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House prices surge again The UK's largest mortgage lender said house prices rose by 1.7% in October. The Halifax House Price Index showed that the average UK home is now worth £184,593, 8.6% higher than at year ago. The October rise was the largest monthly jump since April and the second highest in the past year. It follows a 1.2% rise in September. A lack of housing supply and the general strength of the economy means that there is still some upwards pressure on house prices. The talk from lenders is not about slowdown in prices rather than meltdown and the Bank will be hoping another rise in interest rates will bring the housing to a soft landing. The UK's chartered surveyors called for the Bank to raise rates yesterday in an attempt to cool down property demand.
Howard Archer, chief UK
economist for Global Insight, agreed that the housing market would
cool. He said: 'First time buyers are finding it ever more difficult
and costly to break into the housing market, while a growing number
of people have missed mortgage payments recently. 'There are also
increasing reports that people are finding it more difficult to trade
up the housing ladder. 'Ultimately, we believe affordability
constraints will cause house prices to moderate, although the process
looks like taking longer than we have been expecting.'
House prices top £200,000 The average UK home is now worth more than £200,000, with the Bank of England's August interest rate rise failing to quell demand. Quarterly figures from the Land Registry showed that the average house price rose to £211,453 in the three months to the end of September. Prices have risen by 9% since the start of the year. The number of properties being traded was up 17% on the same period a year ago, showing that an August interest rate rise to 4.75% had little impact. The Bank of England is expected to announce a further hike tomorrow. The rise will be a welcome move for the UK's leading property organisation. Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, said: 'The experience of late 2003 and 2004 shows that it takes several rounds of interest rate rises to take the heat out of the housing market when the economy is performing well. 'A pre-emptive rise in interest rates will help to contain inflation pressures and wage rises in the next year, providing for a more stable economic environment. The Bank of England will be well advised to act this week.' The Land Registry's figures provided further evidence that the first rung of the housing ladder is out of the reach of most first-time buyers. Only three areas of the UK – Stoke, Kingston-upon-Hull and Blaenau Gwent - have an average house price below £100,000.
The number of properties
selling for more than £1m rose by 50% over the past year to
nearly 2,000.
Rise of buy-to-let millionaires The booming property market has created an army of buy-to-let millionaires with a portfolio worth an average £1.5m each. Research published yesterday reveals the fortune that thousands are making. The average professional buy-to-let investor owns 12 properties, usually flats or houses in city centres, worth £1.54m. To qualify as a 'professional', they have to own at least three properties and have been renting them out for at least three years. The majority have a full-time job working in anything from accountancy to manufacturing but manage their property portfolio as a sideline. The research, published by mortgage expert Paragon, comes about a decade after buy- to - let was launched in Britain. Most have enjoyed huge success from buying properties, using the rent to cover mortgage payments and watching the value of their investment shoot up. The 'average' portfolio owned by a professional Paragon client has risen by about £100,000 in value over the last three months. About 1.7m properties are privately rented out by landlords. Some investors have just one property, typically a flat which they used to live in but never sold, many have dozens, even hundreds, in their collection. And they are extremely confident about the future, with most planning to add at least one more property to their portfolio over the next 12 months. John Heron, managing director of Paragon, said these landlords have enjoyed the perfect conditions - rising house prices and huge demand from tenants. There is demand for a place to rent from a wide variety of people, from the young who cannot afford to buy to eastern European immigrants. Many others are recently divorced couples, which means either the husband or wife needs to rent a new home if they cannot afford a second mortgage. A typical home in Britain now costs nearly £170,000, which is nearly £13,000 more than the same home would have cost last year. Prices have gone up an inflation busting 8.2% over the last 12 months, a period when experts predicted they would come to a standstill. As a result, many in their twenties and thirties cannot afford to buy and are forced to keep on renting. Official figures show the number of buy-to-let mortgages has soared to nearly 770,000, worth £84bn, according to the Council of Mortgage Lenders. This is equal to everybody in Leeds, Britain's third biggest city, being a buy-to-let investor. In 1998, there were just 28,700, worth just £2bn - a sign of how much the market has boomed since buy-to-let mortgages became widely available. Many regard their buy-to-let property, typically a flat in a city centre, as an investment which will be their pension when they retire. A typical buyer pays £172,000 for their buy-to-let home, taking out a mortgage of just over £130,000. Between January and June, a record 152,500 buy-to-let mortgages were taken out, a 63% rise on the same period last year. Michael Coogan, director-general of the Council of Mortgage Lenders, said the market remains 'robust, underpinned by strong rental demand'. Rob Crighton, 51, and his partner, Sue Hill, 52, own 16 houses in Milton Keynes worth £3.8m.
IN THE MONEY: Rob Crighton
and Sue Hill They have been snapping up houses ever since. One of the biggest jobs is trying to find the right people to live together in each house. Mr Crighton, who used to work part-time in IT support for the Open University, said: 'We have 'flavours' of houses. We have a couple that are all female. We have some where only Polish people live. We try to make birds of a feather live together.' Mr Crighton, who lives in Milton Keynes, said the couple regard their property portfolio as their pension. He still works part time for the OU while his partner is a part-time piano teacher.
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