Choppy waters in the UK housing market
Latest figures from the Halifax show that UK house prices fell 0.9% in February, thereby cancelling out the modest rise of the previous month. Compared with February last year prices have now fallen by 2.8%
The average home in the UK now costs £162,657
Looking to the rest of the year, analysts believe that the uncertain economic climate is likely to depress the housing market, leading to a modest fall in prices over the course of 2011.
Fewer properties have been coming onto the market in recent months. If this trend is sustained it should improve the balance between demand and supply and help to prevent a more significant fall in house prices.
The Halifax uses a smoothed-out quarterly comparison to calculate annual house price changes. It recorded a 2.8% fall year-on-year in the three months to the end February, the biggest annual decline since October 2009.
Meanwhile, a poll of surveyors has found the cost of renting a home rose at a rapid rate in the three months to January.
Some 40% more surveyors reported that rents rose rather than fell, the highest level recorded since the Royal Institution of Chartered Surveyors (Rics) survey began in 1998.
Demand from tenants was growing, but they were chasing space in fewer properties, the poll found. This is no doubt linked to separate research suggesting that mortgage availability has shrunk again.
The proportion of social tenants has risen during the tough economic times. However, the proportion of student lettings had dipped compared with the previous three months, surveyors said.
Surveyors in all areas of Britain expected rents to continue to rise in the three months to April since its unlikely that finance for first-time buyers will become much more readily available, while uncertainty over the economy may also deter potential housebuyers.
As a result, demand for property to rent will remain strong and in all probability will continue to outstrip supply. In this environment, rents will remain on an upward trajectory adding to the pressure on many households whose incomes are already being squeezed by rising inflation prices and the hike in VAT.
