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An ugly house next door could reduce your property sale price by thousands

New research suggests that the majority of UK estate agents believe that if your next door neighbour looks after their property and presents a well maintained home, the property sale price will be much higher.

Indeed, 88% of estate agents in the UK asked for the survey believe that having an attractive house next door to your own increases the average sale price by approximately 12%, or £19,400. The opposite is also true, with properties having an unsightly next door neighbour finding their property value reduced by 13% on average, or £21,000. These figures come from new research carried out by Churchill Insurance.

Property Sale Price

There are many unattractive features of the house next door that can put off buyers and so reduce the asking price, the worst of all being boarded-up or broken windows. Other aspects that can negatively influence your property’s value are next door having a broken down car in the driveway or a very messy and overgrown garden. Even less dramatic features such as overflowing gutters, dirty windows, peeling or unattractive paintwork, and a poorly constructed extension can reduce the value of a property by thousands.

Martin Scott, head of Churchill home insurance is quoted as saying ‘Whilst many householders will recognise that the condition of surrounding properties can influence curb appeal, the study shows that the upkeep of a neighbouring property could affect the sale price of a home by thousands of pounds,’.

Of course, the biggest problem of all if you do happen to have an unsightly house next door to your own is how to counteract the negative impact of this. The most obvious thing of all to do is make sure your own home is absolutely spotless and in the best condition possible. Considering the financial implications, it may even be worth offering to tidy up your neighbour’s garden or paintwork if they are willing.

Average property asking prices in England go up in cities, down in rural areas

The average property asking prices for homes in the towns and cities of England has gone up by 1.9% compared to this time last year, whilst asking prices for homes in rural areas have gone down by 5.1% during the same period of time.

The average asking price for a home in an urban area now stands at £315,170, a significant rise from the average of £309,280 this time last year. Comparatively, the average asking price for a home in the country is now an average of £272,180, a significant drop from £286,890 12 months ago.

Property Asking Prices

These figures come from recent research carried out by PrimeLocation and shows that over the last year it is rural property asking prices in the North East that have dropped the most - by 11.3%. Not far behind are asking prices in the rural South West which are down by 10%. Overall, the average property asking prices in these areas are £180,760 and £272,480 respectively.

However, the average asking prices in some rural areas have bucked the trend, with prices having gone up by 2.2% in the South East, 1.3% in the east of the country and 1% in the West Midlands.

The average asking price in these rural areas now stands at £391,560, £275,440 and £261,700 respectively.

Meanwhile, in the cities asking prices have gone up the most in London (12.2%), followed quite far behind by the West Midlands (7.9%), the South East (3.2%), and by the tiny margin of 0.2% in the North East. The overall average asking price in these areas now stands at £680,520, £225,680, £326,760 and £181,820 respectively.

Towns and cities in some parts of the country saw asking prices remaining the same such as Yorkshire and Humberside at £200,180, whilst some urban areas actually saw big drops in asking prices such as the east of the country where the average went down 11.6% to £335,470.

UK property sales at highest point in more than two years

Residential property sales in the UK have peaked at their highest point in over two and a half years based on the three months leading up to the end of February. Also reported in the Royal Institution of Chartered Surveyors (RICS) latest house market survey is that chartered surveyors sold an average of 16.8 homes each over this time.

RICS announced that throughout February the growing market strength seen in recent months converted into an elevation in sales, and what’s more, surveyors are carefully hopeful that this improvement will endure. Approximately 8% more respondents signalled that they believed sales levels will go on to rise further rather than drop over the three months to come.

6% More chartered surveyors also reported that house prices continued in a rather flat trend, with many noting prices had dropped rather than gone up. Despite this negative feedback prices for house and properety sales have still remained comparatively consistent since the autumn.

Property Sales, Demand High

On a more positive note, the actual demand for property continued in a steady fashion as many potential buyers are still looking for either their first purchase or to upgrade the size of their home. It is also believed that the government’s Funding for Lending scheme and the additional increase in the availability of mortgage finance may be slowly taking effect and encouraging potential buyers to try the market.

Looking to the future, most chartered surveyors see house prices continuing to stabilise during the upcoming three month period as confidence slowly returns to the country’s property sales market. After this period, there is a renewed faith that prices will start to move upwards at a headline level with the 12 month price expectations indicator rising to its highest point since the series was begun in February 2010.

Increase in Scottish first-time buyers

According to a recent survey conducted by the Council of Mortgage Lenders in Scotland (CML Scotland), first-time property buyers are on the increase north of the border. These findings revealed that in 2012, 30% more people purchased their first home than the year before. In fact, the total figure of 19,000 Scottish first-time buyers is the highest since 2008.

In each quarter of last year, as well as this rise in first-time buyers there was an increase in the value of loans granted to them by mortgage lenders, representing the highest totals since the end of 2009. By the fourth quarter of 2012, the total number of first-time buyers had risen to 5,200 from 4,000 - figures that signified an 18% rise from 2011. During the same period loan values soared to £490 million from £380 million.

The report went on to outline some of the factors which had prompted these rises. Lower house prices in Scotland meant that first-time buyers were exempt from stamp duty. Of those buyers entering the market for the first time, over 60% were purchasing houses valued at less than £125,000. This was compared to the overall figure for the UK which was far lower – standing at 39% for the fourth quarter of 2012.

In addition, Scottish first-time buyers also received loans that were less relative to their income than elsewhere in the UK. They also spent a lower proportion of their income on mortgage repayments. Typically, Scottish first-time buyers spent around 2.9 times their income, compared to the figure for elsewhere in the UK which was 3.26 times income.

The chairman of CML Scotland, Iain Malloch, concluded that the Scottish housing market had been showing clear signs of recovery in 2012, with the availability of mortgages at more than 90% loan-to- value doubling in the last two years.

First time buyers hits highest figure for 5 years

According to a recent study conducted by the Council of Mortgage Lenders (CML), the number of first-time buyers in the UK housing market has risen to its highest level since 2007. Over 216,000 first-time buyers climbed onto the property ladder last year –the first time that this amount has passed the 200,000 mark since 2007. With the number of UK first-time buyers standing 12% above the comparable figure for 2011, the research provided strong evidence of the extent of the recovery in the UK’s property and mortgage market.

Figures for October to December 2012 revealed that first time buyers have returned to the property market in increasing numbers. With some 60,500 loans advanced to first-time buyers in the last quarter of 2012, there was an 8% increase from the third quarter. The overall value of these loans was worth approximately £7.6 billion to the housing market. During the same period in 2012, first-time buyers accounted for over 40% of all home purchase lending.

An executive director of the Mortgage Lenders Association, Peter Williams, commented on what findings such as the CML report are revealing about the current state of the UK market. He said that despite the lower year-on-year figures for gross lending at the start of the year, the property market could take heart in the relative strengths of home purchase activity when compared to re-mortgaging. The fact that lending to first-time home buyers was accounting for an increasingly greater proportion of the market showed that an appetite for risk was returning.

Williams concluded that mortgage lenders were striving to discover innovative ways to help first- time buyers gain that all-important property ladder foothold. Many forward thinking-products were emerging in the home loan market, including Lloyds Banking Group’s ‘Lend a Hand’ and Nationwide’s ‘Save to Buy’.

UK remortgaging drops significantly

Recently research conducted by Lloyds TSB has revealed some startling information about remortgaging in the UK. By the end of last year, activity in this sector of the housing market had slumped to 25% of comparable levels recorded at the start of 2008. For most of that year, remortgaging accounted for over 50% of the total mortgage market. By December 2012 this figure had dropped drastically.

What this analysis has revealed is the fact that borrowers might no longer be better off sticking to standard variable rate mortgages (SVRs). Since the tail end of 2008, SVRs have been falling, lessening the gap with fixed rate mortgages. This has reduced the incentive to remortgage in many cases. Despite this, some home owners are still finding better rates by choosing to remortgage due to recent falls in fixed rates.

The remortgage statistics for 2012 showed a 12% drop compared with the year before. However, there were signs of this trend lapsing towards the end of the year with a 7% increase in remortgage applications between the third and fourth quarters.

The prime market factor which has traditionally driven remortgaging has been borrowers deciding to replace fixed home loans as they reach the end of term. This is to avoid moving on to an SVR because these where invariably more expensive. SVRs also come with a degree of uncertainty over future monthly payments as these can fluctuate. But in recent years there has been less enticement for this type of borrowing as interest rates have fallen to an all-time low.

Since August 2011 the rates of SVR mortgages have tended to be higher than their fixed rate counterparts. During this period remortgaging has remained fairly subdued, averaging just short of 30,000 per month – a figure equating to 37% of the total mortgage lending market.

11 percent fall in new home builds in England

Data released by the Department for Communities and Local Government (DCLG) as revealed a sharp fall in the number of new homes being built in England. According to the research, the totals fell by 11% during 2012, with work commencing on less than 50% of the requirement for new housing. Less than 27,000 new properties were started in the final three months of the year, leaving the overall total for the previous 12 months standing at below 100,000. The report concluded that the figures for 2012 were amongst the lowest in recent years.

It is worthwhile comparing this to 2006 when totals for new home builds peaked at 183,000. However, the obvious factor that has curtailed activity in this sector of the construction industry has been the credit crunch. Indeed, during 2009, as the global recession was really beginning to bite, housing production tumbled by almost 50% of the 2006 figure, with a mere 75,000 new homes being built.

With the coalition government attempting to boost the number of new homes with a range of key schemes, the figures from DCLG can only be seen as a disappointment. However, the chief economist of the Royal Institution of Chartered Surveyors (RICS), Simon Rubisohn, stated that the report’s findings had to be viewed in context. The rate of the fall in new home production demonstrated the scale of the problem being faced by the country as a whole. He went on to suggest there were no reasons why output would not increase significantly during 2013.

With weakness visible across the housing industry, the sharpest decline was from housing associations. In this sector, new builds experienced a drop of more than 20%. Again, the RICS were cautiously optimistic that matters would improve over the next few months, particularly as incentives introduced by government began to take effect.

Growing optimism about property prices amongst home owners

Recent research derived from the House Price Sentiment Index, as monitored by property consultants Knight Frank and economics consultants Markit, has thrown up an interesting picture. According to the cross-section of home owners consulted, average UK property prices will continue to rise in 2013.

This sense of glowing optimism for the residential real estate market in this country was reflected across all 11 UK regions. In fact, this is the first time that such a uniformly positive outlook has been registered for over two and a half years.

The most optimistic of Britain’s home owners are to be found in the capital, with Londoners particularly positive about their homes rising in value over the next 12 months. The South East and Wales are the next two regions to be fostering strong levels of hope for rising property prices.

The survey was based on a sample of 1,500 households across the UK, with owners being asked a straightforward question about whether they expected their property value to increase or decrease over the next year. Although some households were of the opinion that their home value had declined over the last month, this had done so at a slow rate – the slowest since June 2010.

Almost 9% of those questioned stated their property value had risen over the last month, while 11.7% felt the reverse trend to be the case. The HPSI reading taken from these readings equates to 48.4 – with any figure below 50 an indicator that prices are falling. The lower this figure - the steeper the decline. Figures over 50 indicate that prices are rising. This HPSI total compares to January’s of 47.6.

The extent of the anticipated house price rises reflected the country’s perceived north/south divide, with households in the south far more likely to be optimistic about price rises than their northern counterparts.

Rate of UK repossessions hits lowest level for years

Recently published statistics have revealed there has been a substantial fall into the number of UK property repossessions. According to the Council of Mortgage Lenders (CML), in the final quarter of 2012 housing repossessed by first charge residential lenders had fallen to 7,700, compared to 8,200 in the previous quarter. The CML added that this trend signified the lowest quarterly total since the equivalent period in 2007.

The annual amounts of repossessions have also fallen dramatically, from 37,300 in 2011, down to 33,900 by the end of the following year. Again, these represented the lowest amounts since 2007 before the recession got underway. The actual rate of repossessions was standing at 0.3% by the end of 2012, compared to 0.33% the previous year. Added to all these encouraging figures was the fact that the stock of properties in possession was currently at its lowest for over five years.

In parallel with the CML figures on repossessions, the numbers of households who have experienced mortgage arrears issues have also been falling away. By the end of 2012, almost 158,000 homes were facing mortgage arrears amounting to 2.5% or more of the outstanding balance. This total was a great improvement on the 2011 figure of 161,400. Indeed, at the peak of the current arrears cycle, that total was nearer 216,400 (at the end of the first half of 2009).

The CML did introduce a note of caution. They stated that while it was certainly the case that the overall total of households experiencing arrears had fallen, and had been doing so consistently since 2007, this primarily affected homes in lower arrears bands. The number of cases in the highest band, with arrears amounting to more than 10% of the balance, increased slightly (from 28,200 at the end of 2011 to 28,900 twelve months later).

UK Mortgage brokers reflect growing market confidence

Research recently undertaken by the Intermediary Lenders Association (IMLA) has revealed that almost a third of broker firms believe conditions in the beleaguered UK housing market are finally on the up. Amongst the encouraging signs was the fact that mortgage availability improved steadily during 2012. While 80% of borrowers were unable to secure a mortgage in the three months leading to January 2012, this has now dropped to 63%.

In terms of gross lending this year, brokers remain more cautious. IMLA membership represents more than 80% of those lending to the intermediary market, and they are anticipating a total reaching £150 billion; however, intermediaries made a more conservative projection of £139 million. Both figures are below the £156 million estimated by the Council of Mortgage Lenders.

The sector of the housing market most anticipated to prosper in the following months is remortgages. As a source of new business, these are predicted to account for 51% of the market this year, compared to the January 2012 figure of 35%. Also, while the expectations of more buy to let business had fallen from 56% in July 2012, 48% still see potential for growth.

The most significant change in the housing industry has been in first-time buyers. Double the number of brokers expected to see their business volumes increase in this area – a rise to 40% compared to the 21% figure in January last year. Brokers believe first-time buyers will receive assistance from the stability of house prices. Intermediaries are expected to be in the region of £162,500 by June 2013, compared to the Land Registry figure for October 2012 which stood at £161,605.

The IMLA’s executive director, Peter Williams, summarized these findings by stating that they demonstrated a growing sense of optimism, especially with new products emerging onto the market.

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