View more on these topics

Is trap springing on the boomtown rates?

The overheating housing market will cool down towards the end of the year,


according to Nationwide Building Society.


The first quarter of 2000 has seen the usual hot spots in the market but


Nationwide says the rate of house price rises is unsustainable.


The South-east has continued to drive the trend, with prices up by 20.8


per cent, followed by 20.3 per cent in the South-west and 16.3 per cent in


East Anglia.


Prices in certain pockets of the country are now above their long-term


trend levels.


In London, prices are 7 per cent above their long-term trend and


Nationwide says the ripples are spreading out from the capital to areas


such as Surrey, Brighton, Oxford and Cheltenham.


But divisional planning director David Parry believes this is


unsustainable in the long term.


Nationwide&#39s seasonally adjusted figures show a quarterly increase in


house prices to 4.8 per cent in the first quarter of this year from 4.6 per


cent in the last quarter of 1999.


The annual change shows a rise of 15.1 per cent from 12.6 per cent in the


last quarter of 1999. The average house price in the first quarter of 2000


increased to £77,698 from £74,638. In the UK as a whole, the Nationwide


survey shows affordability remains very good with around 15 per cent of


borrowers&#39 gross income taken up by mortgage payments.


Even if base rates rise to around 6.75 per cent, as Nationwide expects,


homeowners will still be able to enter the housing market comfortably.


But the boom is not restricted to affluent areas, with some deprived areas


in central London topping the table for house price growth.


Hammersmith, which is 18th in the list of most deprived areas according to


the Department of Environment, Transport and the Regions, has the highest


annual house price inflation in the country at 45.5 per cent in the first


quarter.


Parry says: “The key drivers of house price inflation remain positive this


year. We expect the economy to grow by 3.5 per cent, earnings&#39 growth to


remain robust and unemployment to fall further.


“There is little on the horison to suggest that the housing market will be


knocked off course this year but there are factors that could have a


negative impact. Clearly, a series of &#39poor news&#39 events would undermine


confidence, weaken demand and produce a slackening in house sales and price


growth.”

Recommended

Life offices refute claims of clawback blundering

Life offices deny that they are making a huge number of commissionclawback claims in error despite the findings of network DBS.As reported last week in Money Marketing, DBS discovered that half ofcommission clawback claims made to its members were not genuine. Theanomaly was discovered when it set up an online service enabling IFAs tocheck on […]

Debtor&#39s prison

Flexible mortgages, the new flavour of the month, are being offered by somany lenders now that it is possible that about 25 per cent of allmortgages and remortgages are now “flexible”.That flexibility usually includes features such as the ability to takepayment holidays, the availability of extra borrowing above the initialmortgage amount secured on the property, […]

&#39Drawdown is being missold on small funds&#39

The Income Drawdown Advisory Bureau has voiced fears that drawdownproducts are being missold to clients who do not have a pension fund withthe necessary size.The bureau believes the minimum fund necessary for a drawdown product is£215,000. It warns that products are being sold to those with much lesscapital.An ABI report estimates that 16,000 policies were […]

CML calls for full range of advice on mortgages

The Council of Mortgage Lenders wants the FSA to ensure advisers providefull information on all aspects of mort-gage products and not just comparethem with Cat-standard mortgages.CML director general Michael Coogan says the FSA will have to decide onits preferred option for mortgage advice in the coming months as it isgiven the authority to regulate mortgage […]

Don’t play chicken with the Bank of Japan

By Josh Ausden, Head of Client Investment Strategy, Neptune Short-term yen strength has hurt the Neptune Japan Opportunities Fund but recent events have only added weight to our conviction that the Bank of Japan will act to ease policy, boosting multinationals’ profits and weakening the yen. In recent weeks the performance of the Japanese stockmarket […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment