The Centre for Economics and Business Research (CEBR) has declared that the house price crash is now over, as reported in the Telegraph.

CEBR has predicted that although there will be further falls of 3% throughout the remainder of 2009, property values will then grow by 2% during next year. It has also suggested the rise may infact be greater due to the collapse in new homebuilding.

Based on these predictions, at the end of 2009 prices will be 24% below their peak in the 3rd quarter of 2007.

This prediction follows the recent positive news reports regarding the housing market:

• Halifax, Nationwide and the Land registry all reported house price rises in July.
• The Royal Institution of Chartered Surveyors, which predicted at the start of the year that prices could fall by 5%, has now said it predicts home values could actually increase in 2009.

However, is it too early to call the bottom of the market?

In my view prices are increasing mow, not necessarily because of greater confidence in the market but because of the lack of supply. Prices bounced up and down for several years during the 1990s slump before recovering on a long term basis.

Mortgage approvals have risen recently but they are still extremely low compared to the levels that have been experience in the past during rising markets. Until mortgage lenders show a greater appetite for lending, particularly to first time buyers with lower deposits my view is any long term recovery is still some time off.

But in order to avoid being too negative even those of us who think this is not the end of the price slump still welcome all positive news in relation to market conditions. News has been negative for a long time, so any change to that sentiment in a great boost.

At the beginning of the year auction prices were at a 40% discount to the conventional market price. However, last week the FT reported that in May that figure had reduced to an 11% discount. The discount is at its lowest level for 15 months.

Despite the positive news though, all is not rosy. The article went on to report that futures markets are still pricing in modest falls in prices in the coming year - about 7 per cent.

When house prices are rising steadily, homes often sell at auction for more than the value implied by general house price inflation, because those bidding know they will not have to wait many months for a sale to be completed.

When house prices are falling, the sales at auctions can be expected to have lower prices than in the conventional market because bidders expect prices to continue to fall.

The reduction in the discount is consistent with a number of other housing data recently available showing the rate of decline in prices has definitely slowed.

However, mortgage finance is still very limited particularly for first time buyers without a large deposit. This will prevent any significant rebound in the housing market.

There has been an increase in positive data coming relating to the housing market over the past few days:

• Hometrack, recorded that house prices remained unchanged in May. This is the first time in 20 months that the survey has not shown a fall.
• Data from UK Land Registry showed that although house prices in England and Wales fell in April, the drop was the smallest monthly drop in nearly a year.
• The latest house price survey from Nationwide showed an increase of 1.2% in May. This has been the single highest monthly improvement since late 2006. It is also the second average rise in the past 3 months.
• During April there was an 8 per cent rise in the number of mortgages approved for house purchases. This was the third consecutive monthly rise.
• The decline in the construction sector eased in May to its slowest level in more than a year.

No one would suggest that the housing market problems are over. However, it does make a change to see that some positive data is available. Having seen monthly falls for so long it does raise my spirits.

House prices often move erratically up or down rather than show steady monthly movements in a single direction. I suspect that any increase in actual house purchases is likely to be gradual and rather fitful for some time to come.

In most geographical areas the fall in the property market has severely reduced the number of properties available for sale. Another contributing factor is the pitifully low interest a vendor would earn with the funds if they did sell. As a result unless you are in the position of having to sell most are holding off until the market improves.

But the reverse side of the coin is that because of the lower prices and historically low interest rates the number of enquiries has risen. This has ensured house prices in many areas have remained reasonably stable and in some instances has led buyers to pay more than the asking price in the face of such a shortage of possibilities for anyone who is determined to move.

When we add to this the issue that new build supply had significantly reduced since last year the gap can only get bigger.

But based on the above, the law of supply and demand suggests prices will therefore rise. What do you think?

Rightmove, the property website has been reported in The Financial Times as having a significant increase in house hunters to its website. For the first time in April 2009 traffic to the website has increased relative to the same month in 2008. Interest on the website is now running at a similar level to that shown before the downturn.

In addition, it has been reported that there has been a significant decline in the rate at which estate agents are leaving the industry. No estate agents have left the industry in 2009.

Rightmove’s board of directors said that the outlook for the UK property market was now “cautiously positive” and that 2009 pre-tax profits should be ahead of its previous expectations.

A glimmer of light at last?

The Chancellor will produce his second budget next Wednesday 22nd March. What impact will it have for landlords and homeowners?

Stamp Duty

The stamp duty threshold at which you start to pay stamp duty was increased last year from £125,000 to £175,000. At the time it was introduced as a temporary measure and is scheduled to end later this year on 2 September..

During the period that the increased threshold has been in place house sale volumes have been very poor. The relief has therefore had limited impact.  In order to be of benefit to property investors and homeowners we would need to see the increased threshold remain for longer or at least a new threshold of say £150,000.

The Financial Times reports that based on figures from The Land Registry the average house price is less than £175,000 in all parts of England & Wales - apart from the South East (£190,000) and London itself (£298,000).

Therefore if the increased threshold is extended for a longer period for anyone buying a property valued up to £175,000 there is a saving of £1,750- a not inconsiderable sum.

Let’s hope the Chancellor does bring in some measures to assist the property market.

The following 3 changes are being introduced with effect from today, 6^th April 2009 in relation to selling your property:

• Previously a property could be marketed provided a HIP had been instructed. This temporary first day marketing exemption for a HIP is now being removed and from today it will be unlawful to market a property unless the HIP is actually available.
• The HIP must also now contain a Property Information Questionnaire, which must be completed by the seller and included in the pack before the marketing of the property can begin. The intention is that the PIQ will provide the prospective buyer with a helpful checklist as they walk around the property.  The PIQ must be completed by the vendor. If the selling agent assists with completion the agent will be liable under the Property Misdescriptions Act 1991.
• An insurance policy designed to cover any missing data in personal searches will no longer be allowed.  From today all searches must be complete.

If you have decided that it’s the right time to get involved in property investment, then how on earth do you get started?

Do you just wander through the high street talking to estate agents and letting agents? And if so, what do you ask them?

Over the next few days I will talk you through the steps you need to follow and the research you need to do to get you started with your first buy to let. It’s not simply a case of looking at a few properties up for sale, making an offer and then instructing a letting agent.

A good property investment will let well with limited voids at the rent you expect. If you do not do adequate research you may end up with a property that you are struggling to let, with increasing void periods. This will therefore end up being a huge cost and drain on your resources rather than the good investment you were expecting.

To get the advice you need………….watch this space…………

The FT has reported that ARLA, the Association of Residential Letting Agents has reported signs of improvement in the buy to let sector. For the first time in 2 years, landlords are now buying more properties than they are selling.

The biggest bargains have been noted to be in new build developments coming up to completion. Sales prices which were agreed maybe 2 years ago, now look too high. Consequently some investors are choosing to lose their deposit and walk away from the transaction.  Developers have therefore been agreeing significant reduction in price to shift their stock.

It’s been reported that some property agents are selling blocks of new-build flats to private investors at discounts of up to 40 or 45 per cent of the peak market price. Some developments are now providing gross rental yields of up to 10 per cent.

In the period since the Second World War UK residential property has on average doubled every 9 years. Residential property has therefore shown an unequalled track record of producing high and consistent capital growth.

Although there have been temporary dips in property values, property has subsequently recovered and values have gone on to increase.

For example, the Nationwide house price survey shows the average price of a house in Quarter 2 1989 was £116,674. Prices then started to fall and reached a low of £73,079 in Quarter 4 1995. However, prices then started to rise and by Quarter 1 2002 the average price had climbed to £118,100, a figure just in excess of the previous high. The figures available for quarter 4 2008 shows an average value of £156,828.

So even accounting for the recent falls in property value the average house is still worth more than twice the figure from 13 years ago.