Buying, selling and letting - December, 2006

How one first-time buyer found success, thanks to shared ownership

La Toyah McAllister knows a thing or two about the importance of a place to call home. For six years she has worked for St Mungos, a London homeless charity that helps hundreds of vulnerable and homeless people every year find a safe place to live.
‘I feel extremely lucky,’ said La Toyah. ‘I work with people who’ve not had the same opportunities I have had. It can sometimes take them many years to find even a rented property of their own.’
It was just over a year ago that La Toyah decided to change her insecure housing situation. Since she was 17 she had rented homes with others. Sometimes it was a shared house with four or five people she hardly knew, and there would often be rows about the washing up, paying the rent or cleaning the house. Other times she lived with good friends, but they would come and go – travelling, moving jobs, moving on – meaning La Toyah could rarely plan ahead. Plus, her monthly rent was paying off someone else’s mortgage.

‘The place I was living was great, but it relied on my having someone else to share with, and I started to feel that renting was dead money.’
Last year, prompted by yet another friend having to move out, La Toyah decided she wanted to buy a place of her own. But for a single person earning £30,000 a year, affording a flat alone was impossible.
‘I went to see a mortgage advisor, and found out I could borrow just £120,000. That wouldn’t buy anything in London, particularly in the area I wanted to live – Stoke Newington, where I grew up.’
Thanks to her job, La Toyah already knew about the benefits of shared ownership. Once she knew how much she could borrow, she signed up with Metropolitan Home Ownership (MHO) to find a place she could part-buy by herself.

‘The signing up process was very quick, and within weeks I was looking at places. MHO kept me informed and were very helpful.
La Toyah took the plunge having viewed newly built apartments at King House in Newington Green.
‘It was the fourth place I saw, and I knew as soon as I walked in I knew it was the one. The complex just had a really good feeling, and the place felt right. It has really distinctive windows, laminate flooring throughout, two bedrooms and a great open-plan kitchen and living space, exactly what I was looking for. It’s a gated complex, which makes it really secure.’
The value of the flat was £200,000, and La Toyah took out a £50,000 mortgage to buy a quarter of the property. She pays rent to MHO on the remaining 75 percent. The flat costs her around £215 a month for her mortgage, and £500 in rent and service charges.

The scheme gives her a foot on the property ladder and allows her to slowly invest money in her own home, but is affordable on her salary. For the first time, La Toyah feels she has her own place.
‘Shared ownership really works for me. It gives people, particularly single people, an investment and a property in London. It’s given me the freedom to live by myself, which I wanted so much.
‘It took me a good few months to get used to it, and even now I wake up and can’t believe that it’s my flat. It’s a constant “wow” to have your own property.
‘MHO made buying my own place a really positive experience. Throughout the process, they were really good at keeping the information flowing. I never felt that they just wanted me in so they could start collecting rent – that really made the difference.’

Now La Toyah has settled in and begun decorating, and her finances have stabilised, she’s already thinking about how she can buy more of her property. She can gradually increase the share of the property she owns, paying gradually less rent and increasing her investment. A year ago, La Toyah didn’t even think she could get on the housing ladder. Now she’s thinking of how to step up a few more rungs.
‘I can’t believe the opportunities shared ownership has brought,’ she said.

New year’s resolutions – every year we make them… and almost every year we break them.
So this year, instead of the usual promises to lose weight, get fit or quit smoking, why not ring the changes - and pledge to do something a bit different to benefit your home?
But remember, it’s important to choose realistic, actionable goals and reward yourself for your achievements – that way you’ll help to ensure your resolutions become real successes.

Leading housebuilder George Wimpey South Midlands has compiled its top ten new year resolutions for the home that everyone can follow in 2006:

·    Clear out the clutter. Chances are that if you haven’t needed an item since the last time you made your new year’s resolutions, it’s just taking up space that could be used for something else. Bin it, car boot it, or give it to charity.
·    Be environmentally friendly. Resolve to help the planet by recycling your paper, glass and cans – and saving gas and electricity by taking steps to make your home more energy efficient.
·    Add a touch of colour. Paints, wallcoverings and furniture come in a huge variety of colours and designs - so make this the year to give your home a new look.
·    Get to grips with DIY. We’re all guilty of leaving some household jobs half finished – or even failing to get started despite our good intentions. The new year is the perfect time to tackle those DIY chores we put off in 2005 – especially with the January sales offering bargain power-tools and cut-price fixtures and fittings.
·    Safety first. Nearly three million people go to hospital each year after accidents in the home. Either invest in a home first aid kit or, if you already have one, make sure it’s regularly replenished.
·    Get organised. Imagine how much time you’ll save during the year if you can find everything you need straightaway.
·    Be secure. Review your home security - not just an alarm, but also window locks and security lighting. All too often it’s one of those jobs we put off – until it’s too late!
·    Alarm bells. Get smoke alarms fitted and, if you’ve already got them in your home, be sure to test them regularly. It’s also a good idea to have a fire escape plan so that everyone knows the quickest and safest routes out of your home in the event of a fire.
·    Delegate. Lighten the load this year by delegating the household chores to ensure every member of the family does their share.
·    Clean sweep. Why wait until the spring to give your home a thorough once-over? The new year is the perfect time to deep clean carpets and curtains, wash windows and generally give your home a tidy.

Jason Colmer, George Wimpey South Midlands’ Sales and Marketing Director, says: “Every new year we make resolutions to try and improve our lives – but seldom do we consider what we can do to improve our homes.

“Most of our suggestions are simple and inexpensive but, by making a new year’s resolution to get them done, means we can all look forward to a happier, safer year in 2006.”

Holidays saw healthy sales

Home sales were healthy before and during the holiday period, according to the latest figures from the National Association of Estate Agents (NAEA). Following a difficult year, the December 2005 market appeared to be back on track, with sales figures up on the same time the previous year.
Consumer confidence seemed to be on the up as agents across the country reported record Christmas sales. Buyers who saw an opportunity, or who needed to purchase before Christmas, helped push sales through. Meanwhile, others continued to employ a ‘wait and see’ strategy over the festive period; with the average number of registered house buyers on NAEA estate agents’ books falling once again in December.
As expected for this traditionally quiet time of year, the number of sales agreed decreased between November and December – from 11 per agent to eight. However, the market was still healthy with sales up 33.3 per cent compared with the previous December. Encouragingly, the latest figures are back up to the level of those witnessed during December 2002 and 2003, demonstrating tangible signs of recovery after an uncertain year.

First-time buyers return

The percentage of buyers who are first-timers has risen steadily in the past few years, according to research from Propertyfinder.com. The figure is now at 37 per cent, its highest level in 15 months. At its lowest, a few years ago, the percentage of first-time buyers was an unhealthy 29 per cent. This bodes well as a sign of confidence in the present housing market, although the market has some distance to go first-time-buyer-wise before the long-term average of 46 per cent is once again attained..
Jim Buckle, chief executive officer of Propertyfinder.com, says, ‘The fact that more first-time buyers are returning to search for property is a very positive sign of a healthy balance returning to the housing market. The numbers are still below the long-run average, but it is encouraging to see more people gaining the confidence to take their first step on to the housing ladder.’

Rate of inflation slows

Inflation slowed to its weakest pace in five months in November, mainly due to cheaper petrol and air tickets, according to the Office for National Statistics (ONS). This development has some predicting a cut in interest rates in early 2006.
The price of energy refused to follow the downward trend, however, as gas and electricity prices climbed at their fastest rate in 22 years – due to limited supplies of gas and predictions of a particuarly cold winter to come.
The ONS said the consumer price index last month stood 2.1 per cent higher than a year ago, the smallest rise since June. This figure is down from 2.3 per cent in October, and very close to the Bank of England's two per cent target; this has led to predictions of an interest rate cut, although Mervyn King, governor of the Bank, has made his reluctance known.

With this winter expected to be particularly harsh, it is important to protect your home from the elements – particularly for older residents

Age Concern Insurance Services (ACIS) predicts a significant increase in insurance claims this winter from home owners who fail to adequately protect their homes against what meteorologists have dubbed the ‘freeze of the decade’.
‘Patterns in the North Atlantic sea temperature suggest that this winter will be significantly colder than the mild winters we have experienced of late,’ said the Met Office’s Barry Gromett.
Due to the poor standard of some housing in the UK, many homes are susceptible to cold weather damage such as cracked pipes, damp or faulty radiators. Older people are most at risk from such effects as they tend to live in older houses, which are often poorly insulated and harder to heat.
In the face of fast-rising council taxes and other expenditures, many older people will struggle to meet the cost of an emergency call out this winter. However, a few precautionary measures can ensure that homes are adequately protected.

In order to help protect against the worst of the weather, David Hoyle, Age Concern Insurance Services, recommends the ACIS Winter Home MOT. ‘As we are now well into the heart of the winter, and with temperatures set to drop, home owners need to take action now to ensure that their home is protected – and of course to check and double check that they have adequate home cover in place.’
This simple five-step plan will help home owners reduce the risk of winter weather damage to their property. The key recommendations are:

Make sure you know where your mains water stop valve is and that you can turn it on and off in case of a burst pipe
Make sure that your central heating is working efficiently, checking for any leaking pipes or radiators
Ensure fences and gates are properly maintained and repaired to minimise damage caused by strong winds
Get your roof checked for any cracked or dislodged tiles and your gutters for cracks or debris
Make sure you have adequate home and contents insurance and check the precise level of cover your policy offers

Age Concern Insurance Services (ACIS) offers home and contents insurance – and it is one of the few insurance providers who offers a very low minimum sum insured, thereby allowing older people with fewer possessions to pay only for the cover they need.
For a free, no-obligation quotation or immediate cover call 0845 606 5075. ACIS also produces a free leaflet entitled A Practical Guide For Protecting & Maintaining Your Home. To obtain your copy, visit your local Age Concern or call 0800 169 2700.

Mortgage approvals up

Mortgage approvals for house purchases rose in November to its highest level for 18 months, a sign that the housing market is recovering from its recent doldrums.
According to new figures by the Bank of England, there were 115,000 new approvals for mortgages in November, up from 113,000 in October and the highest total since April 2004. The total value of approved loans rose to £28.2 billion, up from £27.6 billion in October.
One reason for this, say analysts, is continued momentum from the August interest rate cut. There is growing confidence in the market after a year of stagnation. Geoffrey Dicks, of RBS Capital Markets, said, ‘Every month’s data reinforces the message that activity in the housing market is at, if not above, normal levels and that the momentum is coming from new house purchase.’

DIY tops resolution lists

Three of the four top New Year’s resolutions involve home improvement, according to a poll by Propertyfinder.com. Thirty-six per cent of respondents plan to fit a new kitchen or bathroom in their homes in 2006, while 25 per cent are keen to give their garden a makeover and 18 per cent are planning other DIY improvements for the New Year.

Jim Buckle, CEO of Propertyfinder.com, says, ‘Home improvements are high on the list of resolutions for 2006. People often make improvements to their homes before putting them on the market, which is interesting, as we have recently predicted that transaction volumes could rise by 30 per cent in the new year. Many of us have a tendency to make grand plans for our homes at the start of the new year, which can fall by the wayside by February. But for those looking to sell, home improvements can add considerable value and sprucing up the garden or doing some painting and decorating are the cheapest ways to increase the saleability of your home.’

A significant 26 per cent of respondents said that they plan to increase the energy efficiency of their homes in 2006. This is unsurprising, as many will be feeling the pinch financially in this year. Propertyfinder.com’s recent energy survey showed that an overwhelming 75 per cent of respondents would become more energy efficient if it meant saving money on fuel bills. A comparatively low 49 per cent of respondents said that they would be motivated by concern for the environment.
Given that saving money is such a priority for many people this year, it is surprising that only 4.7 per cent of respondents plan to remortgage in 2006. However, with interest rates tipped to drop again in the 2006, the potential savings from remortgaging look set to increase.

Consolidating legislation to reduce the burden on businesses is a key platform for the government’s regulatory review. But, according to ARMA, the Association of Residential Managing Agents, this relative ease of use and understanding demands a large learning curve at the start. Recent changes to fire regulations – the most far-reaching for 30 years – are a case in point, says ARMA.

Those responsible for managing residential blocks need to ensure they understand recent changes to fire safety regulations. One expert, Phil Jones, from Quantum Risk Management, explains: ‘From 1 October 2006, there has been a new Regulatory Reform (Fire Safety) Order which will mean that the onus for assessing risk in the common parts of residential building falls to the owners, managers or employers of those working in apartment blocks.
‘The emphasis is on prevention and risk assessments which must be carried out by what the regulations describe as a “competent” person.’

Another expert, David Foster, ARMA’s Health and Safety consultant and a director of Eljay Health and Safety, agrees. ‘The new Order seems to have adopted a common-sense approach. People who are applying themselves to fire safety in a sensible manner have nothing to fear from the new regulations. In fact, it should assist them. However the legal requirement for risk assessments and for them to be undertaken by competent persons should not be ignored.’
The Order provides a risk assessment-based system with specific people (i.e. ‘responsible persons’) charged with the responsibility for safety in any premises they manage or own. Where there is more than one ‘responsible person’ the law requires them to co-operate.
Until October there were two major pieces of specific fire safety legislation – the Fire Precautions Act 1971 and the Fire Precautions (Workplace) Regulations 1997 [amended]. These are based on very different philosophies. The first of these ensures that in the event of a fire, people can evacuate the building safely; the second puts the onus on employers to identify – and eliminate – risk.

Add to these pieces of legislation the myriad of additional fire safety regulations and the situation until now has become complex and confusing. Phil Jones has high hopes of the newly-introduced regulations cutting through this complexity and providing a main port of call. However, he says: ‘In principle the regulators appear to have succeeded in achieving their goal which is to reduce burdensome layers of legislation. However, we shall have to wait over the coming months and years to see how the enforcement decisions interpret the new legislation.’
The main duty holder is the ‘responsible person’ in relation to the premises. It should always be remembered that in the case of a residential block, the common parts form a place of work for a number of different people, as well as forming the link to someone’s home. Employers and managers therefore must ensure the safety of employees as well as the well-being of the residents using the building.
Undertaking a single risk assessment is not sufficient. Regular reviews must be carried out with such factors as dangerous substances stored or used on the premises kept under close scrutiny.

Where more than five people are employed, risk assessments must record significant findings, safety measures taken and people identified as being especially ‘at risk’. Training, communication and provision of equipment are all part of the duties of the ‘responsible person’.
A further key issue for property managers is the need to ensure that emergency exit routes are kept clear at all times. This is not always an easy achievement in a residential block but again the ‘responsible person’ has an overriding duty of care to ensure that exits are not obstructed and are clearly marked – with doors opening outwards.

Fire Certificates will no longer be issued by the Fire Authority on the enactment of the new Order. However, where a Fire Certificate is in force and reflects current standards this may be used as part of the fire risk assessment process.
The ‘responsible person’ has an over-riding duty to see to this but he or she must ensure that any person they appoint to assist with or undertake any preventative or protective measures is ‘competent’. Contravention of the regulations can mean more than a fine. Phil Jones cautions: ‘A responsible person commits an offence if he or she fails to comply with the duties imposed by the Order. These are prosecutable through the courts, and fines or even imprisonment can result’.

For further information call ARMA’s Secretariat on 020 7978 2607 or visit arma.co.uk

Research from buy-to-let specialist Landlord Mortgages  reveals that 25 per cent of landlords have refinanced over the last year to create ‘war chests’ in anticipation of a softening housing market. The money they put by is earmarked to allow them to take full advantage of lower prices.
Lee Grandin, Managing Director, Landlord Mortgages, says, ‘Landlords are preparing themselves for a much-publicised softening property market by refinancing their portfolios rather than trimming them down. The benefits of this are two-fold: investors avoid capital gains liabilities and put themselves in a strong position to snap up potential bargain properties if the property bubble bursts.

‘The experienced landlord will be taking advantage of this ‘cheap’ money and will be ready to make the most of an uncertain market. At Landlord Mortgages we are seeing a great deal of ‘pound cost averaging’ in the landlord community whereby investors even out house price fluctuations by buying at regular intervals, thus averaging out the returns over a longer period of time.
‘For those landlords whose portfolio needs external management, fees will be a factor in keeping margins to a satisfactory level and as a result landlords will need to review the deals their lettings companies offer. Most companies charge approximately 15 per cent for full management but the recently launched www.lettingagent.com charges 8 per cent or less. So if landlords are paying more than this they need to ask their management companies why.’

House prices in England and Wales showed another significant rise in October, according to figures from the Land Registry. The rise of 1.2 per cent in October was the second month in a row that the figure had increased by over a percentage point.
The average home price in England and Wales is now £171,709.
The overall figure for house price inflation was seven per cent, with the brunt of the increase borne in the South, which has seen overall annual house price inflation increase by 9.6 per cent in London and 8.1 per cent in the South East. The two regions saw respective monthly rises of 1.6 and 1.9 per cent, with London houses now costing an average of £309,432.
While first-time buyers in or around the capital face increasing difficulty and hardship trying to get on the housing ladder, the news was better in the North East where, despite a monthly rise of 2.9 per cent, the annual rise has been a below-average 5.8 per cent with the average price now £125,660.

Despite high demand for property in catchment areas for schools that are seen as high-quality, the value-added-premium that potential buyers are willing to pay for the privilege is falling, says RICS (Royal Institution of Chartered Surveyors) in a recent survey.
When a similar survey was last conducted, in August 2003, estate agents suggested buyers were willing to pay a 12 percent premium. With the exception of London, this percentage figure has fallen to eight percent, with the premium for primary schools lower than for secondary schools. Due to rising house prices the actual figure being paid has remained unchanged at £16,000.
The latest figures suggest that the substantial rise in house prices has led to affordability difficulties in the areas close to good schools, which in turn is putting a lid on prices in these sought after locations.

Jeremy Leaf, RICS spokesperson, says, ‘A secondary school with a good reputation can cause mayhem in a local property market. Buyers with children of school age will do and pay anything to get their children a place. However, our latest figures suggest some people are simply being priced out of the market in these key locations.
‘It is quite normal for potential buyers to check the local Ofsted reports before they read the particulars for their preferred properties. The education effect on property prices can extend well beyond the school run boundaries.’
Some estate agents, responding to the questionnaire raised the point that properties more suited to non-family purchasers can actually suffer because of their close proximity to a secondary school where the heavy traffic caused by school runs and children loitering around the premises out of school hours can be unappealing.

This year, it certainly seems that what an increasing number of people want for Christmas is less debt. Compared to a survey conducted last year, where 18 per cent had used their Christmas bonus to pay off debt, this year 26 per cent of people surveyed who received a bonus intended to use their bonus to reduce the amount they owe. 
With the desire to be debt-free high on many people’s Christmas lists, it’s therefore surprising to find that only two per cent of consumers intend to use their bonus to reduce their mortgage, often people’s biggest financial burden, when doing so could save them thousands of pounds.    
Simply paying the average annual bonus into a current account mortgage each year could pay off your mortgage more than six years early, saving thousands of pounds in interest in the process, which really would be something worth celebrating.
Debbie Milsom, spokesperson for The One Account, comments:  ‘We all yearn to be mortgage-free, but this need not be an impossible dream.  Having a current account mortgage, like The One Account, brings together your mortgage, current account, savings, loans and credit cards.  Simply put, it means that any money in your current account, be it monthly salary, savings, or indeed your hard-earned bonus, is constantly working to reduce your mortgage but is accessible at all times. You have worked hard for your bonus – so let your bonus work hard for you.’
Milsom continues, ‘Having your current account working for your mortgage provides flexibility and uses your monthly income or extra money to help you reduce the interest paid on your mortgage and in turn reduce the term.  The fact that over 80 per cent of The One Account customers are on track to pay off their mortgage earlier clearly demonstrates this.
‘It is the lifestyle benefits of The One Account that really makes it stand out - undoubtedly the most inspiring is the ability to pay off your mortgage early.  Shrink your mortgage, not your dreams.’


Got a mortgage and want to be able to make better use of your bonus this year? Have a go on the Mortgage Shrinker at www.oneaccount.com

AXA Real Estate Investment Manager’s Alan Mooney, Head of UK Research & Strategy, identifies trends and key themes for the UK property market in 2007:

“2006 is shaping up to be another good year for property.  After strong returns of 19.1 percent in 2005, total returns for the first three quarters of 2006 stood at 13.9 percent with likely returns for the year of between 17 – 18 percent.  As in the previous year, the strong performance of the property market was driven by downward yield movement as the volume of liquidity continued in 2006.

There is, however, a growing sense of caution in the market, particularly in relation to secondary assets.  Anecdotal evidence suggests that the market for such property is now thinning, with the number of bidders for smaller secondary lot sizes reducing and properties taking longer to sell. Although prices have yet to be fully affected, there are early signs of easing in the secondary market. We expect this cautious mood to affect buying intentions in 2007.

There are several contributing factors which could potentially limit further positive yield movement in 2007. These have been identified as:
·    Pricing issues in the market, in particular the upward trend in base rates further eroding property’s yield premium
·    The first signs of nervousness amongst debt backed investors
·    An increasing resistance on the part of investors to prime yields
·    Early tentative signs of the unwinding in the compression of the yield gap

Further downward yield movement is likely to be limited to those property types which can demonstrate substantial potential rental growth.

In the occupational market, central London offices should continue to show strong rental growth but we expect there will be increasing concerns about this market as the amount of speculative space under construction continues to grow.  

With returns likely to be driven by rental growth rather than yield compression, we expect the UK market to deliver total returns in the high single digits in 2007”.

Housing Minister Yvette Cooper yesterday set out reforms to the planning system.  Planning Policy Statement 3 was issued by the Department for Communities and Local Government on the 29^th November 2006.  The guidance in the policy statement comes into effect on the 1^st April 2007 but may influence planning decisions before that date.

The guidance requires local authorities to identify a 15 year supply of development land for housing and sets a national minimum density of 30 dwellings per hectare for new developments.  A target of 60% is set for new development to be provided on previously developed land (Brownfield land).

Luke Carter, Head of Planning at Strutt & Parker’s Brighton office comments “The requirement for local authorities to identify a 15 year supply of land is welcomed, as this will give more surety to land owners and property developers.  However, it remains to be seen whether local authorities have adequate resources to identify sufficient sites given the strict requirements for greater public consultation at every stage of the plan making process”.

People who live with their partner but aren't married could find themselves out on the street or in a financial mess if they were to split up, according to a new briefing report published today by the LivingTogether campaign.

There are more than four million people in the UK living with their partner outside marriage, and more than a third of them live in rented homes - almost twice as many as married couples. Yet two thirds of people wrongly believe these couples have the same legal rights as those who are married, according to LivingTogether research.

The harsh reality, highlighted by the new report, is that those who 'cohabit' could find they have no right to remain in the home if they were to split up from their partner, even if they've lived there for years. If the home is rented or owned in only one partner's name, for instance, the other will have no legal right to stay if their ex asks them to leave. Even if the home is jointly owned, it can only be sold with the agreement of all owners. This can cause problems after a break-up if one partner wants to stay but can't afford to buy the other's share.

To raise awareness of the housing issues for cohabiting couples, the LivingTogether campaign, run by legal rights and information website Advicenow.org.uk, has compiled its new report to highlight the problems, and offer some simple solutions to help people protect themselves.  

Mary Webber, cohabitation expert at Advicenow said, "An alarming number of people still believe that they have a 'common law marriage' but the truth is, unless they take steps to protect themselves, they have very few rights. If the relationship ends, many will find themselves in a very difficult situation, potentially facing money problems or homelessness.

"Having said that, there are things they can do to help themselves. Writing a 'LivingTogether Agreement', for example, is a great way of setting out who owns property and possessions, and how contributions to the rent or mortgage are shared, which can make things much fairer in the event of a split. Also, no-one knows what's round the corner, so making sure your partner has an up-to-date will that would provide for you in the event of their death is really important for unmarried couples, who have no automatic inheritance rights."

The LivingTogether top tips for cohabiting couples:
*    Whether you rent or own your home, draw up a LivingTogether
Agreement, to set out who owns what, and who pays what. This will help keep things as fair as possible if you break up down the line
*    If you're planning to rent a home with your partner, make sure
the tenancy agreement is in both names
*    If you're moving into a home owned by your partner, think about
how you contribute to the mortgage, and things like home improvements. Make sure you're both clear about how things would be divided if you were to split up
*    If you're planning to buy together, think about whether both
names will appear on the deeds, and whether you want to be 'joint tenants' or 'tenants in common', as this will affect what happens if you separate or one of you dies. This is particularly important if you're both putting in different amounts of money
*    Make sure you both have wills, and that your partner has made
provisions for you if anything happened to him  
 
More details of the issues surrounding cohabiting couples and housing, along with the most up to date facts and figures are available in the LivingTogether report 'Property: The Risks and Remedies for Cohabiting Couples'.

Unseasonably strong growth in housing sales over November and falling levels of supply have resulted in an acceleration in the rate of house price growth according to the latest monthly housing market survey by Hometrack, the housing information business. House prices grew on average by 0.6 per cent over November, up from October’s 0.4 per cent figure. The annual rate of growth is now 5.3 per cent, the highest since August 2004.
Richard Donnell, Hometrack’s director of research, says, ‘Buyers may have shrugged off the August interest rate rise, but the prospect of a further increase in November seems to have forced those who were thinking of moving to actually do so. The result has been a sustained increase in market activity over the last two months. But set against a background of dwindling supply, house prices have continued to rise, a trend that has now spread beyond London and the South East.’

After a modest slowdown in market activity over the summer, the volume of sales agreed by agents has now reached levels similar to those seen in the late spring and early summer. Sales agreed over November, compared to October, were up 4.8 per cent with the greatest increases in the Eastern region (10.7 per cent), the South West (12.3 per cent) and London (7.1 per cent) – albeit, in the case of the Eastern and South West regions, off a low base.
The market movement has little to do with first-time buyers, however, says Donnell, as ‘the majority of property transactions being carried out by those that are already on the housing ladder or are being assisted in some way. However, we do expect the recent increase in interest rates to impact on levels of activity in the months ahead with the market likely to experience a seasonal slowdown over December.’
Hometrack forecasts 2007’s annual house price growth to be four per cent, he says, with ‘London and the South East expected to remain the primary engines for growth, with prices being driven by a continuing supply/demand imbalance.’