August 2010 Property Investors Factsheet

Please click on the link above to access the latest facts and figures relevant to UK property investors (note you will have to be a member of the Property Investor Hub which can be done quickly and easily here).

The majority of house price indices have pointed to small drops in prices (with the Halifax being the only exception, reporting a 0.6 % increase for July). Whilst Land Registry statistics have also indicated a slight increase in average house prices, this is widely viewed as a balancing out due to the 0.2 percent drop that was seen in May.  Additionally, the number of RICS surveyors (who largely rely on Land Registry data) reporting a rise in house prices has decreased by 9 percent since last month which generally adheres to the professional consensus that house prices are set to continue to fall marginally in the coming months.  The discount on auction properties has widened by 1.6 percent on the month representing a total of 17.6 percent, according to Fathom Consulting.

Mortgage products available have slightly lost their competitively when compared to previous months with TMW (The Mortgage Works) increasing the pay rate of their 80 percent loan to value product to 5.49 percent (previously 4.69) – attributed due to a rise a demand for what is currently a rare borrowing level.  However, results from the banks quarterly reports showed some encouraging signs with Northern Rock demonstrating it is sitting on a cash pile of more than £7 billion; HSBC revealing that its profits for the first half of 2010 had more than doubled to £7 billion (the bank recently announced a fixed 3.95 percent rate for residential property, widely predicted as a result of increased pressure by the government to begin expanding its loan book) and Barclays announcing that their profits have risen by 44 percent to £3.95 billion (they have subsequently initiated rate cuts as a result).

Whilst the bank base rate remained at 0.5 percent, broad ranged predictions with regards to its increase continued to be debated with former Bank of England deputy-governor, Sir John Gieve, stating that it will have to rise earlier and more sharply than expected to keep inflation under control (to 2.5 percent by July 2011) whereas the Ernst & Young ITEM Club predicted that they would not rise at all until the end of 2013 (assuming impending spending cuts come to fruition).  A poll by the Fair Investment Company illustrated that 67 percent of respondents thought the base rate would be higher than 0.5 percent by July 2011, with 30 percent predicting a half point increase to 1 percent and 29 percent believing it would hit 1.50 percent in 12 months time.  The Bank of England’s inflation benchmark, the Consumer Prices Index, is slowing from the high periods reached earlier in the year – but concerns prompted as to the effects of the impending VAT increase in January 2011 when the British Retail Consortium (BRC) predicted upward pressure on prices in the months ahead looking more likely.

Some other interesting statistics include a daily average of £23.35 million of loan write offs being undertaken by UK banks and building societies; slight decreases in the level of personal and household debt levels as well as a drop in the amount of interest being paid daily (full lending statistics available on the factsheet).  Whilst unemployment was reported to have dropped (to 7.8 percent), supplemetary statistics have shown that there are also approximately 5.87 million people who are on the dole in all but name (the Office of National Statistics figures only point to people who are looking for work).