landlords
The National Landlords Association (NLA) has launched its first ever e-learning programme for landlords in the private rented sector.
The programme, www.landlorddevelopment.org.uk, can be used as a structured learning tool offering landlords the opportunity to complete online modules and then review and test their knowledge in a short quiz. Competence in each module is automatically recorded as part of a landlords’ Continuing Professional Development (CPD) and could help gain recognition and accreditation from UK accreditation schemes.
It also offers landlords information and advice on all aspects of letting residential property from issues affecting pre-tenancy through to ending a tenancy.
It’s not all doom and gloom
The Intermediary Mortgage Lenders Association (IMLA) believe there is a real danger of negative housing predictions feeding a spiral of worsening sentiment.
Although the latest Bank of England Credit Conditions’ survey gave a relatively downbeat picture, there are some positive features.
Peter Williams, IMLA’s executive director, said: “Demand for secured loans has remained buoyant, and indeed demand for buy-to-let and other (non-prime) loans actually exceeded expectations overall. This suggests that despite the uncertainty of the credit squeeze and the consistently negative tone of the media, British consumers are still confident enough to want to borrow, partly because they take a longer term view.
“While the survey indicated a weakening in demand for house price purchase, it showed increased demand for re-mortgaging. Similarly, while the recent Financial Times’ survey of 55 leading economists was seen to offer a fairly gloomy view of the future but it is worth noting that only 13 saw the UK housing market as a major risk to economic stability in 2008, only 10 thought a house price correction might exceed 10% and only the same number felt it would severely impact upon the broader economy.
“Equally positively, we have seen the cost of 3-month LIBOR coming down partly reflecting the bank’s interventions before Christmas. Although the volume of interbank lending at this price remains small, we should expect to see the market ease over the next few months. With the potential for further intervention by the bank and a base rate cut, we should begin to see the cost of borrowing stabilise and fall which in turn will help the demand for borrowing.”
DGHP wants to extend its £63m improvement programme in South West Scotland
A £1.7m land deal to assist housing regeneration in Dumfries, Scotland, is seeking approval from councilors.
Dumfries and Galloway Housing Partnership (DGHP) wants to buy the council-owned site in the Lochside area to extend its £63m improvement programme in South West Scotland.
If the sale goes ahead, DGHP will use half the funds for further housing regeneration and keep the rest in its reserves. The proposed land deal is part of a neighbourhood renewal programme covering North West Dumfries and south central Stranrear.
The project is being delivered by DGHP along with the council and the national housing agency, Communities Scotland.
Regeneration going ahead in Swansea
Developers Hammerson and Urban Splash have been chosen to develop four key sites in Swansea, Wales, as part of a £1bn city centre facelift.
The Quadrant and St David’s shopping centre are included in the revamp. The master plan includes 600,000 sq ft of additional retail space, 1,000 homes and new leisure, office, hotel and conference facilities. Chris Holley, Swansea Council leader, said: “This is probably the most significant announcement during the past 50 years for Swansea.”
Over the next 18 months both companies will work with the council and Welsh Assembly Government to secure the necessary planning consents.
Meanwhile a £22m regeneration scheme for Swansea’s High Street has been unveiled.
It would see an ‘urban village’ of shops and affordable housing midway between the railway station and Castle Square. Plans are going out for consultation later this week.
Geoff Pettifor, Swansea Housing Association’s director of development, said: “Our proposals include new-look retail frontage for high quality commercial space, offices and 175 affordable homes with car parking. It will breathe fresh life into this part of the High Street.”
Interest rates remain unchanged
Bank of England policymakers decided to keep UK interest rates unchanged at 5.5%.
The bank faced a tough decision, having to balance signs of a slowdown in consumer spending against indications of growing inflationary pressures. While rates have been held this month, many analysts expect the cost of borrowing to be lowered in February.
While a rate cut could have lifted both consumer and general business confidence, it could also have risked fuelling price pressures growing on the back of higher energy and food bills.
Energy firm Npower increased both its gas and electricity prices last week and warned that its rival energy providers were likely to follow suit. Oil prices also remain near record highs of above $100 a barrel.
The bank’s Monetary Policy Committee last cut rates in December, reducing them to 5.5% from 5.75%.
London’s prime market hasn’t weathered the credit crunch
According to Knight Frank’s latest Prime Central London Index, the residential housing market grew by 1% between November and December 2007.
Growth on an annual basis also continued to slow but last month’s figure of 28.6% was at a level similar to December 2006’s 28.7%. Also, the area with the greatest monthly growth rate was the South West region of Central London at 1.8%.
Liam Bailey, head of residential research at Knight Frank, said: “Coming amid largely pessimistic debate about the impact of the international credit crunch, December’s Knight Frank Prime Central London figure of 1% growth appears to buck the trend of recent months. The quarterly figure also supports the notion that this particular market is steadying with growth slowing just 0.2% to 1.4% over the quarter.
“Although the annual growth rate slowed again to 28.6% it is worth noting that this is only 2% lower than January’s year-on-year rate and almost identical to the figure recorded in December 2006 (28.7%) which at that stage was the highest since June 1979.
“It would be unwise to suggest that London’s prime market has weathered the credit crunch on the back of these figures. Indeed most indicators suggest that tightening economic conditions will continue and this may well result in job losses across the city. If this is the case it will inevitably lead to property purchase becoming a discretionary as opposed to investment making process.
“We are satisfied with our forecast that the prime sector in London will grow at 3% in 2008 in parallel with that for the rest of the property market throughout the UK. However we believe that various parts of the prime market may exhibit little if any growth in 2008. Properties in the super prime sector meanwhile will continue to return the best rates of growth of anywhere between 5-10% as overseas investors from countries untouched by the international credit crunch enter the market.”
London and the South East top poll for best performing property markets
London and the South East are expected to top the table for the best performing property markets in 2008, with nearly 70% of investors identifying these regions as hotspots, according to The Homebuyer and Property Investor Show.
The South East was the most popular region to move to over the last decade and is continuing to experience a shortage of stock, causing the vast majority of investors to believe the area will see the best house price increases of 2008. Many will be looking to purchase in the South East and London and the growth in buy-to-let interest in these regions will help to buoy the UK property market.
Despite commentary about the oversupply of new build flats in the UK’s major cities, the survey also showed that just over 40% of investors polled consider flats and apartments to provide the most profitable buy-to-let investment. The London market has remained stronger than other cities and demand for flats in the capital will contribute to a boost in the market.
Supply and demand is given as the main reason that the housing markets of the South East and the capital will continue to do well in 2008. The belief is also fuelled by the improved transport links, wealth, foreign buyers and regeneration across the area.
Merseyside was ranked as the second most promising area for property price rises due to being named the European Capital of Culture for 2008. However, the area still came far below London and the South East, with only 10% of investors confident in its performance.
Approval for largest regeneration scheme in Manchester
Manchester City Council has approved plans for the largest regeneration scheme to date to be developed in the city.
The outline planning application for Holt Town Waterfront in East Manchester was submitted by developer Cibitas Investments. The 38-hectare development is less than a mile east of Manchester city centre and is the largest planning application ever to be approved in Manchester.
The urban quarter will provide more than 4,300 new homes over the next 10-15 years, the majority of which will be accommodation for families. The area will also benefit from a new Metrolink tram stop linking the area both into the city centre and out to the east, a new primary school, studio/office accommodation and a range of shops and bars.
Tom Russell, chief executive of New East Manchester, said: “This is an exciting opportunity to create a new concept in family housing that is not only unique to east Manchester but anywhere in the UK.
“Holt Town Waterfront is strategically located close to Manchester city centre, and provides an opportunity to create a new community that will integrate with the existing neighbourhoods. Families will have the chance to invest in their future by setting down roots and staying within in the city.” The first sites are expected to be released to the market in early 2008.
‘Strong landmark’ in Edmonton gets the green light
The Adelphi Point project in Edmonton, London, has been given the go-ahead. It has been claimed that this is the most ambitious development of its kind in the area and has been described as a ‘strong landmark’ by local planners.
It features a 29.5 metre, nine-storey tower attached to a three-storey base. The development will combine 520sqm of ground level commercial space with 24 residential apartments. The Section 106 agreement has now been signed, meaning work can begin as soon as possible. Investland is the chosen developer.
Investland and PARRIT LENG have also incorporated a number of features in the building to bring it into line with the Eco Homes code. Natural ventilation and insulation have been built into the design to cut down on energy demands and solar panels have been incorporated on the roof to provide the building with hot water.
Yuda Amabalo, joint managing director at Investland, said: “The site is a very prominent one in Edmonton, and so we felt it vital to create something that could live up to the needs to the area as it continues to grow. It’s provided some unique challenges with all the issues that replacing an old petrol station throw up.”
