Lunchtime news Monday 4 February 2024

Halifax’s annual county house price survey revealed over the weekend that all the UK’s 104 counties and authorities have recorded at least a doubling in their average house prices during the past decade. Five of the 10 counties to have delivered the biggest house price rises were in Northern Ireland, which has become the second most expensive area after the South East. The least expensive areas were in Scotland, where eight of the 10 counties with lowest average house price growth were recorded. Much of the upward pressure on house prices came from second home owners, resulting in Cornwall having the biggest gap between average house prices and average salaries (with house prices 12 times average earnings).

A Treasury adviser on the mortgage market, David Miles, says that UK mortgages could become more expensive and harder to obtain unless there is further help for credit markets. He believes that banks need to refinance £250 billion worth of loans, or issuing new mortgages will have to be curtailed, and will have to charge higher rates. Morgan Stanley estimate that 28 per cent of mortgages in the UK are financed by banks who sell them on to other investors, and around one third of these mortgages will need to be refinanced this year.

The Financial Services Authority (FSA) repeated fears that banks and individuals face a tough year due to a worsening economy and market turmoil. Its Financial Risk Outlook published last Friday identifies 150,000 risky mortgages where homeowners have borrowed large amounts of money they may not be able to afford to repay, and argues that consumers may lose confidence in financial institutions and the authorities’ ability to safeguard the financial system.

A report, released today from the Centre for Policy Studies, shows that the average family has seen their annual income after tax and housing costs drop by £1,300 during the past four years. The rising tax burden and higher mortgage costs and council tax have left Britain’s middle earners vulnerable to economic downturn, according to the report. Calculations show that Labour’s second period in office (2002 until now) average earnings after tax and household costs fell by 6 per cent, whereas they rose 28 per cent between 1997 and 2002.

Estate agents are seeing a booming demand for rental properties. Agents, particularly in London and the South East, are seeing up to 25 per cent more activity in their lettings business compared to a year ago, while managing to secure ‘significant’ rental increases. A spokesperson from Winkworth estate agents suggests that tenants renewing their agreements are paying 5-10 per cent more, while new occupants were going to pay as much as 20 per cent more than they would have done a year earlier.

And one in five first-time buyers is now aged over 35 years old, according to property website, Rightmove, with 51 per cent aged between 25 and 34. Of first-time buyers, 36 per cent were still living with their parents as they tried saving for a deposit, while 49 per cent were renting. However, 43 per cent of first time buyers claimed that they would still buy their own place even if property prices increased.