House prices in Ireland fell for the 12th month in a row in February, bringing the total decline compared to a year earlier to 8.8%, according to the Permanent tsb/ESRI House Price Index.
Prices fell on average by 0.8% in February compared with a drop of 0.7% the previous month, marking a slower fall than in late 2007 when they fell more than 1% in each of the last three months of the year. The average price paid for a house in February was €283,650, compared with €287,887 in December 2007.
Niall O’Grady, head of marketing with Permanent tsb bank, said: “I think the rate of price decreases over the first two months of the year are lower than many people might have expected. We are also seeing that some sellers are finally grasping the point that people are interested in buying properties if the prices sought are realistic.”
House prices, which more than quadrupled in the decade after the Irish economy began to boom in the late 1990’s, started falling in March 2007 for the first time in five years.
Number of new homes falls by 22%
Statistics released by insurance provider NHBC revealed that the number of applications to start new homes in the UK decreased to 22% year-on-year during the three month period from December 2007 to February 2008.
NHBC’s statistics showed that there were 35,780 applications to start new homes in the three months from December 2007 to February 2008 – a 22% decrease on the same three-month period a year ago (45,613). Of that total, 28,580 related to private sector activity (i.e. excluding housing associations), showing a 24% decrease on the same period in 2007 (37,529).
Housing association completions also decreased in the three months to the end of February this year with applications totalling 7,200 – a decrease of 11% on the same period a year ago.
Imtiaz Farookhi, NHBC chief executive, said: “NHBC figures show that the number of registrations by house builders has fallen in the three months to the end of February. The number of completions also fell, although less sharply, with our statistics showing a year-on-year decline of 4%.”
40% of UK landlords unaware of TDS
Almost one year on from the introduction of Tenancy Deposit Schemes (TDS) and 40% of UK landlords are still unaware of TDS, leaving them at risk of committing a civil offence and being forced to pay tenants three times the deposit amount, according to the Money Centre.
A further 22% of respondents said they were aware but did not fully understand it, leaving only 38% confirming they were aware of the scheme and understood it. The TDS was introduced by the Government on 6 th April 2007 to protect tenancy deposits and provide a fairer system for settling disputes about the return of a deposit at the end of a tenancy.
Lynsey Sweales, marketing and PR director of The Money Centre, said: “The results of this research was extremely worrying. The scheme has now been in place for nearly a year, yet many landlords are still unaware of the legislation and its implications. The good news is more than half of those surveyed did believe the scheme would benefit both landlords and tenants, as it was designed to do. But until awareness, understanding and participation can be improved the scheme won’t be fully effective.”
The research was undertaken by independent research agency BDRC on behalf of a syndicate of buy-to-let mortgage lenders and brokers. Online interviews among 493 residential property investors were conducted in December 2007.
CML welcomes the FSA’s review on MCOB
The Council of Mortgage Lenders (CML) welcomed the Financial Services Authority’s (FSA) report on the second stage of its review of the effectiveness of the mortgages conduct of business rules (MCOB), which focuses on the effectiveness of the rules as they relate to lifetime mortgages and the sub-prime mortgage market.
Kate Davis, CML senior policy adviser, said: “The first stage of the MCOB review looked at the mainstream mortgage market, and its findings relate to the much smaller niche markets of lifetime mortgages and sub-prime lending. It is perhaps unsurprising that borrowers in these markets seem to be using their key facts illustration more as an information check than as a tool for shopping around.
“The FSA may have missed a trick in failing to incorporate the old Mortgage Code requirement for advised sales to include a “reasons why” letter into its own rules. But we agree it makes sense to wait for the outcome of European developments before making any significant overhaul of the regulatory regime.”
Anger at commercial property’s stealth tax
The Institute of Commercial Business Agents (ICBA) is angry about the stealth tax the Government has recently imposed on commercial landlords. From 1st April 2008, commercial properties empty for more than 3 months will no longer receive relief from rates. This rises to 6 months for industrial properties.
Charles Smailes, chairman of the National Federation of Property Professionals who heads up the ICBA, said: “We are angry because we feel that the industry’s concerns were not taken into account during the consultation period – this is just another stealth tax on business. It’s also completely ludicrous to suggest that commercial or industrial property owners would knowingly leave their premises vacant. There isn’t an owner out there that wouldn’t rent or sell their property if they could. Keeping commercial premises vacant is simply just not cost-effective.
“My fear is that owners will simply try and find the loopholes, one of which is an exemption if the property is not fit to rent or occupy. This could lead to people making their premises unfit on a temporary basis if they can’t find tenants. How is this going to look in our city and town centres? The Government has really not thought this through.”
Steady decline in growth in Prime Central London
According to Knight Frank’s latest Prime Central London Index, residential house prices in the region grew by just 0.1% in March. However, annual growth still stands at 20.4% compared to March 2007.
Sales volumes across prime Central London have also fallen by 20% year-on-year during the first quarter of 2008.
Liam Bailey, head of residential research at Knight Frank, said: “The pattern of slower monthly growth rates seen over the last five months continued into March with our prime Central London index recording near even growth of just 0.1%, the same level as November 2007. This slowdown was also reflected in our quarterly figure which showed prices of properties in this sector, the traditional flagship for the UK property market, increasing by only 1.8%.
“Although our index showed that property in prime Central London increased in value by 20.4% in the year to the end of March, the overall trend is one of steady decline in growth. The explanation for this pattern of weakening growth is to be found in the continuing pressure being felt in the international money markets; a problem compounded by problems at various financial institutions on both sides of the Atlantic in recent weeks. However, it also reflects growing fears for job security in the City. This was given added emphasis by a forecast from the CBI that predicted 10,000 jobs in the financial services industry could be lost in the next three months; a sector that is the historic driver for the prime Central London housing market.”
RICS believes Government won’t hit its housing targets
A slowing housing market has hit the UK construction industry, making it even more unlikely that the Government will reach its housing targets, according to the Royal Institute of Chartered Surveyors’ (RICS) UK Construction Markey Survey.
Growth in construction business fell to its lowest level for more than a decade as house builders and businesses were hit by the effects of the credit crunch and demand for housing fell away. Only 1% more chartered surveyors reported a rise than a fall in work loads, down from 16% in Q4 2007.
The worst hit sector was private housing with growth in this sector turning negative for the first time since 1999. The fall was mainly due to a downturn in the North, but private housing weakened in all regions and is now static in London and the South East, Wales, the Midlands and Northern Ireland. Around 9% more chartered surveyors reported a fall than a rise in private sector housing construction levels down from the positive figure of 16%.
Higher mortgage costs for 1.4m borrowers
Around 1.4m borrowers are likely to face higher mortgage costs in 2008 when their fixed rate mortgages come to an end, according to the Financial Services Authority (FSA).
Supported by members of all sides of the House of Commons, the Money Advice Trust has been working with the Council of Mortgage Lenders (CML) to publish advice for these borrowers.
Joanna Elson, The Money Advice Trust’s chief executive, said “The idea behind the initiative is to give free early advice to these borrowers coming off their fixed-rate deals and highlight key sources of independent and free confidential advice, such as adviceUK members, Citizens Advice Bureaux, Business Debtline, National Debtline and the Consumer Credit Counselling Service.
“We have already seen a 16% increase between 2007 and 2008 in clients contacting National Debtline for advice regarding mortgage and secured loan arrears and we fear that people really are starting to struggle with their mortgage payments as credit becomes more expensive to service. Our experience suggests that if you do get into difficulty, seeking free independent advice as soon as possible is the best option to help you sort out your problems. There is always something that can be done and the earlier you seek advice the more options you will have.”
Government launches consultation on how RDAs should be accountable
The Government has announced a consultation, regarding how the sub-national review will be moved forward. It seeks views on how Regional Development Agencies (RDAs) should be held to account once they assume the planning powers currently held by regional assemblies.
The Royal Town Planning Institute (RTPI) believes it is vital that communities can influence the outcome of major planning decisions if RDAs are to be successful in overseeing spatial planning strategy.
Rynd Smith, RTPI policy director, said: “The sub-national review is a massive overhaul of the regional planning system and it is vital that whatever structure is introduced gives the public both a direct say in planning decisions through appropriate community engagement and an indirect one through the oversight of plans by elected representatives.
“The Government must make sure the economic, social and environmental effects of development are all properly considered in the policy-making process for new Single Regional Strategies. This will require a significant change in the culture and skills of the RDAs, which will need to broaden their existing economic remit. Regional planners will also need to adapt to these changes.”
No of buy-to-let mortgages down 63% in past year
According to Moneyfacts.co.uk, the number of buy-to-let mortgages on the market had fallen by 63% since the start of the credit squeeze, dropping from 2,990 in April last year to 1,116.
Following on, the Bank of Scotland has withdrawn part of its buy-to-let mortgage range due to mounting pressure from the added business of other lenders who have left the market.
HBOS has dropped five of its buy-to-let mortgages and 10 of its self-certifying mortgages in order to restore some balance.
Record volumes of mortgage applications have also forced the Royal Bank of Scotland and Natwest to increase the minimum size of deposits that landlords must pay. The figure rose from 15% to 25% of a property’s value. This was proposed as a defensive measure to protect the service in the midst of mounting mortgage applications.
