Is London becoming Manhattan-on-Thames?  That’s the question posed by Ian Cowie in today’s Daily Telegraph.

Now in their thirty-fifth year of issuing reports on the housing market, London estate agent, Knight Frank, claim the capital is bucking the national downward trend in house prices, hitting new heights in December 2011 when London property prices were up 7% on their pre-credit crisis levels.

As far back as October 2010, Cowie explained the contradictory London market like this:

“… the international popularity ofBritain’s capital city, not just as a pleasant place to live but also as a relatively secure location to park large amounts of wealth. Russian oligarchs investing millions of pounds in Highgate mansions and American film stars in Hampstead need not fear that their property will be seized by local or central government, as can happen in other countries.”

Foreign buyers continue to inflate the London market – despite the current uncertainty triggered by the problems with the Euro and total London property market growth in 2011 was 12.1%.

The rest of the country is not faring quite so well: mortgage approvals continue to run at just 50% of the usual level and those ‘in the know,’ Halifax and Nationwide, for example, continue to predict falling prices. Halifax reported an annual fall-off of 1.3% in house prices over 2011.

While the London trend is fortunate for those who already own property, ordinary Londoners won’t stand a chance of buying in such a market – they will be forced to rent, which will, of course, push rents higher, or commute from the suburbs – and travel doesn’t come cheap nowadays, even if you can afford the expense of a season ticket. A twelve-month season ticket from Luton to London St Pancras comes in at £3,604…

So, while London property owners sit pretty and house owners in the rest of the country pray for an upturn in the market, one suspects the younger generation, desperate to gain a foothold on the property ladder, are praying for the UK property market to crash.

Are we losing the plot here? On Friday of last week, we reported that:

According to the Nationwide:

“In August prices fell by 0.9%, following a smaller, 0.5% decline in July. The average UK house price is now around £166,500.
Prices fell 0.9% last month, following a 0.5% decline in July, Nationwide said, adding that it was the first time that prices had fallen for two consecutive months since February 2009.”

One week later and it’s time for the Halifax view of the housing market.

According to the Halifax:

UK house prices edged up 0.2p% in August, confounding expectations of a fall as a strengthening economic recovery helped support demand. The latest monthly increase follows a rise of 0.7% in July and reverses most of the falls seen during the previous three months. The average home now costs £167,953, a 9% increase on the low reached in April last year, but still 16% below the August 2007 peak

Confused? Yes, so are we.

Perhaps we should look to the Bank of England for clarification?

According to the Bank of England:

Bank of England data showed that only 48,722 mortgages were approved for house purchase during July, a level that economists consider to be consistent with house price falls.

A case of ‘you pay your money and take your choice’ perhaps.

Or maybe it something to do with ‘lies, damned lies and statistics?’

Figures released by the Nationwide Building Society today reveal that house prices have fallen for the second month in a row, the first time this has happened since February 2009.

In August prices fell by 0.9%, following a smaller, 0.5% decline in July. The average UK house price is now around £166,500.

Prices fell 0.9% last month, following a 0.5% decline in July, Nationwide said, adding that it was the first time that prices had fallen for two consecutive months since February 2009.

The average house price now stands at just over £166,500. Nationwide said prices had “essentially stagnated over the summer,” and explained that the increase in house sellers has given house buyers greater bargaining powers. However, Martin Gahbauer, chief economist for the building society, warned: “Given that the price increases of the last year had gotten ahead of the recovery in the wider economy, the current correction is not an unhealthy development.”

Richard Hatch of Carter Jonas property consultancy was rather more upbeat in his interpretation of the figures, saying: “We do not expect two months of consecutive declines to be the beginning of a sharper downward price trend. The market is simply readjusting after getting ahead of itself. The market is stabilising, not collapsing.”

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The good news comes with a word of warning from Rightmove’s commercial director, Miles Shipside who said: “with weather disruptions out of the way, more sellers are coming to market and they appear to be ignoring the uncertainties facing potential buyers. Prices are up, but so is choice, and the two are not happy bedfellows in the longer term. This year more than ever the traditional spring seller window is a price-sensitive one. If asking prices continue to rise, all but the most popular locations are building themselves up for some of the gains to be lost later in the year.”

In the same report, we hear that sellers are asking 6.0 percent more for their homes than a year ago, up from 5.3 percent in March. During 2008 house prices dropped up to 20% of their value, although almost 50% of these losses were recouped in the second half of 2009, helped by record low official interest rates and tight supply.

House Price Index
is a government site publishing monthly housing market statistics. For serious research, this site and its associated pages are a mine of information: you will find year-on-year comparisons; statistics relating to new buyers and owner-occupiers; regional variations and all manner of related data

Our Property
provides information from the Land Registry on the actual selling prices of UK wide property; in short, this site helps you see beyond the estate agents’ patter. If you’re looking to buy, you’ll know whether the asking price is realistic or inflated and, if you’re selling, you’ll be more realistic about what your property will achieve.

Property Snake
is the opposite of the property ladder in that it shows you properties where the selling price has been reduced. The site is run by an anonymous owner in his or her spare time; having said that, we tried it out with a couple of post codes and the information was remarkably accurate.

Priced Out
is a campaigning website for first time buyers and provides some very useful links for this particular group.

UK Property Auctions
does exactly what it says on the tin – it is a portal to the UK property auction market.

Bank of England
this is self-explanatory. However this link will take you straight to the Monetary Policy decision page where you will find the latest on interest rates.

Which Way Homes
explains the ups and downs of the property market in a down-to-earth, jargon-free way.

If you find other useful sites or would like to comment on the sites listed above, why not tell us on the forum?

Property Bee works alongside the agents listed below and shows any changes in price and details since the property was listed. In brief, you can find the following information:

• When the property was put on the market
  
• Price changes (up and down) since the property was listed
  
• Whether the property has gone STC and come back onto the market
  
• Any changes to the details since the property was listed
  

This is powerful information to have in hand when bargaining.

What Estate Agents does Property Bee Work with?

What does Property Bee Cost?

Nothing! Property Bee is free to download and use.

Firefox

If you don’t use Firefox, that’s no problem, although it is rated as one of the best internet browsers available. However, you can hang on to your favourite browser; Firefox can be installed along side your existing Web browser and you can even use both at the same time if you wish. Firefox is available for Windows, Linux and Macs.

To install Firefox: go to mozilla.org and follow the prompts.

To use Property Bee: go to Property-Bee and click the ‘download’ button on the left and follow the prompts. Next time you search for properties on any of the linked agents, any alterations in prices and details will appear as if by magic.

Free Property Valuation

Here’s a guide to some of the best:

What Price are Houses on your Street Fetching?

Don’t, whatever you do, make the mistake of going to a website that charges you for this information when you can get it for free! Instead, go to any of the following sites and key in your postcode or the name of a street you’re interested in, et voila, you will see what houses in that area are currently going for. Oh, and your neighbour’s house, the one that sold last week, won’t appear for about three months…

A word to the wise about getting excited when you see the prices for houses in your street in the local estate agents’ windows – these prices are set with a margin for ‘knocking down;’ asking prices are rarely achieved.

How to Find Properties that have Dropped the Asking Price

It is thought that better than expected unemployment rates are helping the market – although unemployment rates have risen considerably, the fact that many employers have opted to reduce working hours and pay rather than make employees redundant has meant that the unemployment figures are not as high as had been expected.

These figures were published the day after the  Bank of England reported that there were 57,345 approved property purchase loans in October – the 11th consecutive monthly increase.  However, there are signs that the positive trend is slowing down and economists are still predicting a return of falling house prices for 2010.

Every coin has two sides, however, and it was interesting to read that, according to a Barclays survey, twice as many people plan to increase their investment in residential and commercial property as intend to reduce.  The survey reveals that real estate investment among wealthy individuals is set to rise from its current 28% to 30% of the average portfolio for the next few years.  One of the more surprising findings was that  emotional attachment to bricks and mortar often means that rich investors less rigorous in measuring the return on their investment and can, in fact, be unwilling to sell real estate at short notice.  This despite the fact that properties used as the owner’s principle residence were excluded from the figures.

Of British and Indian investors, almost 30% have more than 50% of their wealth tied up in property and, of those respondents with more than £30 million, 40% had over half their wealth in bricks and mortar.

Well, if it’s good enough for them… read more about opportunities in the housing market

New House Reservations Up by 34%

First the good news.

In yesterday’s Independent newspaper housebuilders, Barratt, revealed that at the beginning of November their forward order book stood at £846.6 million, compared with £817.7 million in 2008.  It must be true – it said so in the Financial Times too!

Barratt, the UK’s second largest independent housebuilder when measured by market value, said that net private reservations for its sites were running 34% ahead of the same time last year.  However, once again, words of caution appeared in what was otherwise positive news when Mark Clare, the company’s chief executive, warned:

While trading conditions in the housing market have improved, activity levels will remain constrained until the availability of mortgage finance increases, particularly at higher loan-to-value levels.

Barratt’s main competitor, Persimmon Homes, who are number one in terms of market value, issued a similar statement at the beginning of the week, reporting that their forward order books are also well ahead of last year.  In the words of Persimmon Chief executive, Mike Farley:  The market is encouraging. Buyers are back.

UK Housing Market May Not Recover Peak Until 2014 

However, in a report issued today (20th November) nine of 14 economists and estate agents surveyed said they foresee a decline in 2010 after a surprise rebound this year. They predict an average drop of about 1.6 percent, with estimates ranging from a loss of 10 percent to a rise of the same magnitude.

Seema Shah, a housing economist at Capital Economics, said that prices needed to fall a further 20-25% to get back to their long-term trend.  She is of the opinion that the 7%  gain in average prices since April has beend riven by a shortage of properties for sale.  It won’t be sustained, she said.

Although Land Registry figures are compiled from completed transactions and, therefore, lag behind other key indicators, they are still seen as the most authoritative.  The Registry further reports that the annual rate of deflation is now down to 5.6% and the average London house price is now only 3.2% behind the September 2008 level.   Sadly, house prices in Wales and the North East continued to fall.

The biggest price fall was in flats and maisonettes, which were down 6.8% on September 2008 levels, with detached houses running at 4.3% lower.

It will be interesting to see the Nationwide Building Society house price index for October, which is due for release tomorrow.  Last month, as we reported, it reported rising prices for the fifth consecutive month putting the average property price back on par to September 2008 levels.