ROOF Blog

House prices are up 0.1% compared to February, the smallest margin ever recorded at this time of the year, when prices have never fallen month on month, according to property website Rightmove. The near standstill in prices has fuelled concerns that a decline in the housing market could lead to a slowdown in the wider economy as unemployment, public sector spending cuts and potentially higher interest rates hit the consumer. Both Nationwide and Halifax reported house price falls in February. Nationwide said average prices dipped 1% to £161,320, ending a run of nine consecutive monthly rises. Halifax reported an even sharper fall of 1.5%, with average house prices dropping to £166, 857. It remains unclear whether February’s data was a blip caused by the severe weather conditions in the UK or a more long term trend.

The British housing market is improving at a faster rate than property prices across most of the rest of Europe, a report by the Royal Institution of Chartered Surveyors (RICS) has found. House prices rose in only five European countries, including Britain, during 2009. But other countries continued to suffer a sharp market correction, with prices diving by up to 53%. RICS warned that countries with vulnerable economies would continue to suffer from price falls and depressed markets during 2010. Norway led the revival, with property prices in the country rising by 12% during 2009, followed by Finland at 8% and Sweden at 7%. Britain was the fourth best performing country, with the average cost of a home ending the year 1% higher than it started it, although house prices had risen by 10% from their lowest point in April.

Councils are considering plans to reduce their spending including by cutting up to 170,000 public sector jobs in anticipation of a dramatic downturn in their budgets. Dame Margaret Eaton, chair of the Local Government Association, said that local authorities were being hit by a ‘perfect storm’ in the recession with increased pressure on their services and a squeeze on their budgets. Privately, councils are looking at how to slash their budgets by 15% over the next three years, using projections on the cuts necessary to reduce the £178m public deficit drawn-up by the respected Institute for Fiscal Studies.

Fears of a double-dip recession and a sterling crisis in the run-up to the election were raised last night amid news of collapsing investment in British industry and a warning from one of the world’s leading financiers that the pound could plummet within weeks. The pound fell sharply on the foreign exchange markets after a day of grim economic news which saw an admission from RBS that it had missed government targets for business lending, a downgrading of the UK growth prospects by the European commission and a warning from the CBI that consumer spending was likely to remain weak ahead of polling day.

The end of stamp duty relief at the start of the year has helped cause a substantial dip in mortgage lending during January, with just £8.02 billion lent during the month, the lowest level since March 2001. This compares with an average monthly amount of about £18 billion during 2007. The data, released by the British Bankers’ association, are the latest figures to suggest the economy will endure a slow recovery, after signs of optimism at the end of last year. A leading member of the Bank of England’s Monetary Policy Committee warned today that the housing market could be ‘weak’ during 2010.

Ministers are to crack down on excessive housing benefit payments in a series of reforms designed to curb the increasing £17 billion annual rental bill. Yvette Cooper, the work and pensions secretary, plans to cap the highest rates paid to private landlords — as much as £1,800 a week — to stop families on benefit living in palatial homes at the taxpayers’ expense. The reforms are expected to save hundreds of millions of pounds a year, but could result in hundreds of families being evicted from expensive accommodation with six months’ notice. The housing benefit bill, which covers rents in the private and social sector, has jumped from £11 billion in 1998 to £17.4 billion in 2008-09 and goes to 4.5 million claimants. The Treasury has forecast that this will rise to £20 billion by 2011 because of the recession, rising private rents and a critical shortage of social housing. The average rent in social housing is only £72 a week against £108 in the private sector.

Most Britons believe that house prices will rise this year as the country awaits official confirmation that the worst peacetime recession is finally over. A survey by Rightmove found that 53 per cent of those in the UK believe house prices will rise over the next 12 months, compared with just 10 per cent at the beginning of last year. The sharp upswing in confidence about one of the worst affected sectors during the recession comes prior to the publication of figures tomorrow that are expected to show the economy started growing again in the last quarter of 2009. Economists are predicting that the Office for National Statistics will say that gross domestic product increased by 0.4 per cent, which would mark the official end of the recession following six quarters of contraction.

The recession may have severely dented the property market, but new figures show it has also prompted a surge in official complaints against those who make their living from it – estate agents, lettings companies, developers and even surveyors show big rises. The Property Ombudsman Scheme (POS) – the best-known redress system for buyers, sellers and tenants – received well over 10,000 complaints last year, with those in the lettings sector of the market alone surging by 79 per cent since late 2008.

House prices defied the economic downturn last year to rise 1.1 per cent, boosted by a second-half surge in demand from homebuyers. The annual increase was the first rise over 12 months that Halifax, the mortgage lender, has recorded since March 2008. The latest rebound continued in December, with prices rising by 1 per cent over the month, the sixth monthly rise in a row, taking house prices to an average of £169,042 — 9.4 per cent higher than in April last year, when the market bottomed out. Despite the apparent buoyancy of the market, Halifax, now part of Lloyds Banking Group, gave a cautious outlook for the year ahead, warning that it expected house prices to remain flat during 2010.

Crisis has warned that despite the budget deficit, 75% of the British public want the Government to address the growing gap between rich and poor. A YouGov poll commissioned by Crisis also shows that the majority of people in UK (60% of those with an opinion) say that the recession has made them more worried about the gap between rich and poor and the same proportion want to see the poorest protected from budget cuts as they can least afford to pay. Leslie Morphy, Crisis chief executive said: ‘With the election looming, politicians vying for votes must recognise people’s desire for a fairer society. They must not forget those who are poorest, amongst whom homeless people are some of the most vulnerable. They must pledge to protect them.’