News

Market Update

It is likely that the Governor of the Bank of England in his report on Thursday will highlight the UK economy is losing its fizz and it might be a while before it gets going enough to spark inflation.  A report this week showed services grew at the weakest pace in more than two years, signaling a slowing economy that underlines the case for holding the key rate at a record low.
According to the latest Halifax House Price Index. Between August and September prices actually fell, with the average house now costing £202,859 compared to £204,722.
However, Martin Ellis, Halifax’s housing economist, said he saw no reason to expect house price rises to continue to ease.
He said: “Housing demand has been strengthening recently, underpinned by economic growth, rising real earnings and very low mortgage rates”.
“Increasing demand is combining with very low growth. There is little reason to expect any fundamental shift in the key market drivers over the coming months.”
Separate research by the Halifax also showed that there has been a 60% increase in the average price of a flat over the past ten years – significantly higher than the 38% rise for all residential properties. Highlighting the up take in Buy to Let, also changes to stamp duty nil rate band, when that is increased, house builders push up first time buyer properties accordingly. We need to find a better system for land and buildings tax (stamp duty). I have always believed the stamp duty on equities was a far fairer system. Everybody pays 0.5% on the entire transaction. If you were buying a £120,000 property you would pay £600, a £1,200,000 you would pay £6000. That would be fair all round, take politics out of housing and raise far more for the Inland Revenue because buyer and seller would be paying it. However I’m not the finance secretary!
The research also showed that detached homes and bungalows have recorded the slowest rises over the past decade – at 21% and 28% respectively. Ironically, in days gone by bungalows always sold at a premium. How the world changes.
Bill Reid BEM BA NAEA DipPFS