U.K. House Prices Rise 0.2% in May as Low Supply Boosts Values

Spiv_2

U.K. House Prices Rise 0.2% in May as Low Supply Boosts Values


May 31 (Bloomberg) -- U.K. house values rose in May for the 10th month as a shortage of properties for sale allowed real- estate agents to raise prices, Hometrack Ltd. said.
The average price of a home in England and Wales increased 0.2 percent from April to 158,700 pounds ($229,600), the London- based property researcher said in a monthly report published today. Prices rose 2 percent from a year earlier.

Plans by Prime Minister David Cameron’s new coalition government to seek 6.2 billion pounds in spending cuts this year undermined consumer confidence in May. Concern that an emergency budget this month will worsen households’ finances may keep housing activity “subdued,” Hometrack said.
“Low turnover looks set to remain the dominant feature of the market,” Richard Donnell, director of research at Hometrack, said in the report. That will “sustain the scarcity of housing for sale and continue to act as a support to prices.”
Home-price increases are being sustained by values rising in less than a fifth of the 2,300 postal districts in England and Wales, with most of those being in the south, including London, Hometrack said. Across the remaining areas, transaction levels “remain low,” with prices neither rising nor falling, it said.

Hometrack said the “greatest threats” to the housing market are higher interest rates and a proposed increase in capital-gains tax. It also highlighted the impact on price- growth from a possible increase in the supply of properties.

” New buyers registering with real-estate agents to browse properties rose 0.5 percent this month, compared with an average of 4.2 percent in the quarter through April, Hometrack said. The supply of homes for sale rose by 1.8 percent in May, compared with an average monthly gain of 4.6 percent in the previous three months.
Growth in activity levels historically drops from an annual peak in February as the housing market’s busy selling season in the spring wanes.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2iAxMyRvg6Y

brit1234

I think it will next month, or the month after and then the hometrack figures will go negative. There is a month or two delays behind.

Spiv_2

London housing shortage to push up prices

• Survey shows just 1,100 houses being built in capital
• Government policy may lead to homes shortage in south east

The next two years will see an acute shortage of family housing in London as the full impact of the recession kicks in – sending house prices in the capital soaring.
Property consultants Drivers Jonas Deloitte will warn in their latest London residential survey this week that the building of family homes will hit historic lows in coming years.
Examining schemes of 50-plus units, the firm found that just 1,100 houses are currently under construction across London. A decade ago houses made up a third of all building but that figure has fallen to just 5%. Future construction is heavily dominated by flats, with one and two-bedroom flats accounting for 77% of the total.
Just 155 houses are under way in the inner London boroughs – and only a third of these will be brought to the open market, with the rest affordable housing.

http://www.guardian.co.uk/business/2010/may/30/housing-shortage-london-south-east

Generali

Just to make the point, RPI was what, 5%? A 2% rise is a real fall.

nembot

Have to admit 0.2% is pretty grim for those with a bullish perspective, especially with the mention of this months new buyers to maket rising by only 0.5% percent, yet a number of EA chains said the number of properties for sale increased by over 30% in the same time period.

Supply and Demand..... LOL

Generali

nembot wrote: »

Have to admit 0.2% is pretty grim for those with a bullish perspective, especially with the mention of this months new buyers to maket rising by only 0.5% percent, yet a number of EA chains said the number of properties for sale increased by over 30% in the same time period.

Supply and Demand..... LOL

It's all that can set the price of a house.

To be fair, number of registered buyers isn't the same as demand and number of houses for sale isn't the same as supply.

HAMISH_MCTAVISH

Generali wrote: »

Just to make the point, RPI was what, 5%? A 2% rise is a real fall.

Technically.

But in practice it only benefits anyone whose wages have risen by more than HPI or the recent 3% or so reported rises in rents.

Otherwise its just a case of housing, AND everything else becoming more expensive relative to income.

Generali

HAMISH_MCTAVISH wrote: »

Technically.

But in practice it only benefits anyone whose wages have risen by more than HPI or the recent 3% or so reported rises in rents.

Otherwise its just a case of housing, AND everything else becoming more expensive relative to income.

I agree. One of the things that has driven rising house prices has been rising real wages so less money spent on food, transport, clothing etc leaves more to spend on housing. Presumably the converse is also true.

PasturesNew

With an STR pot to spend - and no borrowing available, and no job, it's the actual price on the ticket that determines if something's costing me more or less .... any inflation or adjustments are irrelevant. It's a simple case of: "What's in that pot .... what will it buy/will it buy House X?"

For me it's like the chicken and egg. What comes first? Do you buy a house first, then look for a job near it, or, do you wait to get a job then buy a house near the job. So, what I do is apply for jobs up to 200 miles away (never hear anything back) -and- look for the perfect house 20 miles away (hate them all so far though). I could be at this for years......

IveSeenTheLight

nembot wrote: »

Have to admit 0.2% is pretty grim for those with a bullish perspective

A 0.2% monthly increase equates to a compounded 2.42% annual increase.
I would have thought that most people would be happy for house prices to rise at this rate, or indeed as close to inflation as possible.

Still, there is nothing to be gained on over analysing monthly data.
It's far to noisy to be heard clearly

nembot

I'm quite happy with inflationary rises ISTL and if we'd had this since 2001 with the usual lending criteria - the country would be in less of a pickle than it is today.

Agreed these figures alone don't tell whole story, interesting times ahead methinks.