The latest inflation figures have been released today and they tell us that the rate of price increases is falling.  I do not think anyone is going to be particularly surprised at this as this is the first month where the VAT hike to 20% last year does not affect the figures.

I’m fairly sure the powers that be will put some sort of positive spin on this but as I have said in previous posts prices are still rising just not as much as they were this time last year.  If you then take into account we have the highest unemployment figures for over 15 years and average wage increases over 2011 of around 1.9% then the light at the end of the tunnel seems a very long way off.  Equally I think we can enjoy (assuming you have a mortgage) low interest rates for the foreseeable future.

Little wonder the UK is likely to be downgraded by a credit rating agency, possibly leading to a lack of confidence in the UK market.

I think all these figures will lead to an inevitable sense of caution from homeowners.  Looking on the property portals, in Farnham there have been relatively little movement in the housing market with few properties coming onto the market.  General uncertainty in the economy means that people could well be delaying the big move until the economy has improved.

Those properties that do come onto the market will enjoy an inflated price due to lack of supply, especially South Farnham which is extremely popular.  Did see a bargain in Upper Hale, the “wreck” that can be developed into a great home.  Hope it goes to someone who will lovingly restore it rather than turn it around for a fast buck.

First time buyers have got a few weeks left of their stamp duty holiday, some surveys are showing a surge of first time buyers looking to take advantage before time runs out.  Only applicable up to £250k.

I really want to write some good news but not sure when I am going to get the opportunity!

Bousfield Blog: Are we doomed???

On 25^th Jan the Office for National Statistics (ONS) will publish the data on Gross Domestic Product (GDP) for the UK and it is widely believed output will be down 0.1% (source Bloomberg.com).  If the first quarter stats in 2012 show a decrease too then we are officially in recession again.

House prices have fallen if you take the, land registry measure, by 1.9% nationally as of November 2011.

House prices have always varied widely around the county though and as usual London still shows price growth.  When I moved from London to Farnham six years ago I sold my house in London for less than I paid for my new house in Farnham, now the property in London is worth more than my house in Farnham.  Still I’d much rather live in Farnham thank you very much.

Unfortunately the land registry stats do not give us information on Farnham, but Surrey as a whole fell by 0.6%.  Personally I have seen prices rise in Farnham but then that is a reflection of it being an attractive place to live.

The figures I think show that prices on the whole have not changed particularly and the reason has to be supply of housing.  More buyers than sellers is keeping prices steady and because in Farnham we are seeing quite a lot more buyers than sellers that definitely keeps the prices steady and more often than not sees them rising.

What does this mean if you have a mortgage? Well if you feel that you fall into the bracket of home owners that has been fortunate enough to see a rise then you could look to switch your mortgage to another provider and there are justifiable reasons for doing so should the circumstances be right for you.  For example you may have bought your house two or three years ago and taken an 85% mortgage when the deals were not too great.  Now there is every chance you could find yourself in a position where your Loan to Value (LTV-see my jargon buster) is much lower and therefore you could open doors to much better mortgage products.  This example can still be relevant should you have taken a 70% mortgage and you are down now to 60% as there are some very good products at that level too.

As I have posted in the past I still cannot see interest rates moving in the near future, so if you are on the Standard Variable Rate (SVR) with your lender then talking to a mortgage broker may well benefit you.  Surely savings you make are better in your pocket than the banks.

In my last post I pointed out that lending rates have crept up before Christmas and that has continued slightly in 2012 but once again I stress there really are some very good deals available and with interest rates at this level one really ought to take advantage as they will not be around for ever.

So are we doomed?  Don't think so but I wouldn't rule it out!

Blog 6^th Jan 2012

Happy New Year to you.  I thought I would open 2012 with a brief blog on what is in store for the UK this year.

I have had a couple of weeks off for the festive period and have done a bit of catching up with industry news to see that most predictions are of doom and gloom to come in 2012.

Firstly I note from the office of national statistics that December’s unemployment figures showed the highest number of unemployed people since 1994 (http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/december-2011/index.html) which is only going to increase strain on the public purse.  I don’t see the private sector rushing to take on these numbers as businesses are also looking at austerity measures.  Blacks have gone into administration and although they are being circled by dragons I can’t see all of the 3,000 workforce surviving.

On the plus side inflation is predicted to come down this year, however one should read between the lines here.  Inflation is the rate of (usually) price change over the past year, so the rate of increase is falling, but there is still an increase nonetheless.  Also we should bear in mind prices have gone up a lot over the past two or three years and wages have not.  The lack of wage rises combined with price rises puts massive pressure on household budgets and has seen consumers spending less on the high street.

House prices are always a topic of dinner party conversation these days and so if you are attending one this weekend read this: http://www.bbc.co.uk/news/business-16288438.  So now you can be the party bore!  The BBC article is a good one actually as it takes opinion from a number of sources, all of whom are predicting house price falls or at best staying level.  The most interesting argument for me was from Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).  He said that a sharp drop (10%) in house prices would not necessarily be good for first time buyers as that suddenly falling house prices would undermine the security of the loans already given by the banks and make new mortgages more difficult to secure as the lenders become even more cautious.

"If you think it is tough now, if prices were to start falling sharply, I suspect they [the banks] would be even tighter and harsher, and first-time buyers would struggle to gain any sort of opportunity," Rubinsohn warns.

It is a good point although the article does state that house price fluctuations are very regional and I suspect in some parts of the country these drops have already taken place.  The prices (certainly in the South) are being maintained due to a smaller supply of property and the demand outweighing that supply.  I do not see a change in the next year for either interest rates or house prices as we see more of the same from 2011.

In summary I do not think we are doomed (Mr Mainwaring) but one should remain cautious.  Mortgage lenders are still offering competitive deals so if you are not moving house you should assess your current mortgage and make sure it is competitive.  If you are on the move then providing you are comfortable with your employment prospects going forward and have a deposit or equity to take with you then rates are good and one should not be afraid.  Cautious optimism may well be the phrase to use, time will tell.