More properties on the market

UK commercial property values surge

A third fewer social homes to be built in 2010

Mortgage deposits coming down

Five buyers for every property

A new survey by the Royal Institution of Chartered Surveyors (RICS) has revealed that in October 2009 house prices continued to rise despite the increase in the number of available properties.

The report also contained evidence that all regions in the UK have posted an increase in properties coming on to the market for the first time since the credit crunch began, with the North, the South West and London ahead of the rest at this point.

According to the report, surveyors said prices have risen in London during October, with 34% nationwide stating the same. This is a +14% increase on September and the highest result since December 2006.

Jeremy Leaf, RICS’s spokesperson, said: “ Although the supply of property is beginning to pick-up, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term. Cheap money remains a critical prop for the market and this is being reflected in the continuing appetite for finance from first-time buyers despite the large deposits still being demanded by lenders."

Buyer interest meanwhile has decreased slightly as new buyer enquiries dropped -4% to 31%, however transactions have improved with sales per surveyor up to 19 over the three months to October, with the sales to stock ration marginally improving to 30 – this is the measure of market slack and an indicator of future prices.

UK commercial property values surge

According to Colliers CRE, commercial real estate values are set to overturn most of the losses suffered in the first half, as booming investor demand has taken prices back to near peak levels in some sectors.

The strength of the rally could lead to a second price correction, Colliers cautioned, with analysts warning that a bubble is being created. Colliers has upgraded its forecasts significantly for this year and next, estimating that the total return – the movement in property values plus rental income – for 2009 will be 0.4%, a rapid recovery from just a few months ago when the sector was still reeling from its heaviest slump. Colliers’ previous forecast was of -7.3% for 2009.

Russell Francis, head of valuation at Colliers, said: “The speed of the recovery in capital values for many properties has been quite dramatic.”

However, analysts are worried there could be a second price correction. Prices have been driven by a shortage of supply, which could change quickly given fears about the amount of property debt maturing.

A third fewer social homes to be built in 2010

The Homes and Communities Agency (HCA) has revealed that its development assets have dropped by £1.1bn due to the housing crash and, as a result, a third fewer social homes will be built.

Completions will rise in 2010 as 61,500 properties will be finished in comparison with 2009 when 55,625 were built. This is due to an injection of money from the Government as Gordon Brown announced in June that an extra £1.5bn in funding was to be made available for new homes.

This extra funding has resulted in only a temporary increase as grant-funded housing starts scheduled for 2010/11 are only 29,900, which is -34% less than the 45,500 target for the financial year of 2009/10. Within those figures ‘social rented’ homes to be built under the National Affordable Housing Programme will go down from 30,389 in 2008/09 to 14,500 in 2009/10, this is over a -50% drop.

Sir Bob Kerslake, HCA’s chief executive, said: “Overall this has been a year of considerable achievement and despite tough operating conditions, the HCA has delivered in all of its key areas during its first months of operation.

“This year and next will be equally challenging but we will continue to deliver against our targets, identify new funding streams and new ways of working, and maximise the impact of every pound of public money we invest.”

Mortgage deposits coming down

Figures compiled by Moneyfacts has revealed that since the Bank of England (BoE) base rate was cut to 0.5% in March 2009, the number of mortgage products which have a loan-to-value (LTV) of 85% has risen from 169 to 231, an increase of +27%.

The minimum deposit required had increased to 40% for some home loans after the subprime mortgage meltdown however lenders have started to lift their restrictions.

Darren Cook, Moneyfacts’s spokesperson, said: “It is encouraging to see that lenders are becoming more accommodating with their deposit requirements. This is likely to give more opportunities to first time buyers.

“Lenders seem to be getting a bit more comfortable now that property values are levelling out and are prepared to advance to a higher level. However, rates are relatively higher for mortgages with small deposits.”

Five buyers for every property

A survey by the National Association of Estate Agents (NAEA) has discovered that for every property that comes on to the market there are five interested parties.

The survey revealed that the average estate agent had 287 house hunters registered on its books in October, down by seven from September. They also registered a fall in the supply of properties with the average branch having only 57 available, which was down by five on September.

Gary Smith, NAEA’s president, said: “There is strong demand for property and more optimism in the housing market than we have seen for months. This is good news for the recovery of the market and for the UK economy in general.

“Many buyers are at the very beginning of the house buying process and this is creating a lack of properties in the short term. It is now up to the Government and the banks to do more to keep the momentum of market recovery going. A good place to start would be for the Government to extend the Stamp Duty holiday, which mainly affects first time buyers, and is currently scheduled to end in December.”

It also stated that the gap between the asking and selling prices had closed up from 10.9% in September to 8.8% in October.

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