Year on year figures perhaps help put things in perspective – this January figures were 1.1% down on last January’s, with an average price of £161,602.

Robert Gardner, of Nationwide, is reported as saying:

“January’s data does little to alter the picture of a sluggish market that has been evident since the summer. Indeed, the three-month-on-three-month measure of house prices, which is a better measure of the underlying trend, showed a fall of 0.5%, consistent with the gradual moderation in prices that has been in place since the summer of 2010. The outlook is still highly uncertain, but the most likely outcome is that the pattern of low transaction levels and prices moving sideways or modestly lower will continue through 2011.”

We have to assume that an increase in the cost of living, as evidenced by the latest inflation figures, has negatively effected demand for housing.  Will these latest figures cause the Bank of England to raise interest rates?  The general consensus seems to be that this will not happen until the second half of this year and even then the rise will be a gradual one.

As far as the housing market is concerned, the view taken by the experts seems to be that although prices will continue to fall this year we are not headed for a property market crash.

Despite this, the housing market is stagnant – borrowers unsurprisingly lack the confidence to take out new mortgages or increase existing ones.

Perhaps a sign of the times is that during December 2010 total lending to individuals reduced by £117m – this figure includes both secured and unsecured loans – only the third time this has happened since records began.

As a nation we continued to spend during the height of the credit crunch and in so doing fuelled a 1.2% recovery in the British economy last quarter – the best growth for 10 years or so. Now, however, it seems we have finally got the message – there are going to be cuts and job losses. So we are beginning to tighten our belts – moving us towards that dreaded double dip; among the economists and money men this phenomenon is known as the dead cat bounce, which would be funny if it wasn’t so very descriptive.

Now, I’m not sure if my next question is politically incorrect or not, but I’m going to ask it anyway: isn’t this sort of thing just talking us into that double dip? Isn’t it possible (probable) that all the negative chatter pushes Mr and Mrs Average to tighten their belts and stop spending? The new government have emphasised the need for cuts, and of course we do have to pay for our previous profligacy, but aren’t they just labouring the point to highlight the differences between their approach and the economic laxity of the outgoing government?

It’s all very well us being primed for what is to come but I worry that by painting such a negative picture we are simply building up the impetus for the cat to bounce even higher than it would have done anyway.

As a writer, rather than an economist, it would be interesting to hear your take on this issue – and I stand to be corrected if need be!

.

In summary, the largest percentage fall was in the West Midlands, where repossessions fell by 40% compared to the same period in 2008.  Meanwhile, the greatest number of repossessions per households occurred in Wales, where 1.4 properties out of every 1,000 were repossessed in the quarter, although this figure does represent a 34% fall when compared last year.

The figures below represent:

1. Total number of repossessions for the period
2. Percentage rise or fall on Q3 2008
3. Number of repossessions per 1,000 households

• Total England & Wales: 24,938; down 34%; 1.1
• England only: 23,205; down 34%; 1.1

Regional Break Down

• North East: 1,465; down 34% ; 1.3
• North West: 3,875; down 37%; 1.3
• Yorkshire and the Humber: 2,830; down 29%; 1.3
• East Midlands: 2,155; down 33%; 1.2
• West Midlands: 2,480; down 40%; 1.1
• East: 2,360; down 31%; 1.0
• London: 3,425; down 36%; 1.1
• South East: 2,925; down 34%; 0.8
• South West: 1,700; down 32%; 0.8
• Wales: 1,710; down 34%; 1.4

For even greater regional breakdown of repossession figures for the quarter, click on the relevant region above.

The Housing Market: Reasons to be Cheerful

The Council of Mortgage Lenders Quarter 3 Report will not be available until the end of this month; however, with a  Quarter 2 report headline that reads Possessions Fall and Arrears Flatten, things looked good going into the third quarter.  We will, of course, be reporting in full when the latest figures are issued later this week; however there is optimism, albeit faint, in the the CML market commentary for October 2009 .

• We have seen some activity in the wholesale funding markets, allowing several highly rated institutions access to new funding.
• Confidence in the housing market and economy at large has improved, and house prices have now retraced much of the ground lost over in the past year.
• Unemployment has not risen by as much as might have been feared – we have seen the first slowing in the rate of increase in the current cycle.
• While the number out of work is rising, it is possible that the peak may be rather lower and earlier than previously expected.
• Low inflation figures support the view that monetary policy can remain supportive for some time to come.

Being realistic, however, recovery will be slow and, inevitably, work on rebalancing the public finances won’t start until after the general election.  This means that growth in the economy will be limited until Spring 2010.

The Job Market: More Reasons to be Cheerful

In the grand scheme of things, it is the job market that affects the housing market; in very simple terms, when people are fearful of losing their jobs they stop spending and there is less money in the economy.  People tend to ‘improve rather than move’ and the market stagnates.  And, of course, mortgage arrears rise, leading to an increase in the number of properties being repossessed.

For these reasons, the recent unemployment figures are encouraging.  Although the number of people out of work continues to rise – by 88,000 to 2.47 million in the second quarter of 2009 – this was the smallest increase in over a year.  Although due in part to employers and employees exploring alternatives such as pay freezes and reduced hours rather than redundancy, a lower likelihood of being made unemployed should boost consumer confidence.

The CML updated forecasts for the year, which will be released on 12th November, should make interesting reading.

Who are the Council of Mortgage Lenders?

The Council of Mortgage Lenders (CML) is the trade association for the mortgage lending industry.  That is, they are the representative voice for the residential mortgage lending industry and the central provider of economic, statistical, legal, research and other market information. This, of course, is what makes their published statistics so valuable to anybody who is commentating on the housing market.

Financial Reporting

When all is said and done, the CML is essential a financial organisation and, therefore, their reports tend to come out at key points during the fiscal year.  The financial world splits its calendars into quarters, each of which is three months long.  To complicate things even further, the quarters are arranged to fit in with the tax year rather than the calendar year!  Here are the dates of the financial quarters:

• Quarter 1 : April to June
• Quarter 2:  July to September
• Quarter 3 : October to December
• Quarter 4 : January to March

Obviously at the end of a quarter it takes time for financial institutions and organisations to collate the data, so reports for, say, Quarter 2, will usually be published around the end of October.  So, it doesn’t take a huge leap of imagination to guess what we’ll be concentrating for the next few posts!

UK House Repossessions

There were approximately 10,400 properties repossessed in the Q4 2008, which is down from 11,100 in Q3 2008. Despite this minute fall, the number of repossessions in the quarter was nearly double that of the record in Q4 of 2007.

The Ministry of Justice data also released in February 2008 shows a 35% drop in the number of claims for possession made by lenders. The Ministry of Justice attributes this to the launch of the Mortgage Pre-Action Protocol. Do we agree or is it simply that people pockets were not deep enough coupled together with job losses. The MoJ aim was to reduce the quantity of claims made by all parties and for them to explore alternative options to legal action.

However, Capital Economics property economist Ed Stansfield said mortgage possessions were on course to match, or exceed their previous peak of 75,500 seen in 1991. “Unemployment is set to reach double digit rates as the recession runs its course. We believe that this will have a greater impact on mortgage arrears than either government initiatives or lower interest rates.”

Senior economist Brigid O’Leary from RICS said “the data provided welcome indications that government intervention to minimise possessions was having some effect. In spite of increasingly difficult economic circumstances, both the number of houses taken into possession and the number of mortgage possession actions issued actually fell,” she said.

“However, the proportion of mortgages in arrears continued to increase, and that trend is likely to continue as economic circumstances deteriorate.”

We are not out of the woods that is for sure, loss of jobs and people on fixed mortgages are paying the price of these uncertain times.

Do you think house repossessions will increase in 2009, compared to 2008?

London house repossession – what’s happening in the City?

All of the UK’s regions are suffering, with Wales in particular facing an alarming rise in home repossessions. But what’s happening in London?

London, house repossession percentages during the first quarter of 2008 were actually lower than 2007.

London is traditionally viewed as a special case, with much higher house prices than the rest of the UK. Some view London like its own country, separate from the rest of the UK due to the immense amounts of cash flowing in and out. People who work in London are generally paid more than those who work outside the capital. Interest rises hit huge mortgage repayments hard and a quarter of a percent rise on an enormous mortgage can be crippling.

But, despite the risks, London has fared much better than the regions. But London house repossessions are predicted to rise.

Why has London fared better than the rest of the UK? There are many reasons, however, the word ‘scarcity’ has to be mentioned. Scarcity of land and the fact that people have to live somewhere close to work make any house or flat in London more valuable and its scarcity less likely to be diluted through mass development on say farmland… what farmland? Exactly!

Note the few London boroughs that did have higher repossessions when compared to 2007. They are areas with more land and generally relaxed planning regulations both of which contribute to increased development. Maybe supply of dwellings increased too quickly in these areas and diluted the value of existing homes and flats?

We’ll compare the number of London house repossession orders made in the city’s county courts in quarter one 2007 to the same time period in 2008.

London house repossessions – the facts

•    Barnet endured 148 mortgage repossession orders during January to March 2008, a reduction of 3% on the same period last year.
•    Bow 441, 33% fewer repossession orders than last year.
•    Brentford 194, 24% more than in 2007
•    Bromley 278, up 14%
•    Central London 77, down 13%
•    Clerkenwell and Shoreditch 163, down 18%
•    Croydon 421, down 2%
•    Edmonton 342, down 4%
•    Kingston–on-Thames 78, down 7%
•    Lambeth 268, down 8%
•    Mayors and City 0
•    Romford 290, up 11%
•    Uxbridge 158, up 10%
•    Wandsworth 104, down 24%
•    West London 42, down 48%
•    Willesden 269, up 31%
•    Other London 400, up 3%

London house repossession – dramatic swings

•    There’s a tremendous range of London house repossession figures for London. West London has seen a 48% reduction in mortgage repossession orders over the same period in 2007, Bow 33% fewer and Wandsworth 24% less.

•    In stark contrast, Willesden has seen an increase of 31% and Brentford a sharp rise of 24%
See the full story! You’ll find the Ministry of Justice’s latest figures for London house repossessions (May 2008) at: Justice.gov.uk

Why do you think that repossessions increased in the areas highlighted above and not others? Make a comment below and contribute to this article.

No surprise that there has been a marked increase throughout the UK.

• The figures report how many possession proceedings have been issued, and how many orders for possession have been made by the county courts.

• Since many of the orders made will not have been enforced these figures do not reflect how many properties have actually been taken into possession.

• Figures on properties actually being taken into possession are published twice a year by the Council of Mortgage Lenders. Further information can also be found on their website (www.cml.org.uk).

Mortgage possession actions

• 39,078 mortgage possession claims were issued on a seasonally adjusted basis, 17% higher than in the second quarter of 2007 and with no change than in the first quarter of 2008.

• 28,658 mortgage possession orders were made on a seasonally adjusted basis, 24% higher than in the second quarter of 2007 and 4% higher than in the first quarter of 2008.

• 48% of mortgage possession orders were suspended compared to 46% in the second quarter of 2007 and 47% in the first quarter of 2008

Landlord possession actions

• 37,609 landlord possession claims were issued using the standard and accelerated possession procedures on a seasonally adjusted basis, 2% higher than in the second quarter of 2007 and the same as the first quarter of 2008.

• 28,042 landlord possession orders were made through the standard and accelerated possession procedures on a seasonally adjusted basis, 8% higher than in the second quarter of 2007 and 1% lower than in the first quarter of 2008.

• 40% of landlord possession orders made through the standard and accelerated possession procedures were suspended compared to 39% in the second quarter of 2007 and 41% in the first quarter of 2008.

We suggest that you read the full report, the statistics are incredible to say the least. Landlord possessions have not changed too much for the last 5 years, its the mortgage repossessions that have been increasing at a dramatic rate. Too many people have been caught out in negative equity coupled together with interest rate hikes. If you borrowed at 4% and now have to pay 6%… your mortgage payments just increased by 50%.

Read the full PDF here:
http://www.justice.gov.uk/docs/stats-mortgage-land-q2-2008.pdf