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london-property · 04-14-2008, 04:28 PM

he UK housing market has taken a battering so far this year, with predictions of house price falls for 2008 and the market heading to 'correction'. Sarah Routledge looks at the current state of the British housing market.

The UK housing market took a serious dive in March.

The property market slowed unexpectedly in March, dropping by 2.5 per cent according to the Halifax house price index. The news inevitably invited comparisons with the house price crash of the 1990s, as it was the biggest monthly fall since September 1992.

Things are not looking too great for those looking for a mortgage either, with several lenders pulling either a few - or in the case of First Direct to non customers, all of their mortgage products from the market.

Halifax HPI

February: House prices fall 2.5 per cent. Halifax predicts a decline in growth over 2008.

House prices in the UK fell 2.5 per cent in March, according to the latest figures from Halifax. The annual house price fall was also the biggest in 12 years.

Halifax's house price index showed house prices were only 1.1 per cent higher than a year earlier.

The bank, which is part of the HBOS group, predicted a decline in house prices over 2008 as a whole.

Martin Ellis, Halifax's chief economist, said: "Overall, we expect there to be a modest fall in UK house prices this year."

Nationwide HPI

February: Property prices slip by 0.6 per cent. Nationwide index reports fall for fifth consecutive month.

The price of a typical house fell by 0.6 per cent during March, with the annual rate of house price growth declining to just 1.1 per cent.

The building society said this brings the annual rate of house price inflation to its lowest rate since March 1996.

An average property now costs £179,110, from £179,358 in February.

Nationwide's chief economist, Fionnuala Earley, said: "Expectations of higher house prices will have undoubtedly encouraged some speculative demand in the housing market over the years, but with lower house price growth expected now and in the future, the effect will work the other way, causing at least some of this demand to fall away."

Rightmove HPI

February: Asking prices climbed 0.8 per cent. Rightmove says higher expectations are "ignoring reality".

March asking prices for UK houses rose by 0.8 per cent despite a fall in actual house prices, according to property website Rightmove.

Despite the credit crunch restricting people's ability to buy, sellers are pricing their properties remarkably close to the peak of last year's boom, Rightmove said.

New-to-the-market sellers raised their average asking prices again last month to £239,655, an increase of 0.8 per cent (£1,799).

Miles Shipside, commercial director of Rightmove, said: "Most sellers coming to the market seem to be ignoring the increased competition from other unsold properties and the challenge buyers now face in obtaining a mortgage.

"As many of these sellers are likely to be buyers themselves, they seem to be trying to bank a higher figure for their home but want a bargain when they buy. It's human nature, but in the current market, sellers should price below their competition to achieve more interest now and avoid a larger price drop later in the year."

Bank of England lending figures

February: Number of mortgages approved falls.

Net lending secured on dwellings (£7.4 billion) was in line with the increase in January but below the previous six-month average, according to the Bank of England's latest figures.

The twelve-month growth rate slowed to 9.4 per cent. The three-month annualised growth rate also slowed, by 0.2 percentage points to eight per cent.

The numbers of loans approved for house purchase (73,000) and remortgaging (111,000) were lower than in January.

Lenders are becoming more cautious following the credit crunch several lenders have withdrawn mortgage products. First Direct has suspended its entire line while others have only suspended some products.

Land Registry

February: House prices in England and Wales remained flat.

House prices in England and Wales remained static during February, with no monthly price change, according to the latest figures from Land Registry.

The average house price stands at £185,616, while London prices fell by 0.4 per cent, with the average price for a house in the capital dropping to £353,760.

The number of transactions during the period September to December 2007 averaged 90,880 per month, down from 117,301 for the same period last year.

Rics housing market survey

In February, 64.1 per cent more chartered surveyors reported a fall than a rise in house prices, an increase from 54.7 per cent in January..

The Rics house price balance dropped for the seventh month in succession signalling more than half a year of negative market sentiment.

Some 64.1 per cent more chartered surveyors reported a fall than a rise in house prices, an increase from 54.7 per cent in the previous month.

This figure is close to the historical low of June 1990 when 64.5 per cent more chartered surveyors reported a fall in house prices, Rics said.

Homefinder · 04-14-2008, 06:49 PM

One thing is that the UK is able to control its own economy, up to a point, by adjusting the lending rate. last week the B of E reduced a further 1/4 point to 5%. My view is that they will go on reducing until property prices bottom out.
One thing about the UK market, with a housing SHORTAGE, is that in situations like this, buying to let start to become viable.

Unfortunately Spain does not have such control over its economy and it is said that the solution is devaluation, if that was possible. As it is not they now have to "do it the hard way".
Spain actually has a housing SURPLUS. There are not a lot of tenents desperate for a roof over their heads, so buying to let is not going to save the day.

The last time there was a world recession most of Europe was losely tied in to the EMS. Spain was forced to devalue and the UK pulled out completely. This quickly resolved the situation for Spain.
Almost immediately tourism recovered. Property prices had already fallen considerably and the devaluation (I think it was 16%) made all the difference.

It is said that there are around 4 million unoccupied properties and perhaps another 1 million in the pipeline. If we say 4 to a property on average, where will 20 million more people come from?
Tourism is NOT increasing and has stagnated for 10 years. I know that tourist entries have increased but the figures are being manipulated. I know that tourist spending has increased but then Spain has become a lot more expensive.

In my view the authorities have been burying their heads in the sand but now that it has finally happened it is going to be hell of a thing to sort out. Quite simply property prices have to adjust - considerably!
and Spain has simply become too expensive to encourage tourism!

Homefinder

Richie · 04-14-2008, 07:14 PM

Quote:

Originally Posted by Homefinder

Tourism is NOT increasing and has stagnated for 10 years. I know that tourist entries have increased but the figures are being manipulated. I know that tourist spending has increased but then Spain has become a lot more expensive.

In my view the authorities have been burying their heads in the sand but now that it has finally happened it is going to be hell of a thing to sort out. Quite simply property prices have to adjust - considerably!
and Spain has simply become too expensive to encourage tourism!

You are quite right that Spain has become more expensive, however - according to a report in the Daily Mail (or was it the Daily Express???) a couple of days ago, Spain is still the cheapest place inside the EU to go on holiday.

Places such as Bulgaria, were cheapest last year but Spain has gone back to the top of the cheap chart due to the strength of the Lev and the fall of the pound!

Still, this isn't going to help - travel agents in the UK are encouraging people to take their holidays in the States with low cost Trans Atlantic flights and with the dollar on its knees it is an attractive opportunity for your holidays.

I might even go!

Homefinder · 04-14-2008, 08:17 PM

I have 100's of regular holiday clients and get into converstaions with them about their holiday choice. Some have actually apoligised for not coming to Moraira this year.
From what they tell me, Richie is absolutely right. Spain still is the cheapest EurosZone country but it is far more expensive than it used to be - but we all know that.
Additionally, my tour operator clients tell me that Florida is suddenly doing well but (I quote) "its a terrible palce".
Also France is doing well again - they can just get in their cars and go there.
Richie: Why don't you consider sunny Moraira-on-Sea for your 2008 hols? LOL
Guess where Homefinder is going for a week in July? Limoges, France! LEL (Thats laugh even louder!)

Se Vende Casa · 04-14-2008, 10:27 PM

Spain, as reported by El Pais, is the second most popular tourist destination in the world.

Spain received a record 59.2 million overseas visitors last year, as the country remained the second most popular tourist destination in the world.

The figure was up 1.7 percent from 2006 when there were 58.2 million overseas arrivals.

According to figures released yesterday by the Industrial, Tourism and Trade Ministry the number of visitors in December alone was up 0.7 percent at 3.2 million.

The ministry said Catalonia, the Balearic and Canary Islands and Andalusia were the most popular destinations last year. Foreigners showed increasing interest in Madrid, with the number of visitors climbing to just under 12 percent.

The main market for Spain remained the United Kingdom followed by Germany. Britain accounted for 27.5 percent of all foreign visitors last year. Spain also became increasingly popular with US visitors. The number of arrivals from the United States rose 22 percent to 1.1 million.

The ministry also said total spending by tourists in the 11 months to November was up 3.5 percent at EUR 46.897 billion. Average spending per tourist in the period was up 1.4 percent at EUR 865, although the average stay declined by 3.1 percent to 9 nights.

We would like to hear from owners of rental properties, where do the majority of your rentals hail from?

Emma
SeVendeCasa.eu, Propiedades en venta en España - Home

Homefinder · 04-15-2008, 01:58 AM

Hi Emma
It looks like you disagree with my post about Toursim.
All I can say is that -
a) I research the issue a few months ago.
b) I have been selling self-catering holidays in Spain for over 20 years and my commonsense tells me that the stats are very wrong.
c) I have UK (self-catering) tour operator clients in UK who send their clients to lots of different destinations and who say that Spain has been going down BIG TIME since 2002 (except for the Balearic and Canary Islands).
I need to explain where all these misleading facts are coming from but you can see everything in detail here - ARTICLE: The Spanish Tourism Crisis written in July 2007. I took all my facts from the WTO Estimates for 2007

Now obviously there is no disputing that receipts from Tourism have increased, that had to happen because Spain is much, much more expensive than it was 10 years ago.

The misunderstanding is cuased by the fact that we are looking at tourist entries and the only way it can be judged is by the total number of days for bona fide tourists and there has been a dramitic and critical decrease in this respect during the period 1997 - 2007.

You say that the number of tourists for for 2007 was 59.2 millon and I actually estimated 59 million but the problem is that the current trend is for shorter, more frequent holidays.

In 1997 47.000 million visitors stayed an average of 12 days (estimated) = 564 million tourist days.
In 2007 59.000 million visitors stayed an average of 8 days (estimated) = 472 million tourist days.
If the average stay is correct you can already see that there has been a significant reduction.

When we talk about tourists can we consider that property owners are bono fide tourists when they stay at their property?
If you consider this is not the case then you have to consider that in 1997 400,000 properties were owned by foreign residents and by 2007 this had increase to 1,200,000 (Estimated).
If you further imagine that each owner occupied his/her property with 4 persons for 28 days you have to deduct 44.8 and 134.4 millon respectively leaving the bono fide tourist as 237.2 and 148.8 million respectively - which is bad enough but it gets worse!

I know that, until now, we were just considering tourism figures but there is another issue that concerns the whole real estate sector.
If we say that the ratio between hotel and self-catering beds has remained the same and crunching the figures a little more to calculate the average rental demand in weeks per self-catering property we get 21 weeks in 1997 and 4.4 weeks in 2007 - and that's hell of a problem for the Buy2Let brigade!

Now I have worked hard at rentals for 20 years and had my finger on the pulse all through. My gut feeling tells me that my calculatione were about right because in the 1980's I had around 100 villas on contract and gave rental gurantees - anything up to 30 weeks and mostly filled them up.
I now have around 30, give no guarantees whatsover and only take on the best ones. I will average 12 to 14 weeks in each.
My holiday clients pay about the same as they did in 1987 (in £sterling). Flights cost about the same but the properties are much better quality (air cond., heated pools etc.). The villa owners earn considerably more but my margins are a joke.
I do last moment deals, marking up just £50 in order to fill the villas and get the owner some rent.
When I started rentals were based on 14 nights accommodation, Saturday to Saturady, and there was a surcharge for a 1 wwek holiday. Most clients stayed for 14 nights, some for 21.
Now changeover days are Tuesday, Thursday and Saturday, 5 days minimum (pro rata) with a discout for more than 13 nights. The average is now 8 nights because I do a lot of business with Spanish clients who come for "puentes", 3 or 4 nights but I charge them for 5.

There was a news item the other day (Costa Blanca News, I think). It was said that a number of hotel owners had successfully petitioned the town hall to allow change of usage from hotels to commercial and residential.
Guess where?
Benidorm - the tourist flagship of the Costa Blanca!

Sorry Emma - I am not convinced that Spanish Tourism is flourishing!

Homefinder

Se Vende Casa · 04-15-2008, 09:55 AM

Hi Homefinder,

I suppose official statistics can be taken in whichever light reflects what the officials want to say.
definitely the person (you) with first hand experience of the market trends would know more.

can i use your information as a reply on my site also?
let me know

Thanks

Emma