Housing market ‘unseasonably warm’
House prices increased by 1.3% during September, bringing the annual rate up to 8.2% - its fastest annual rate of growth since February 2005, Nationwide said today.
Fionnuala Earley, Nationwide's group economist, said, “Just like the weather, the housing market was unseasonably warm in September as August’s interest rate hike did nothing to cool the rate of house price inflation.
A weak patch this time last year, when prices fell by 0.2%, exaggerates the annual increase, but the more recent three-month-on-three-month series still shows a clear pick up in price growth since July.
The price of a typical house is now £169,413, almost £13,000 more than at this time last year and the equivalent of a rise of more than £35 per day over the last 12 months.
Demand in the housing market seems firm “Housing market demand strengthened again in July with house purchase approvals reaching 120,000 – almost 20% above the long term trend,” said Ms Earley. “Buyer interest remains robust as estate agents continue to report strong enquiries. However, fewer sellers willing to put their properties on the market is adding to already squeezed supply, which increases price pressure. High prices and little room for price negotiation could mean that many of these new enquiries do not come to fruition, but up until now new buyers have found both the appetite and the ability to overcome the affordability hurdle.”
Landlord demand
Buy-to-let landlord demand looks to remain strong for some time to come. Around two thirds of existing landlords have plans to extend their portfolios and many have access to finance from gearing their existing portfolios.
Loan-to-value ratios on buy-to-let lending (including remortgaging) has drifted up since the start of 2005. In the first half of 2006 almost two thirds of gross buy-to-let lending was at a loan-to-value ratio of 80% or more, compared with only 41% in the first half of 2005.
Homeowners increasing their borrowing
Owner-occupier borrowers are also managing to overcome the financing hurdle.
Many reports suggest that parents and family are increasingly funding deposits for their children. Nationwide analysis of mortgage lending data suggests that borrowers increase their borrowing by around 10% when remortgaging.
Based on a typical house purchase two years ago remortgaging now would release around £11,500 which, if used to help an average first-time buyer onto the housing ladder, would leave them only having to find a further £2,300 to fund a 10% deposit.
“As raising the deposit, rather than meeting the mortgage payment, is the biggest hurdle to first-time buyers, such a helping hand goes a long way,” said Ms Earley.
House prices increased by 1.3% during September, bringing the annual rate up to 8.2% - its fastest annual rate of growth since February 2005, Nationwide said today.
Fionnuala Earley, Nationwide's group economist, said, “Just like the weather, the housing market was unseasonably warm in September as August’s interest rate hike did nothing to cool the rate of house price inflation.
A weak patch this time last year, when prices fell by 0.2%, exaggerates the annual increase, but the more recent three-month-on-three-month series still shows a clear pick up in price growth since July.
The price of a typical house is now £169,413, almost £13,000 more than at this time last year and the equivalent of a rise of more than £35 per day over the last 12 months.
Demand in the housing market seems firm “Housing market demand strengthened again in July with house purchase approvals reaching 120,000 – almost 20% above the long term trend,” said Ms Earley. “Buyer interest remains robust as estate agents continue to report strong enquiries. However, fewer sellers willing to put their properties on the market is adding to already squeezed supply, which increases price pressure. High prices and little room for price negotiation could mean that many of these new enquiries do not come to fruition, but up until now new buyers have found both the appetite and the ability to overcome the affordability hurdle.”
Landlord demand
Buy-to-let landlord demand looks to remain strong for some time to come. Around two thirds of existing landlords have plans to extend their portfolios and many have access to finance from gearing their existing portfolios.
Loan-to-value ratios on buy-to-let lending (including remortgaging) has drifted up since the start of 2005. In the first half of 2006 almost two thirds of gross buy-to-let lending was at a loan-to-value ratio of 80% or more, compared with only 41% in the first half of 2005.
Homeowners increasing their borrowing
Owner-occupier borrowers are also managing to overcome the financing hurdle.
Many reports suggest that parents and family are increasingly funding deposits for their children. Nationwide analysis of mortgage lending data suggests that borrowers increase their borrowing by around 10% when remortgaging.
Based on a typical house purchase two years ago remortgaging now would release around £11,500 which, if used to help an average first-time buyer onto the housing ladder, would leave them only having to find a further £2,300 to fund a 10% deposit.
“As raising the deposit, rather than meeting the mortgage payment, is the biggest hurdle to first-time buyers, such a helping hand goes a long way,” said Ms Earley.
posted by tony at 5:32 PM
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