Latest News from Almond Valley Property Centre
Public still confident about house prices
Four in ten people who are planning to move home believe that buying now makes financial sense as they are confident house prices will rise over the next year.
Altogether, three-quarters of home movers believe that prices will either stay the same or go up.
Rightmove reported this morning from a survey of 20,000 prospective home movers.
But while confidence remains bullish, it has fallen: the 75% who believe prices will stay the same or rise compares with the 84% of price optimists recorded in April.
Miles Shipside, Rightmove commercial director, said: “A 9% drop is a significant shift. However, three-quarters of people still believe that prices will either be the same or higher in 12 months’ time. This suggests that either the government cuts have not yet bitten hard enough to knock the inherent belief in property as a long-term safe bet, or there is a strong sense that the property market’s dark days are behind us.”
He added: “With austerity measures starting to bite, a growing nervousness is to be expected.”
Rightmove itself has just recorded a drop in asking prices and is predicting that further falls in the second half of this year will wipe out gains in the first half.
Lending Levels fall to 4 month low
Lending fell sharply in June, with the British Bankers Association reporting that the number of mortgage approvals for house purchase fell to a four-month low of 34,813.
The long-term average for the month is 59,387 approvals.
Andrew Montlake, director of independent mortgage broker Coreco, said the figure is worrying.
He said: “The latest figures show that mortgage lending still has a long way to go to reach healthy levels, and the fear is that with turbulent economic waters ahead, the lending climate is going to get significantly tougher in the second half of the year, with the fallout from the stress-testing of European banks and the dark clouds of public sector cuts and fiscal tightening looming overhead.
“Despite this gloomy prognosis, we must guard against talking ourselves into a double-dip scenario, as the reality is that for the property sector, falling house prices and more properties coming on to the market will hopefully stimulate activity by tempting wait-and-see buyers back through estate agents’ door
We are moving
Plans are taking shape as we continue to organise for our move to our new office in Carmondean, Livingston. The new office, part of a development under construction by Dunbar Homes, will ensure we are more accessable to clients old and new. Entry is planned for Apr 30th. More to follow soon...
Interest Rates Held
The Bank of England has kept interest rates at a record low of 0.5% for the 12th consecutive month.
The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK's fragile economic recovery.
Also as expected, the bank has not pumped any more money into the economy under its quantitative easing (QE) programme - for now at least.
Last month the Bank halted QE, having spent £200bn to boost the economy.
'Mixed picture'
Figures released last week showed that the UK economy grew by 0.3% in the final three months of 2009, compared with an initial estimate of 0.1% growth.
But although the 0.3% growth in the final quarter of 2009 was stronger than previously thought, the Bank believes that continued economic growth is not yet guaranteed.
The October to December period was the first quarter of growth following six consecutive quarters of economic decline - the longest period since comparable figures were first recorded in 1955.
Lee Hopley, chief economist at the EEF engineering employers' group, said the Bank's Monetary Policy Committee (MPC) had little choice given the "mixed economic picture".
"An unchanged position at this point is the right one given the ongoing uncertainty about the strength of the recovery, with the reality that any moves could be on hold for some months to come," he said.
David Kern, chief economist at the British Chambers of Commerce, said it would be wrong to contemplate raising rates.
"Despite the upward revision to GDP in the fourth quarter of last year, the economy remains weak and fragile. Businesses are still under serious pressure and there is no room for complacency," he said.
"Threats of a double-dip recession are unquestionably more serious in the near future than risks of higher inflation,"
Inflationary pressure
Under QE, the Bank has bought assets in order to boost lending to businesses and individuals by commercial banks.
Capital Economics' senior economist Vicky Redwood said that without QE the UK could still be in recession, although the policy has not worked well enough to kick-start a strong recovery.
"We doubt that the £200bn undertaken so far will be enough to ensure a strong and sustained economic recovery. We still think that the MPC will have to take further action."
But the Bank has said that the full effects of QE will take more time to filter through to the economy.
Many analysts argue that banks have not in fact increased lending as the economy begins to recover. Banks in turn argue that businesses are looking to pay down debt rather than take out new loans.
The Bank must also be wary of the inflationary pressure caused by QE.
The latest inflation figures, released last month, showed the annual inflation rate rising by 3.5% in January, the fastest annual pace for 14 months. This compares with 2.9% the previous month.
As a result, the Bank's governor, Mervyn King, had to write a letter to the chancellor explaining why prices were rising so quickly.
A letter from the governor is required if inflation is more than one percentage point above or below the government's 2% target.
However, Mr King said that the rise in inflation was temporary, and was largely the result of the rise in VAT to 17.5% in January.
The government had reduced VAT to 15% to try to boost consumer spending.
Local Housing Allowance decision 'good for landlords'
According to Housing Benefit regulations, a landlord can apply to their local authority for direct payment of rent when eight weeks or more of arrears has accrued. Currently, some local authorities refuse direct payment within this period citing Department for Work and Pensions (DWP) guidance which states that "a person cannot be in rent arrears in respect of a period that has not yet been served".
In his judgment (I Doncaster v Coventry City Council), Mr. C Jones, Chairman, Coventry Appeal Tribunal, categorically disagreed with the DWP view, saying, "rent is in arrears once the contractual date for payment has passed irrespective of whether rent is due in advance or in arrears."
This decision, which neither sets a legal precedent nor is binding on future decisions, may, in the meantime, however be used by landlords in a similar position to Mr Doncaster when negotiating with local authorities over LHA rent arrears.
Richard Price, Director of Operations, NLA, said: "It is quite clear that the normal rules of renting should apply to Local Housing Allowance. According to most tenancy agreements, rent is payable in advance.
"Yet local authorities pay their Housing Benefit claimants in arrears. Therefore, when it comes to assessing the length of rent areas, there is a significant difference in approach between councils and landlords. The aim of the LHA was to put those tenants in receipt of Housing Benefit on a level-playing field to those in the open market. The fact that rent is paid in arrears puts them at a major disadvantage.
"This decision is good news for landlords and, although not binding, those who are experiencing similar problems should consider highlighting this decision to their local authority."