House price optimism is rising as more than a third (35 per cent) of home-movers expect prices to be higher in 12 months’ time, the highest level since the third quarter of 2010.

House price confidence is strongly influenced by the mortgage market as both ‘price optimists’ (who expect house prices to rise) and ‘price pessimists’ (who expect prices to fall) cite mortgage-related issues as being the main reason behind their views.

Suitable stock has emerged as a major issue for buyers with half of home purchasers (50 per cent) stating this is their single biggest concern about buying

Prices are still considered ‘above fair and reasonable’ by just under half (46 per cent) of homemovers.

House price optimism is at its highest for seven quarters, Rightmove’s latest quarterly Consumer Confidence Survey of over 40,000 home-movers finds.  Miles Shipside, director at Rightmove, comments: “While the most common view remains that property prices will be about the same one year from now, this is the most upbeat price forecast Britain’s homemovers have delivered in nearly two years.

“Confidence plays an important role in motivating those who can afford to buy to actually go ahead and transact.  By self-selection, many of them are hunting in the same better-heeled locations which in turn builds greater momentum and price rise expectation in these more affluent areas.  Conversely, lower levels of activity in less well-off areas spreads negative sentiment fuelling falling price confidence.”

A total of 9,600 properties were repossessed in the UK in the first quarter of 2012, according to new figures from the Council of Mortgage Lenders (CML).

This is roughly the same as this time last year, but a slight rise on the previous quarter and breaks a recent trend of year-on-year increases.

The latest figure is a 10 per cent increase on the fourth quarter of 2011, but the CML said this represents a “normal seasonal pattern”.

The CML has described the situation as stable and said that its previous prediction that repossessions would rise to 45,000 this year could be revised down later this summer when it publishes its housing market forecasts.

“Continuing pressures on household finances, changes to welfare benefits and an upward drift in mortgage rates all have the potential to disrupt the current stable picture,” it cautioned.

The report also highlighted a modest improvement in arrears. The number of mortgages with arrears of 2.5 per cent or more of the outstanding balance fell to 157,800, down from 160,300 at the end of December and 170,500 a year ago.

Mark Harris, chief executive of broker SPF Private Clients, said that while it is encouraging news, it is important that complacency does not creep in.

“Lenders must continue to show forbearance and look after customers who are struggling by letting them switch to interest-only, take payment holidays or extend their mortgage terms,” he said.

If you are experiencing mortgage arrears or need help avoiding house repossession, email me (editor@theadvisory.co.uk). We have access to a number of “repossession avoidance specialists” that can help you!

With the Olympics in London, lettings agents across the country are getting excited about the chance to cash in on the rental opportunities.  Sol Campbell has put his home on the market and rents are tripling in the areas around Stratford.

But some agents are reporting hundreds of properties on their books with no-one to rent them.

James Davis, CEO of lettings agency Upad, which has its own Olympics division, comments:

“It’s been really quite encouraging.  The majority of letting as based in East London, but we’re seeing properties being looked at across the whole of the city.

“It’s a lot like Wimbledon,” he says.  “There are people who want to be around during the tournament but there are lots of families who want to get out of town, capitalise on their empty property and make some money in the process.”

On the question of over-supply, he comments: “I suppose the warning is for landlords not to be too greedy.  There should be a premium attached to the short let but don’t get carried away with what’s being reported in the press.

“The hardest part is pricing your property.  Because we haven’t been here before, it’s very hard to say what the mark-up should be.  Short let properties have a premium attached to them anyway, but it’s important to be realistic and be careful not to price yourself out of the market.”

You have to take statistics with a pinch of salt at the best of times, but when people start getting worked up about fractions of a percent, it gets ridiculous.

Latest pumped up drama over a tadpole piece of news is from Quick Move Now, seizing on a fall of 0.2 per cent in house prices in April, as reported by mortgage lender Nationwide.  This means that for an average-value property of £150,000, the fall was £300.  Is anyone going to throw themselves off a cliff in response?

This was the fourth fall in five months and prices are not expected to revive in the next quarter, according to Quick Move Now.  But prices are still less than 1 per cent below their level a year ago, a pretty insignificant fall when you consider what’s happened to the stock markets, unemployment and the Eurozone.  It’s hardly Armageddon.

Donna Houguez, Quick Move Now’s market analyst commented: “We predicted that buyers rushing to purchase before the end of the stamp duty holiday would artificially lift property sales and prices and this is exactly what happened.  Unfortunately we are now seeing a return to the true situation with a continuing decline in property sales, prices and mortgage lending.

“We expect this announcement to add to the general anxiety surrounding the double-dip recession, resulting in sustained downward pressure on the housing market.

“On a positive note, it appears that the stamp duty holiday had an impact, albeit temporary, and it will be interesting to see if the Government responds to these figures with any further stimulus measures.”

The first-time buyer share of the housing market has shown a small recovery in recent months.

But estate agents fear that the recent ending of a two-year stamp duty concession for first-time buyers could disrupt the market further.

Peter Turner, Experian Interactive managing director said: “In spite of difficulties across the country in getting that first foot on the property ladder, online indicators suggest the market is improving for first-time buyers.”

Milton Keynes is the UK’s top first-time buyer hot spot – almost one in 10 households.  The area’s population has increased by more than 13,000 people since 2007, while its young population is an attraction: 62 per cent of residents are under the age of 44.

Dartford in Kent is second: the population is up by 3,000 people in the last five years and six out of 10 people living there are under 44.

Areas surrounding London dominate the list.  House prices in London have remained relatively high, boosted by demand from overseas buyers, while the market in other areas of the UK has been patchier.

Swindon, third on the first-time buyer hot spot list, has had a population increase of more than 11,600 people since 2007.

In Aldershot, first time buyers make up 8.6 per cent of the population and 8.2 per cent in Hempstead Valley, Kent.

City Residential estate agent in Liverpool has seen a marked increase in repossession numbers during the first quarter of 2012.

The agency noted this hike came out of the blue, despite detecting a small rise in the company’s review of the last three-month period of 2011.

The report stated: “Whilst we expected to see this momentum continue during 2012, we have been a little surprised by the number of apartments that have been brought forward.”

It explained a number of sizeable repossession portfolios have emerged on the market of late, while an increasing amount of lenders are looking to rid themselves of assets deemed to be non-performing or underperforming.

But while interest levels in Liverpool property remain high, it was observed that greater repossession numbers would not be a welcome sight for the market.

This is because such an influx might serve to destabilise the level of supply and demand enjoyed by the sector at present.

City Residential pointed out it may be a little too early to say whether or not 2012 can be dubbed the year of repossession, but claimed there is no doubt some banks are “shaking the tree”.

Resources:

• http://www.cityresidential.co.uk/

An estimated 1.5 million such loans worth around £120bn are due for repayment in the next decade but with lenders much stricter about their lending criteria, there are fears that many will struggle to find another deal.

A string of lenders recently slashed the amount which can be borrowed on an interest-only mortgage to just 50 per cent of the home’s value and in future this type of mortgage is set to be considered a ‘niche’ part of the market, offered only to those who can clearly show how they will repay the capital.

Ray Boulger, senior technical manager at mortgage adviser John Charcol, said those on an interest-only mortgage will be ‘in the most difficult position’ as lending rules tighten and for many, another deal with their existing lender could be their only option.

Interest-only mortgages allowed borrowers to only pay off the capital when the mortgage term ended, enabling them to maximise their borrowing capacity at a time when property prices were outpacing wage increases.

The last property price boom fuelled a new surge in interest-only mortgages, peaking at a third of all mortgage sales in 2007.

According to the Council of Mortgage Lenders, more than 95 per cent of first-time buyers have been taking out repayment loans since the summer of 2011 and the proportion of repayment loans taken out by home-movers and those remortgaging has also been rising.

Under the Financial Services Authority’s plans to clamp down on irresponsible lending, interest-only mortgages will only be offered in future where there is a credible plan to repay the capital, and borrowers cannot just rely on hopes that house prices will rise.

Mr Boulger said: “It may be that they can afford to switch to a repayment mortgage. People aged in their 50s may find they can only get a mortgage for 15 to 20 years, perhaps 10 years.”

He said that some borrowers could also try going for a compromise solution, as a small number of lenders offer mortgages which are part interest-only and part repayment.

Almost 40 per cent of respondents to the latest Halifax housing market confidence tracker believe house prices will generally increase over the next year, almost double the 20 per cent who predict they will fall.

Researchers said this is the most positive view since the quarterly series began 12 months ago, with Londoners the most confident about rises and those living in the North East the least positive.

Martin Ellis, housing economist at Halifax, said: “It is encouraging that the level of consumer confidence in the housing market continues to improve, albeit from a very low base. This is consistent with the broad stability that we have been seeing in house prices nationally in recent months.”

Some recent house price studies have noted a ‘spring bounce’ this year, although much of this has been put down to a rush of first-time buyers completing deals before a two-year stamp duty concession ended in March 2012.

Halifax’s own house price index found that prices in the first quarter of this year were 0.1 per cent lower than during the final quarter of 2011.

Mr Ellis said: “We continue to expect little overall movement in prices this year, provided that the UK economy does not suffer a pronounced weakening.”

The increase in confidence comes despite expectations that the availability of mortgages will decrease in the coming months. Lenders have been tightening their credit criteria, leading to a drop in the proportion of mortgage approvals, while more than a million homeowners will see their mortgage rates rise from May 1, around 850,000 of them Halifax customers.

Lenders have blamed the rises on the weak economy and the increased cost of funding a mortgage.

Resources:

• Halifax House Price Index
• Get your house valued for free

Countrywide Building Society believes that home ownership could be in terminal decline.

“We could see the next generation becoming a nation of renters without the right intervention from Government,” says Grenville Turner, Chief Executive of Countrywide.

Asked why they don’t move home, 62 per cent said they were happy where they live, 21 per cent were unable to afford a deposit, and 16 per cent could not afford a mortgage.  House moving costs and fees including stamp duty was a concern for a further 16 per cent, while 12 per cent cited job insecurity.  Only 5 per cent of those questioned were unwilling to move because they though prices would fall.

Perhaps unsurprisingly those aged 18 – 35 were more worried about employment prospects as youth unemployment rates soar.  18 per cent cited job insecurity as a barrier to moving home.  This is a third more than the general population.

Aspirations for home ownership are still high.  A third (32 per cent) of private rental tenants stated that happiness with their current property is the reason for not moving.  Over half of those renting properties cited deposit affordability as an obstacle (56 per cent).

“Based on current levels of activity, the average home-owner moves house once every 25 years as opposed to once every 12 years.  These levels are unsustainable and we call for further support as a strong, vibrant housing market contributes to GDP growth and will dramatically improve the economy,” says Turner.

Countrywide’s research with YouGov covered over 6,000 UK adults and included private rental tenants, home-owners with mortgages, owner-occupiers, home-owners with shared equity stakes, and those living rent-free.

Resources:

• Countrywide
• You Gov
• What Moving House Really Costs

From May 2012, the Mayor of London will be responsible for the capital’s entire house-building budget – over a third of the national pot of money – and significant public land to build on.

Currently, the mayor can only build new homes by working with the Homes and Communities Agency, the London Development Agency, boroughs and developers to bring together the funding, the land and the planning permission needed to create the homes that Londoners require.

Every Londoner knows that the high cost of buying or renting a home in the capital has a huge impact on the way they live their lives – from young people desperately trying to save for a deposit, to families struggling to keep up with their mortgage or spending up to half of their income on rent.  Many believe they have no other option but to give up on London – a recent poll by Shelter indicates that up to 1.8 million Londoners expect to be driven out of the city by the rising cost of housing.  That’s almost a third of the capital’s population.

From May, the mayor could release the money to build and the land to build on, bringing Londoners more homes that they can afford – either to rent or to buy.  Shelter believes that renting a two-bedroom home in London is unaffordable for families earning less than £52,000.

Resources:

• London Major’s Office
• Shelter
• London Development Agency
• Homes And Communities Agency