After the predictions for 2012’s property market begin to disappear, they are replaced by tangible figures and the Nationwide have indicated a minor drop in housing prices for January, in comparison with the previous month.

The figures reveal that the value of an average home in the UK was £162,228 for January and this represented a fall of just 0.2%. The Nationwide also claim that the rate of property price growth also slowed to 0.6% as opposed to 1% in December 2011.

Nationwide are the first organisation to declare figures of this kind and they are in keeping with the forecasts of many property experts. The organisation themselves had predicted a small decrease or a sideways movement and they appear to have been vindicated by the announcement.

“Given the challenging conditions prevailing in late 2011, with the UK economy contracting in the final three months of the year, it is not surprising that house price growth softened at the start of 2012,” said Robert Gardner, Chief Economist at the Nationwide.

Mr Gardner went on to predict a similar scenario for the first six months of 2012 at least,

“The economy is not expected to gather much momentum until the second half of 2012 at the earliest, which suggests that labour market conditions and buyer sentiment may be slow to improve,” he added.

The Nationwide also pointed to two elements that stand to have a major influence on the figures released for February and beyond. Mr Gardner claimed that the flow of properties emerging on the UK housing market had slowed almost to a standstill and that has helped to keep prices fairly stable.

The other factor surrounds the commonly cited subject of the availability of mortgages and in this regard, a further set of statistics claims that more help to first time buyers with low deposits is becoming available.

The financial information website Moneyfacts shows an increase in products designed for those with a deposit of around 10%. The statistics released at the start of this month show that there are 49 mortgage products for those looking to fund 95% of a purchase compared with just 24 at this stage last year.

In addition, borrowers requiring a 90% mortgage can now find  343 relevant products which represents a significant increase from 280 at the beginning of January 2012.

Much of these figures have been met with a firm degree of expectation but perhaps the most important development is the increase of those low deposit mortgage products. Their potential effect on the property market will be monitored with great interest in the coming months. 
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It’s a question that will probably never be met with a definitive answer as many would be homeowners face up to the question of whether buying or renting is their best option. Naturally, as individuals, those in this position will have a differing set of circumstances and the difficulties in securing a mortgage may well be enough to push many down the rental channel.

As for the costs involved, the Halifax has declared that home owning is considerably cheaper and on average, anyone renting their property could be paying in excess of £100 a month more for the privilege.

As part of the Halifax Buying Versus Renting Review, the organisation took into account many factors including the relative cost of monthly mortgage and rental payments, the cost of essential building repairs and maintenance and any money lost as a result of funding a deposit. Additional expenditure such as buildings insurance was also used as part of the overall survey.

Using their own records and those supplied by the National Office of Statistics, Halifax claim that the typical cost of purchasing a three bedroom house in December 2011 was £600, which is £116 less than the finances involved for renting an identical property.

Ultimately, that works out to be a 16% saving and a significant change to a previous survey carried out in 2008 which claimed that the costs involved for buying a home worked out to be 29% more expensive than renting.

“The affordability gains for buyers relative to renters in the last three years have been significant,” said Martin Ellis, housing economist at Halifax.

“The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates. At the same time, rents have risen due to strong demand for rented accommodation.”

The findings also arrive after a claim from the Association of Letting Agents that the rental market is showing clear signs of softening and that demand for the type of three bedroom property used in the survey is on the decline.

The figures are indeed significant but as the property market has already indicated, this promises to be a volatile and uncertain period in terms of mortgage rates and the ability to arrange a home loan. In addition, economic uncertainty and the difficulty in raising a substantial deposit are likely to see very few renters change their current position in the light of these statistics. 
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So far, the first month of the New Year has seen many property experts predicting a sustained and consistent rise in mortgage rates with the general feeling being that they had reached the lowest point that they could possibly attain. Those reports have been tempered today by suggestions that rates will increase shortly but this will precede a period of rise and fall as the year progresses.

Once again, uncertainty over the economy has been blamed by those who have hinted at the forthcoming rate changes while concerns over the Eurozone crisis are believed to have led to a recent spate of increases from various lenders.

Over the course of the last few days, several major lenders have increased their rates in line with expectations and they are expected to be followed by many more home loan providers in the coming days. This news is very much in line with predictions at the start of 2012 but until now, there hadn’t been suggestions of a period of ‘ebb and flow’.

Andrew Montlake of mortgage brokers Coreco suggests that with the bank rate holding firm, lenders are set to adjust their rates upwards and downwards until they get the level of business that they are looking for,

“We are going to see a period in which the Bank rate remains stable, so lenders will manage the business they want by increasing or decreasing their rates,” Mr Montlake confirmed.

In fact, there have even been some rate reductions by some lenders for first time buyers and these go some way to confirming the likelihood of these new predictions. Mr Mortlake went on to claim that this volatility in the market will continue for the first half of the year at least and is set to continue until more is known with regards to the Eurozone crisis.

A likely outcome in the short term is a huge disparity in available mortgages as some lenders increase their rates while others start to apply reductions. The advice in this instance is quite simply to shop around.

“It really does pay to shop around at the moment if you are looking for a mortgage as some lenders are much more expensive than others,” confirmed Aaron Strutt, of Trinity Financial.

As predictions turn into confirmed rate changes, the mortgage picture may look confusing to some but if you are prepared to look hard enough for reductions, these developments could be good news for many. 
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Property lettings are put under the microscope this week as a survey released by one prominent agent suggests that the costs of renting your home may be dropping. Meanwhile, the survey goes on to suggest that Christmas spending is one of the factors currently having an impact on a rise in late rental payments.

LSL Property Services claim that the average monthly rental payment across the UK in December fell by 0.8% from the previous month. However, LSL go on to state that this still represents an increase of 4% on comparative prices from December 2010.

The fall comes after ten straight months of rental increases, although this does represent a fairly familiar ‘seasonal decrease’.

“The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive,” said David Newnes, director at LSL.

The survey also revealed an increase in late rental payments which it blames squarely on the impact from Christmas spending. The findings suggest that 10.7% of all rental payments were late or unpaid in December, as opposed to a figure of 9.3% from the previous month.

Those figures have prompted the Association of Residential Letting Agents to highlight the difficulties faced by tenants and landlords alike and has reiterated the need for watertight contracts, preferably from a recognised agent.

“It is more critical than ever to take references and conduct thorough research before signing a tenancy agreement,” said Arla’s President Tim Hyatt.

“Seeking advice from a professional, licensed letting agent is the best way to ensure tenants and landlords’ rights are protected.”

The fall in monthly rental prices may be seen by those looking to rent as a positive sign however, industry experts are warning against too much excitement, while affirming their belief that this is no more than a seasonal anomaly.

“It may be premature to say the UK rental market has peaked and that we are about to see rents fall away,” said Matt Hutchinson, director at Spareroom.co.uk.

“What we are probably seeing is a temporary blip, a natural cooling off period for the rental market.”

Overall, rental prices are expected to shortly begin climbing once again while continuing to increase throughout 2012 but the next survey run along similar lines may give us a more telling picture. 
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Now that the wave of predictions for the 2012 property market has died down, the first batch of actual figures are being released with some positive signs for the year ahead. Reports released this week indicate that the asking price for new properties released on to the market actually grew by 1.4%

Perhaps more significantly, there was an increase in potential buyer activity too with 27 per cent more internet searches performed than at the same time in 2011. While a figure of 1.4% in prices may not be enough to get too many experts excited, the 27% search increase is an impressive rise and may just lead to a more positive start to the year than many have predicted.

Property expert Selwyn Lim is certain that these figures are a positive indicator for the months ahead,

“Since the internet began, more people have been searching online and that trend is continuing,” Lim said. Nevertheless, I am sure some of it is a growth in people searching for property in general.”

Mr Lim did however warn that while these figures were welcome in a period where the forecast is generally a gloomy one, the market should guard against what he referred to as ‘excessive optimism’.

One of the problems with regards to moving the market forward is the continuing issues that new buyers have in obtaining a mortgage. The predictions that were produced at the end of 2011 hinted that this situation could be set to get worse as criteria tightens and the ever decreasing window for sub-prime lending continues to close.

Meanwhile, some property experts have been highlighting the value of hybrid mortgages this week while suggesting that they could increase in popularity during 2012. A hybrid mortgage starts its life as a tracker before ending as a fixed rate, thereby giving the borrower the ‘best of both worlds’ according to its supporters.

Catherine Hearnden, director at MyMortgageDirect said that a mortgage of this kind could be a perfect solution for any borrower who is undecided over which path to take.

“People are not keen on fixing now because rates are low and everyone has got it in their head that rates will increase. You have got the benefit now of a tracker, but you know that your rate will not increase between years three to five,” she said.

Hearnden also went on to say that many are unaware of the hybrid’s existence.

“It is quite a new thing, so I shouldn’t imagine that people do know they are out there. Certainly when we ever talk to anyone about them, it is not something that they were expecting,” she added.

A hybrid mortgage may not help those that are struggling to get funds in the first place but they could be a solution to help convert the increase in property searches into confirmed sales.

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Figures released this week show that mortgage lending grew in November 2011 and while the news tends to contradict some of the gloomy forecasts for the 2012 property market, it is being met with considerable and predictable caution.

The figures from the Council of Mortgage Lenders show that lending rose by 4% from the previous month with the number of loans made increasing to 47,000. This also represented a rise of 3% on the figures from November 2010.

The CML welcomed the news amidst claims that mortgage lending restrictions were going to increase but figures are still running at around half of the levels experienced prior to the banking crisis of 2007.

“A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies both at home and in the Eurozone,” said the CML’s director general Paul Smee.

Smee goes on to say that he expects further rises from now until March when the government’s stamp duty exemption ends. Up until then, buyers will not have to pay the 1% charge on properties costing less than £250,000.

“We should expect a further increase in first-time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March,” Smee added.

Does that mean however that the mortgage lending figures are in any way artificial? The CML went on to add that of the 47,000 home loans for that month, 17,300 were taken out by first time buyers which represented an increase of around 4% from the previous month. Of that figure, it’s not been confirmed how many would have been for house purchases under £250,000 but it’s likely to have been a significant proportion.

The Council did confirm that lending to first time buyers had been steady since 2007 with them contributing to between 34% and 40% of overall purchases. That would suggest that with a constant level of first time buyers, mortgage lending figures aren’t necessarily over-inflated but a further spokesman for the CML warned of a slump once the stamp duty concession ends.

“If we look back at the figures from last year, first-time buyer activity tumbled in the first couple of months of the year. That is likely to happen after the Stamp Duty relief ends in March,” the spokesman concluded. 
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Figures released by the Royal Institution of Chartered Surveyors indicate that there has been a further rise in the number of new properties released onto the market. December statistics show that new instructions rose for the third consecutive month but RICS claim that the housing market will remain stagnant, largely due to the unrealistic expectations of vendors.

Overall, the figures are impressive and in London, the number of new properties coming on to the market has reached its highest level since 2005. The number of buyer inquiries has also increased but surveyors are resigned to another quiet year and have put the blame firmly on those ‘unrealistic prices’.

“The increasing number of prospective sellers who placed their homes on the market in December is a positive development, as a lack of stock has been a big issue in some parts of the country,” said Ian Perry, spokesman for RICS.

“But with sales expectations remaining flat, it is important that vendors are realistic in their pricing if they wish the sale to go through in good time.”

Those comments echo earlier reports that suggest some vendors have been cutting their prices significantly in the hope of driving through a sale. Back in November 2011, Property website Zoopla claimed that certain sellers were dropping their asking price to the extent where the market was seeing its biggest reductions in two years.

“With the current economic uncertainty and difficulty buyers face in finding funding, it is no wonder that sellers are having to reduce prices in order to encourage sales,” Zoopla’s Nicholas Leeming said at the time.

While it may be bad news for the market as a whole, anyone in a strong financial position who is currently looking to buy could be set for a bargain if they are prepared to wait for the price drops.

Those buyers are in the minority however as reports continue to suggest that obtaining a home loan will be an even harder task in 2012. As a result, Ian Perry is not predicting any positive changes to the housing market as a whole.

“Looking ahead, along with surveyors’ flat predictions for transaction levels, price expectations remain low,” he added.

The property news is mixed here once again although it is encouraging that there so many more new instructions on the market. However, as RICS suggest, the reductions as reported by Zoopla last year remain isolated and until that position changes, the market will continue to stagnate. 
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The national media continue to provide us with their predictions for 2012 and while there are mixed feelings about many areas of the property market, a general consensus hints at a gloomy twelve months for house repossessions.

The Council of Mortgage Lenders claim that with unemployment set to rise even further next year, more property owners will be forced to surrender their homes as the economic situation fails to improve.

The CML suggest that repossessions in 2012 will not hit the high levels of 2009 but they still forecast a rise from a 2011 figure of 37,000 to 45,000 in twelve months’ time.

“The household sector has been under financial pressure for some time, as a result of falling real incomes, and more recently higher unemployment,” said Bob Pannell, the CML’s chief economist.

“This is likely to unwind some of the improvement in mortgage arrears we have seen over the past two years and lead to a somewhat higher level of possessions in 2012.”

Anyone looking for a positive slant on the story could look to a similar prediction from the CML at the end of 2010 and one that subsequently proved to be unfounded. At the time, the organisation cited low interest rates and flexibility on arrears from lenders but this time around they are certain they will be proved right.

Rising unemployment is cited as the main reason for an overall increase in arrears and with lenders unable to accommodate as they reach tipping point, increased levels of repossession would be a sad and inevitable conclusion.

“Over recent months, as fiscal cuts have begun to be felt, the UK has seen a sharp increase in headline unemployment figures, and the Office for Budget Responsibility envisages a higher level of joblessness persisting through next year and beyond,” the CML added.

“With higher unemployment and a prospect of real incomes stabilising at best over the course of the year, we should expect to see increased signs of financial stress.”

In an overall scenario that will fail to bring any cheer to the market, the CML are also predicting that mortgage lending and overall sales will also drop in 2012 as many providers will either tighten their criteria or simply fail to find the funds.

However, it’s the suggested increase in repossessions that will hit the headlines and if they come true, it will be the worst news for this area of the market since 2009. 
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Housing minister Grant Shapps has been in the news this week with regard to a number of issues affecting the housing market and he has vowed to ‘build the homes that the country needs’ during his tenure.

Shapps also hinted at a crackdown on social housing fraud and pointed at the abuse of the system by some buy to let landlords. The MP for Welwyn and Hatfield underlined the problems faced as suggestions have emerged that the subletting of council properties could soon be a criminal offence. With no restrictions currently in place, some social housing tenants are simply moving out and subletting their homes.

“For too long this country has turned a blind eye on the multibillion-pound problem of housing tenancy fraud and abuse,” Shapps said in the Sunday Telegraph.

“Why is it so easy to get away with subletting your council house at market rent and simply pocketing up to £1,000 a week at taxpayers’ expense?”

Shapps promised an end to the abuse and went on to claim that high earners will soon be forced out of their council homes and on to the open market.

“This year the coalition is determined to end that scandal. Why should someone on a six-figure income enjoy a fantastically subsidised council rent, whilst those in real need languish on the waiting list?”

Pushing those high earners out in to the housing market may be seen as a logical move but with new builds and mortgages becoming increasingly hard to find, how does Shapps intend to address that particular issue?

Writing in his column for 24housing magazine, the minister announced several measures that he hopes will get Britain building again while offering hope for those that are struggling to secure the lending that will get them into home ownership in the first place.

“At the heart of the Strategy is a new-build indemnity scheme, which will offer a useful alternative to the Bank of Mum and Dad for those people struggling to get deposits together and take a step on the housing ladder,” Shapps wrote.

“Due to be launched this Spring, under this new industry-led scheme house builders and we in Government will provide security for the loan, enabling homebuyers to secure mortgages on newly-built homes with just a five per cent deposit”

Shapps also announced right to buy measures which could tempt those would be sub-letters to buy their home in the first instance.

“Shortly I’ll also publish plans to increase the average Right to Buy discount to up to half the value of the home, bringing home ownership more within reach of social housing tenants,” he added.

It’s clear from Grant Shapps’ comments that the social housing sector could have more impact on the overall market than many might think and these measures should help those with higher incomes who face the prospect of being forced out of their property. 
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House price figures for 2011 are currently being announced throughout the media and the Nationwide Building Society is one of the first to comment on the statistics and to offer their predictions for 2012. Over the course of the last twelve months, the average house price rose by 1% but a fall of 0.2% from November to December leaves Nationwide predicting a subdued market this year.

Regionally, there were some significant differences with prices in London rising sharply while in Northern Ireland there was a contrasting slump. Nationwide’s chief economist Robert Gardner claimed that the figures pointed to a resilient market in the face of such economic uncertainty.

“The 1% rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011,” Gardner said.

That has led the society to predict a similar scenario for 2012 as experts point to a stifling of economic growth as the Eurozone crisis continues to dominate the headlines. Against this backdrop, Nationwide feel that the market can do nothing but stagnate.

The society’s figures for 2011 also serve to highlight just how extreme some of the regional variations have been over the last twelve months. In Northern Ireland, that drop in prices equated to 8.7% while in London, the average price rose by 5.5%.

Earlier this week, the Daily Telegraph hinted at a rise in ‘forced sales’ over the next twelve months but Gardner went on to suggest that this type of property purchase had little or no effect on the market last year.

“Thanks to continued low interest rates, the number of forced sales remained low,” Gardner added. “Together with a dearth in building activity in recent years, this prevented a glut of unsold homes from accumulating on the market. This meant that although demand and supply were both weak, they remained relatively well-matched.”

This is the time of year when market predictions will dominate the property news but as far as Nationwide as concerned, they can see little change ahead for 2012 with sideways figures or a slight drop being the most likely outcome,

“The housing market in 2012 looks likely to be characterised by low levels of activity once again, with prices moving sideways or modestly lower over the course of the year,” Robert Gardner concluded. 
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