Growth in UK house prices slowed slightly in November, according to the latest survey from the Nationwide.
Prices were 3.7% higher than a year earlier, the building society said, down from 3.9% in October. House prices rose by 0.1% in November from the previous month, and the average property now costs £196,305.
Nationwide said the annual rate of house price growth for the past few months had been broadly in line with earnings growth over the longer term.
“While this bodes well for a sustainable increase in housing market activity in the period ahead, much will depend on whether building activity can keep pace with increasing demand,” said Nationwide chief economist Robert Gardner.
House price figures from the Land Registry show that values have risen in all regions of England and Wales in the 12 months to the end of October, but at very different speeds.
The sharpest rise was in London, where the annual price increase was 10.6%.
This pushed the value of the average home in London above £500,000 for the first time.
The slowest rise was in Yorkshire and the Humber, where prices rose by 1.4% over the year.
The most expensive sale in October was in Belgravia, London, at £21.5m. The cheapest was in Middlesbrough at £10,000.
The Nationwide noted that there were a number of measures announced in Chancellor George Osborne’s Autumn Statement to encourage building, but construction was well below the rate at which new households were formed and needed homes.
“It is positive that policymakers are focusing on the need to increase home building,” Mr Gardner said.
Among the policies announced by the chancellor was a stamp duty surcharge on buy-to-let and second home purchases from April 2016.
“As buy-to-let represents over 15% of total housing purchases the tax changes are large enough to distort prices in an inelastic market,” he said.
Various surveys record UK house prices on a monthly basis, but they all have slightly different methodology.
The house price index by the Nationwide is the quickest to be released. It uses an average value for properties after considering components such as location and size. The survey is based on its own mortgage lending, which represents about 13% of the market.
The Land Registry calculates the price change for properties that have sold multiple times since 1995. This survey only covers England and Wales.
The government has sold £13 billion of former Northern Rock mortgages that taxpayers acquired during the financial crisis.
The portfolio is being sold by UK Asset Resolution (UKAR) to US investment firm Cerberus. The deal is thought to be the largest financial asset sale to date by a European government.
UKAR was the “bad bank” set up in 2010 to run down loans made by Northern Rock and Bradford & Bingley.
The mortgages are being sold for £280 million above their book value.
The government has now sold more than 85% of the assets of Northern Rock, the Newcastle based lender that collapsed in 2007 and marked the start of the financial crisis.
Chancellor George Osborne said: “We are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.”
Mr Osborne added: “The highly competitive process, unprecedented scale, and the fact that these mortgages have been sold for almost £300m more than their book value demonstrates the confidence investors have in the UK.”
Meanwhile, TSB Bank will buy £3.3 billion of the former Northern Rock mortgages and loans from Cerberus.
That deal means it will become the mortgage lender to another 34,000 UK homeowners.
Customers with former Northern Rock mortgages or loans do not need to take any action and there will be no changes to terms and conditions.
BBC business editor Kamal Ahmed said it was very difficult to judge whether this was a good deal for taxpayers, because calculating the overall cost of the banking bailout was extremely complex.
“What people probably want to get to is a more normal situation with banks operating normally, serving their customers in the private sector. This at least is a step in that direction,” he told the Today programme on Radio 4.
The vast majority of former Northern Rock mortgage holders have been unable to switch to a better deal because lenders have not been keen to take them on.
Raising interest rates to deal with housing market problems would hit the rest of the economy too hard according to the Bank of England deputy governor Dame Nemat (Minouche) Shafik.
Dame Nemat pointed to research carried out at the Bank, suggesting that if it had raised interest rates by two percentage points before the financial crisis, it would have reduced household debt by 2%, but cut economic growth by 2.6%.
She said this analysis supported the use of other tools to control the housing market.
“We have an FPC, which works alongside the MPC. It has tools to do things like put limits on the amount of indebtedness that households can take on, it can reduce banks’ ability to lend very risky loans, so for us we need to use the right tools for the right problem.”
Asked about household debt levels, she said they were still high, but had come down a lot as a share of income.
“It used to be about 155% at the time of the crisis, and it’s come down to 135%. It’s plateaued recently, but we do think it has improved.”
On Thursday, the Monetary Policy Committee (MPC), on which Dame Nemat sits, voted 8-1 to keep interest rates unchanged at 0.5%, where they have been for six and a half years.
Dame Nemat told the BBC: “Just last month, we looked at this again and we said that actually we do have room to lower interest rates if we had to and we could do more quantitative easing if we had to and in fact the governor’s letter to the chancellor this month explains precisely that.
“But the fact of the matter is: at the moment we don’t need any more ammo, because the economy is growing above trend. But what we have said is that we have it there if we need it.”
“My children… tease me relentlessly: you meet all the time, you work so hard, you read all those papers, you look at all that data and then you decide to do nothing,” she said.
“My response to that is every month we meet we pore over the data and we argue and we analyse and it’s a big decision and we make that decision with huge amounts of care and thoughtfulness and making a decision to keep rates steady is just as difficult a decision to raise or lower rates.”
The “starter homes” programme- originally announced a year ago mean that in theory 200,000 first time buyers will be able to purchase new houses or flats at a 20% discount.
The quid pro quo of this arrangement is that developers will be relieved of their obligations to provide affordable homes for rent, or having to pay for general local infrastructure such as roads, or indeed schools.
While this may be good news for Britain’s aspiring homeowners, the worry is that there will be fewer homes for poorer families to rent.
And local authorities fear they will have billions of pounds less to spend on infrastructure.
When, eventually, the first building bricks are laid, the government’s starter homes initiative will offer first time buyers a much better deal than they currently get on the Help to Buy programme.
Buyers will need to be under 40, and cannot have owned their own home previously.
They will get at least a 20% discount on the purchase price, but they will not be allowed to sell or rent the properties for their full market value for five years.
According to the plans published so far, the discounts will apply to properties worth up to £250,000 outside London, or £450,000 in the capital.
Permission will only be granted where land is scheduled as under-used, or as an unviable commercial or industrial site.
Housing associations fear that even fewer affordable homes will now be provided for people to rent. The trend is already going down.
Five years ago, 60,480 affordable homes were built in England. By 2013-14 that had fallen to 42,920, according to government figures.
Social rents – the cheapest – have declined significantly, while “affordable rents”, introduced in 2011, have largely replaced them. They offer rent at 80% of market value.
Intermediate affordable housing – mostly homes in shared ownership schemes – has also declined.
The housing charity Shelter has called the starter homes scheme a “non-starter”. It has calculated that outside London, the houses will cost up to nine times the average salary, and 11.5 times the average wage in the capital.
It claims that they will only be affordable to those on average incomes in 58% of local authorities.
Local authorities are anxious about the money they will lose under so-called section 106 payments. These are the obligations that developers have to meet to benefit the community, in return for getting planning permission.
They consist of providing a certain percentage of affordable homes in any development, as well as payments for general local infrastructure.
The Local Government Association (LGA) says that typically developers pay about £15,000 per home.
If developers are no longer required to make such payments, cash-strapped local councils will lose a further £3 billion, according to LGA estimates.
At the start of the financial crisis, in 2007, some 177,650 homes were completed in England. This plunged to 106,720 three years later. Since then the industry has recovered significantly, building 131,060 in the year to June.
If, by building more houses, prices fall, and more people can afford to buy them, then the government will be able to claim success.
But if prices continue to rise, and it is only the wealthy middle classes who are able to take advantage of an extra leg-up from the government, the starter homes scheme is unlikely to prove popular with those destined to remain renters rather than owners.
And when these homes eventually come back on the market, they will be sold at full price.
The financial regulator, the Financial Conduct Authority (FCA) is considering a deadline for claims over mis sold payment protection insurance (PPI).
It anticipates that PPI customers would still have at least until 2018 to claim compensation. So far more than £20 billion has been paid out for PPI mis-selling to more than 10m consumers.
The policies were supposed to protect people against loss of income or sickness, but were often inappropriate.
The regulator will now launch a consultation, on whether there should be a deadline on compensation claims.
It said there should be a window of at least two years after the deadline is set.
This would not be before the Spring of 2016 – meaning that consumers would have until the Spring of 2018 to make a claim through their bank or the Financial Ombudsman.
A very small sigh of relief this morning from Britain’s biggest banks following the decision of the Financial Conduct Authority to consult on a final deadline for Payment Protection Insurance claims.
Banks such as Lloyds have long argued privately that there should be a cut-off point. They are convinced that many of the claims are bogus and are driven by claims management firms rather than by irritated customers.
Of course, many say that the banks are rightly reaping the effects of their appalling past behaviour.
The FCA move today is all about the “normalisation” of relations between regulators and the City.
As George Osborne signalled in his Mansion House speech earlier this year, the government is keen to see a new “settlement” with the financial services sector.
The former, combative head of the FCA, Martin Wheatley, was removed by the Treasury.
And the PPI deadline means another thorny legacy issue looks close to being dealt with as the number of complaints about PPI is falling, but still runs in to hundreds of thousands every month.
In the first half of 2015 more than 883,000 customers complained about mis-selling, a fall of 16.6% on the same period in 2014.
The FCA said a deadline would “bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector.”
The watchdog said too many people were taking too long to bring their claims, and that a deadline – along with an advertising campaign promoting any potential deadlines – would spur any outstanding claims to be brought.
Some people will have an even shorter time in which to complain.
Three years ago, the regulator ordered banks to write to as many as 12 million customers, advising them they may have a valid complaint.
Those who received such letters were given a deadline of three years in which to submit their claims, meaning some may have already lost their right to complain.
The consumer group Which? warned that any deadline could encourage banks to hold up compensation payments. “A time limit must not reward those that have dragged their heels over paying out compensation,” said Richard Lloyd, Which? executive director.
The buy to let property market in the UK could post a threat to wider financial stability, a Bank of England committee has said.
Buy to let mortgage lending had the potential to “amplify” a housing boom and bust, the Bank’s Financial Stability Committee (FPC) concluded.
Lending in this sector has risen by 40% since 2008, the FPC said. However, it stopped short of suggesting any intervention by government or regulators at this stage.
“The FPC is alert to the rapid growth of the market and potential developments in underwriting standards,” the committee said.
“As the market continues to grow, particularly if driven by loosening of underwriting standards, the sector could pose risks to broader financial stability, both through credit risk to banks and the amplification of movements in the housing market.”
The 40% increase in the outstanding stock of buy to let mortgage lending since 2008 compares with an increase of just 2% in owner-occupier mortgage lending.
The share of buy to let in the stock of outstanding mortgage lending has risen to 16% from 12% in 2008.
The Bank said that buy to let landlords were much more likely to sell if there was a significant drop in house prices, causing property values to dive further.
A similar amplified effect could occur should prices go up sharply.
“Any increase in buy-to-let activity in an upswing could add further pressure to house prices. This could prompt owner occupier buyers to take on even larger loans, thereby increasing overall risks to financial stability,” the FPC said.
Over the Bank of England’s three centuries of history it has had to grapple time and again with the problem of boom and bust.
The Bank’s Financial Policy Committee says it “has the potential to amplify the housing and credit cycles”.
It is careful not to designate either the dash for buy to let or recent house price increases as a boom.
But it is clear that bank officials see investors’ enthusiasm for bricks and mortar as a problem which needs to be watched.
Buy-to-let investors push prices up faster. Because they are more prone to sell if the market hits the buffers, they make prices plunge more steeply.
Cuts to the amount of tax relief that can be claimed on mortgage interest payments by buy-to-let landlords were announced by Chancellor George Osborne in his Budget in July.
The amount that landlords will be able to claim will be set at the basic rate of tax, which is currently 20%. The change will be introduced over four years from April 2017.
Mr Osborne suggested this would help to create a “level playing field” between homeowners and investors.
The FPC said that no intervention was needed in the Help to Buy scheme – which sees the government guarantee part of a low-deposit home loan – as it posed no risks to financial stability in its current form.
House prices are rising fastest in the East of England, official figures show, as analysts suggest property market “action” has moved out of London.
The typical home in the East increased in cost by 8.3% in the year to the end of July, the Office for National Statistics (ONS) said.
Prices in London, which saw big rises last year, rose by 5.5%, slightly lower than the average in England of 5.6%.
Overall, UK house prices increased by 5.2% in the year to the end of July.
The other area to see significant price growth was Northern Ireland, up 7.4%.
Property values in Northern Ireland are recovering from a massive fall during the financial crisis, and remain 42% below the peak of August 2007, the ONS figures show,
Prices rose by 6.7% in the South East of England, the ONS figures show, although here – as in the East and in seven other regions – the pace of price rises has slowed.
Annual house price change
England 5.6% rise
Wales 0.3% rise
Scotland 1.3% fall
Northern Ireland 7.4% rise
North East England 0.7% fall
North West England 3.7% rise
Yorkshire and the Humber 4.7% rise
East Midlands 5% rise
West Midlands 4.9% rise
East of England 8.3% rise
London 5.5% rise
South East England 6.7% rise
South West England 4.2% rise
Source: ONS; 12 months to end of July 2015
The 5.2% average price increase in the UK was down from the 5.7% rate recorded in the previous month. Prices in Scotland fell by 1.3% and were 0.7% lower in the North East of England.
Excluding London and the South East of England, UK house prices increased by 4.4%.
The average home cost £295,000 in England, £173,000 in Wales, £154,000 in Northern Ireland and £196,000 in Scotland. In England, the highest average price was paid in London (£525,000) and the lowest in the North East (£156,000).
The average price paid in the UK was £282,000, and analysts expect this to continue to rise, not least as a result of a lack of properties in the market.
Nearly a million homeowners have no way of paying off their mortgages because they opted for interest only loans, according to Citizens Advice.
The new figure is much higher than previous estimates from lenders and from the City watchdog, the Financial Conduct Authority (FCA).
Citizens Advice said 934,000 owners did not have a plan for how to pay back the money at the end of the mortgage term.
It warned that time was running out for some to organise their finances.
They faced having to sell their homes or even have the property repossessed if they were unable to find other funds, the charity said.
Millions of buyers were sold interest-only mortgages before rules were tightened up three years ago.
Without the need to pay back some of the loan each month on top of the interest, they could borrow more to buy their dream homes.
Banks and building societies have been told by regulators to write to their customers to warn them that they could be in financial danger.
In some cases they have converted interest-only mortgages into Lifetime Mortgages, which allow borrowers to stay in their homes though retirement, paying interest if they can.
The debt is paid off when they die or have to move out.
Citizens Advice has estimated that out of the 934,000 who have no plan in place to repay the loans, more than 432,000 have not even thought about the issue.
“People buy a home for stability, but interest-only mortgages have forced many into a financial black hole,” says the charity’s chief executive, Gillian Guy.
Two years ago the FCA calculated that a far smaller number, around 260,000, had no strategy to pay off their mortgages.
Part of the explanation could lie in different estimates of the number of interest-only loans.
The FCA put it at 2.6 million, a figure which the Council of Mortgage Lenders (CML) believes has fallen recently to 2.4 million.
But Citizens Advice has arrived at a total of 3.3 million borrowers, by taking into account the fact that many couples have joint mortgages.
And it argued that its polling had produced a more accurate picture of the proportion who have little prospect of dealing with the debt.
The first sizeable wave of repayment problems is expected to appear in 2017-18, when endowment mortgages sold in the 1990s reach their peak period of maturing.
A decade later, in 2027-28, the surge in interest-only mortgages taken out from the early 2000s reaches a high point.
And the final peak comes in 2032 when the wild lending to people who could barely afford the interest, just before the credit crunch, has to be dealt with.
Citizens Advice wants mortgage providers to do more, including phoning people and offering face-to-face meetings, to help them prepare for the day when the demand for repayment arrives.
It also wants greater protection for interest-only borrowers, to force the lenders to consider a range of alternatives before trying to repossess a home.
The CML, which represents mortgage lenders, said: “Lenders will continue to communicate directly with customers in a variety of ways and to raise consumer awareness.
“Borrowers should not ignore attempts to communicate with them. The lender is trying to help and reduce the risk of shocks at the end of the mortgage term.”
A spokesman for the FCA said: “We expect firms dealing with interest-only borrowers to discuss repayment strategies and propose solutions where there are no plans in place.
“While we have seen many firms progress with this, borrowers must also engage with their lenders now to resolve it, we will also continue to monitor lenders as part of our normal supervisory work.”
Average rents across the country have risen above £800 a month for the first time on record, according to the latest Buy-to-Let Index from the estate agents Your Move and Reeds Rains.
Rents in England and Wales rose by 1.9 per cent in July to an average of £804, up from £789 in June in the fastest monthly rise since records began in 2009. Tenants in London now pay an average of £1,282 a month.
Compared with July 2014, when the average rent in England and Wales stood at £753, people taking out new tenancies in July 2015 were expected to pay 6.8 per cent more – the largest annual rise on record.
Adrian Gill, director of Reeds Rains and Your Move, said: “As house prices and mortgage deposits continue to eat up a larger and larger proportion of wages, appetite for rental properties has begun to outstrip the available stock. This has driven rents up even faster than house prices.
“A clear and concerted effort towards new-build properties is the most sensible way to address this issue. It boils down to supply and demand.
“However, it’s not the only possible response. The Government could also ensure that we’re making the most efficient use of our small supply of homes – for instance, by doing more to make it easier for people to downsize their properties when they want to.”
The record rent figures were published as the Government announced a new plan to increase the supply of village homes. The Chancellor George Osborne and Environment Secretary Elizabeth Truss launched the Rural Productivity Plan, which will amend planning rules to allow starter homes to be built on “rural exception sites” for the first time. These will be sold to people who already live in an area, or have an existing family or employment connection to a particular area.
They will form part of the 200,000 starter homes that the Government has already announced will be sold at a 20 per cent discount to buyers aged under 40.
The Communities Secretary Greg Clark said: “We’re determined to ensure anyone who works hard and aspires to own their own home has the opportunity to do so – whether they live in cities, towns or rural communities. But all too often young people find themselves exiled from the place where they grew up as they are forced to move away to find a home of their own.
“That’s why we’re putting power directly in the hands of rural councils to give the go-ahead for new starter homes in their area so local, young first-time buyers can continue to be a vital part of their communities.”
August is usually one of the quietest months for people moving home or looking to remortgage- yet this month there has already been a huge spike in the number of mortgage deals going through.
A combination of people seeking to snap up cheap loans, lower deposit requirements and fears of interest rate rises next year has led to the busiest fortnight for mortgage transactions in five years, reports QCAS, the conveyancing division of Leeds legal firm Shulmans .
Victoria Mortimer, head of QCAS, said: “Normally transactions are low in August due to holidays, but we’ve got more work on than ever compared with the same time in previous years. As a national conveyancer we are well placed to spot emerging trends, and there’s no doubt about this one. People are getting their finances sorted before the end of the year.”
The development reinforces the latest mortgage activity report from the Council of Mortgage Lenders (CML), which came out this week. It revealed that the number of homeowners remortgaging jumped by 30 per cent in June. The figures also showed that remortgaging was at its highest level since September 2013.
Paul Smee, the director-general of the CML, said: “Notable is the uptick in remortgage activity among homeowners, perhaps reflecting an increased desire to lock into competitively priced mortgage deals in advance of any rise in rates. It is likely that people are now beginning to feel a rate rise is a realistic prospect, and not just a distant theoretical possibility.”
The Bank of England recently indicated that a rate rise could hit as soon as next spring – and that seems to have generated a flurry of activity among homeowners keen to find a decent fixed-rate deal before they disappear.
Meanwhile, house prices look set to continue climbing, warned Mr Duncombe. “We continue to see a growing demand for property, which has the potential to create a worrying imbalance unless supply is boosted to keep pace with demand.”
He predicted that if the issue isn’t addressed, intense competition for fewer properties will keep prices on an ascent that only compounds the problem
The last time interest rates went up was eight years ago, in July 2007. As a result, there are more than a million homeowners who have no experience of a rise in rates, according to figures from the Council of Mortgage Lenders.