Image courtesy of James.Stringer via flickr.com

The period of recession has seen house sales at an all time low. Lenders have been cautious with mortgages, home loans and others mainly because of uncertainty of jobs, the buyer’s inability to meet the asking price and the seller’s inability to sell at a lower price. As a result, the year 2010 saw house sales dip by 5%.

According to the figures quoted by the Bank of England, the mortgage debt went down by nearly £ 9.1 billion in 2010 and withdrawal of house equity is also negative since 2008. The combination of these factors has resulted in the slow market.

But after this period of sluggishness, the market is expected to rise again in the coming years. The dip of 3% in the year 2011-12 will be replaced with an increase of 1.5% in the next financial year and by 4% or more in the coming three years. So, if you are planning to buy a house, now is the time. Find out more about the Top Estate Agents in and around London so that you can get the best deals.

UK home prices are headed underwater along with the rest of the Eurozone © andreacrisante - Fotolia.com

It is based on the findings of Chesterton Humberts/CEBR December 2011 House Price Poll of Polls report. This report is unique in that it incorporates all of the major national house price indicators and quantifies the results according to historical accuracy.

House prices have fallen by 0.6% in the year ending January, with the exception being London and the south-east. Mortgage approval levels reached 52,939 in December which is 24.5% more than December 2010, but is still 50% less than levels reached during 2007. The average cost of a house in the UK is now £175,020 which is 1.5% less than the average cost of a house throughout 2010, showing prices remained virtually flat throughout last year. The fact that house prices are slightly lower than in December 2010 is perhaps a little unexpected, as the weather in December 2010 was particularly harsh and had a significant effect on economic activity. In contrast last December was relatively mild, but concerns over the Eurozone crisis did reach a peak.

In previous recessions many property sales have been driven by debt, but this time is slightly different due to low interest rates. However a lot of sales are still due to the traditional reasons of death, divorce or downsizing. In contrast with most of the UK, house prices in London rose by 3.9% annually in January, and by a negligible 0.2% in the South-East.

There are already concerns that the UK may have slipped back into recession as business confidence numbers for the first quarter of this year show sentiment is negative, implying a further fall in house prices may be likely in the near future. This could be tempered by quantitative easing from the Bank of England which may come into effect as early as spring.

The Scottish Property Federation reports scarecely more than £1.9 billion in transactions having occurred during all of 2011, that number down some 25.5 per cent on a 9.5 per cent drop in transactions overall compared to 2010. On a whole financial news from Scotland has been dismal of late. The Guardian reported on the North of England having been hit hardest overall in this recession, telling of rising unemployment and discontent with budget cuts. All Scotland is cast now into a scenario not unlike Greece, Ireland, Spain, and other EU countries.

Lending on real estate has been tumbling for more than two years now according to numbers from the Bank of England. And on the residential side of the real estate market in Scotland, things are not looking any brighter. Falling prices by the end of 2011 signal harder times for an overall real estate market stricken like all else in the North by the biggest economic downturn since the Great Depression, maybe ever.

To  make matters worse politically and banking wise, the Daily Record reports state owner Royal Bank of Scotland raking in over £530million pre-tax profits for 2011. With all of Scotland still reeling to dig out of a money disaster, RBS is being raked over the coals for sacking 21,000 employees then forking over huge bonuses to their top decision makers. RBS is not stranger to upheaval and ill fated decisions, the bank reported the largest ever single loss for any UK bank of £24billion after the takeover of Dutch bank ABN Amro.

Taken on the whole, the news of Scotland’s continued woes has to weigh heavily on the UK and the world in general. RBS boss Stephen Hester’s huge bonuses, Swiss ski chalets, public outcry, RBS and the entire Scotland banking sector would seem suspect for many. In 2010 Hester alone took home in excess of £6.5m in bonuses and pension payments. The UK Government owns upwards of 80% of RBS.

We will update this news as the story develops. We leave you with Hester reporting on 2011 results for RBS.

UK faces sharp rise in number of repossessions, warns UK Asset Resolution. Image courtesy of Static Guim

UK Asset Resolution is the state company which was set up to manage the £80 billion of mortgages formerly owned by banks, which were bailed out by taxpayers during the banking crisis.  The company runs the nationalised mortgages of Bradford and Bingley and parts of Northern Rock, and is the UK’s fifth largest mortgage lender with 750,000 customers. The worry is that 23,000 of these customers are already more than six months behind with their payments.

Banks feels that the projections for those falling behind could become a real problem if lenders don’t prepare for it. His worry is that banks are encouraging customers to get further into debt due to the previous governments pleas for lenders to keep families in homes.

UK Asset Resolution are now running Northern Rock, the 5th largest mortgage provider in the UK. Image courtesy of Telegraph

He said “You can see if you don’t do something about it, you can see a tsunami. If you don’t get into the hills, you could get drowned by this. It’s a tough love approach, because if you can’t afford your mortgage, you are only increasing your indebtedness. If we allow you to increase your indebtedness, that’s not really fair to you.”

This bleak view comes as latest figures show the economy grew by just 0.5% during the first quarter of the year. Household consumption fell by 0.6% which is the biggest fall since the height of the recession in 2009. The annual growth rate was also revised downwards slightly to 1.6% from 1.8%. The only good news is that the Bank of England is likely to keep interest rates at their current record low levels for the foreseeable future, so beleaguered home owners can breathe easy for a while longer.