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House price report raises a few eyebrows

Tuesday, July 26th, 2011

The news this week from Zoopla that house prices are once more on the rise will come as a shock to many homeowners who have had their homes on sale for many months and despair of attracting offers anywhere near the asking price.

Out of kilter

Thousands of households across the UK are getting cheap home insurance quotations on a property they thought they would have moved out of months ago, simply because they cannot sell their home at a price that will enable them to finance their planned move. The news from Zoopla seems highly surprising when comparing it to recent reports from institutes such as the Council for Mortgage Lenders (CML) who noted that home loans are at record low levels and the Royal Institute of Chartered Surveyors (RICS) who reported that sales and house prices have been stalled all year and forecast more of the same for the rest of the year.

Top end of the market driving price rise

According to the report house prices on average have risen over £200 a week throughout 2011 with houses at the luxury end of the market being the main driving force. Apparently families looking to purchase new household insurance on four and five bedroom homes are prepared to pay premium prices in most regions of the UK. The reasons behind the resurgence are put down to a number of factors with low interest rates, the weakness of the UK currency attracting overseas investors, plus the inevitable effects of supply and demand being seen as the major contributors.

Big difference between asking price and sale price

The report has been greeted enthusiastically by some in the industry but not all will be immediately seduced by the promise of a new dawn. It is difficult to pinpoint whether the report is based on sale prices or asking prices and as everyone in the industry knows there is a massive difference. The London housing market is without doubt buoyant at the moment but elsewhere there is a different story to tell. Vendors new to the market have read reports of falling house prices for months on end and a conversation with anyone who has had their home up for sale at any time over the last 12 months will have confirmed their worst fears. There are not many buyers around and those that do make a bid put in an offer well below the asking price.

Phoney market

It is not all impossible that we are seeing a market where buyers are bidding low, and to compensate vendors and estate agents are inflating valuations. So we get to a point whereby house valuations are going up by the day and bid prices are going down. It creates a phoney market and impedes the selling of property. Unfortunately it is possible that the UK market has now come to this point, the next few months will probably show us what is really happening.

Tags: cheap home insurance, Council for Mortgage Lenders, Homeowners, Royal Institute of Chartered Surveyors, Zoopla
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London bucking the national trend

Thursday, July 14th, 2011

Homeowners looking to take out new home insurance on a property in London may find themselves in a gazumping war while in the rest of the country prospective purchasers can almost name their own price.

Bad news for most of the country

The contrast in the London property market compared to the rest of the country is at its widest for at least ten years and probably more. At a time when the latest Royal Institute of Chartered Accountants survey predicts that the average price of a property is dropping and will continue to drop for the foreseeable future, and accountants Price Waterhouse Cooper suggest that house prices will not get back to their 2007 level until 2020, house prices in South West London are rocketing ahead.

Foreign influence a factor

A report by Housing Experts Savills reveals that in the last 12 months the average price of a house in South West London has risen by almost 9%. The contrast is amazing and can in part be attributed to foreign investors putting their money into sound property investment to get away from the financial catastrophes happening over the sea in the Euro zone. It is indeed a strange phenomenon because in the past, residents in the Capital who have always been accustomed to high prices and big profits in the housing market have looked to invest their bonuses and spare capital on bargains in the countryside. This is not yet happening.

Double value for London property owners

One reason could be the opportunities in London are too good to miss. Tenant demand is high everywhere in the country but once again London is at the top of the table for rental achievements. It seems as though property investors are getting cheap home insurance on their properties and charging huge rents while at the same time seeing the value of their investments soar.

Bargain prices will eventually kick in

Some estate agents are predicting that areas around London will eventually start to pick up as Londoners see retirement packages beckoning. According to the Savills report, homes in the outer reaches of the commuter belt are now half a million pounds cheaper than equivalent homes inside the M25 and it is only a matter of time before the outstanding value attracts buyers back into the market.

Tags: cheap home insurance, London property market, Property owners, Savills, tenant demand
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High street shops disappearing en masse

Thursday, June 30th, 2011

The drastic effect austerity measures are beginning to have on homeowners across the UK has been aptly demonstrated this week by the collapse of several High Street chains. Households all over the country are now looking more closely at their spending power and looking for bargains such as two for one offers in the supermarket, buy one get one free offers in markets and cheap home insurance when it comes to home security.

A catalogue of big names

The shops that have gone into administration this week include Jane Norman, a fashion outlet at the higher end of the price scale, TJ Hughes a High Street Department Store chain, Moben the high end kitchen retailer and iconic store Habitat, who announced that 30 of their 33 shops would be placed in administration with only the London stores surviving. Two other major names in the retail trade, Carpetright and chocolate manufacturers Thorntons have announced that many of their stores will be closed in a bid to see out the downturn.

Middle England suffering

It is no coincidence that many of the retailers in trouble feature at the high end of the market. For many years economists have said people always look to cut out luxuries first when they find their budgets are being stretched, the truth in this observation is hitting home with a vengeance at the moment. Of course this is qualified by the fact that it is Middle England that is feeling the pinch and not the super rich. Merchants selling goods at the very top end of the market will probably escape the clutches of a recession as their customers are well protected from all but the very worst of bad times.

Nervous times for all as the cuts hit home

It is 15 months since the Coalition came to power with promises of austerity measures the likes we have not seen for many years. For the first 12 months of their Parliament it seemed as though only the housing market and public service jobs would suffer. NHS managers were told they would be losing their jobs and the stagnation in the housing market meant very few home insurance salesmen were taking home big bonuses, but it seemed a bit of a phoney war. It is phoney no longer. The strike by public sector workers on Thursday will be worrying a Government that is looking nervously over its shoulder at what is happening in Greece and economic commentators are openly questioning if the Coalition were right to insist on such heavy cut backs. The next six months will be vital in determining if George Osborne got it right.

Tags: Administration, cheap home insurance, Closing down sales, Spending
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Interest rate committee set to meet again

Tuesday, May 3rd, 2011

Homeowners across the UK will once more be nervously awaiting news from the Bank of England’s (BoE) Finance Committee as they meet later this week to discuss interest rate levels.

Inflated prices hitting the consumer

With food prices in the supermarkets steadily rising, fuel prices rocketing and the cost of home insurance and car insurance spiralling upwards, the last thing anyone with a mortgage wants just now is an interest rate rise. It does seem that the latest news from fiscal experts should keep the rate at 0.5% for this month at least.

Expert forecasting dramatic cut in income

The top economic adviser for influential city finance firm Deloittes, Roger Bootle, is predicting that 2011 will prove to the most restrictive year on respective incomes for over 100 years. He predicts that inflation will rise to over 5% and that tax increases and job cuts will effectively mean that each household in the UK will experience a fall of around 2% in income. He says that on average every family in the country will be around £800 worse off.

Rate rise could damage economy

According to Bootle, wages will fall, house prices will fall and unsurprisingly so will consumer confidence. He predicts unemployment, household costs such as home contents insurance, food and fuel will continue to rise throughout the year leaving us all out of pocket. He believes that some in the City have been too optimistic about the economic recovery and that the poor growth figures suggest we are not out of the woods yet. He also believes a rise in interest rates would risk even more damage to the fragility of the economy. It is no secret that Bootle also has allies within the Government, Chancellor George Osborne and Business Secretary and Vince Cable are known not to favour any interest rate increase just yet.

The hawks may retract their claws

His words come as the BoE committee get ready to discuss the bank’s policy on interest rates. The last few months has seen three members of the committee, Andrew Sentence, Martin Weale, and Spencer Dale all call for a hike in rates to fend off the danger of high inflation, however, the surprising drop in the consumer price index last month coupled with the warning shots across their bows by Bootle, may even convince them that the homeowners can ill afford yet another rising bill.

Tags: cheap home insurance, Home Insurance, Interest rates
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Dorking homeowners experience high insurance hikes

Thursday, April 28th, 2011

As homeowners in one Surrey town find themselves having to spend more time than usual on home insurance comparison sites to find cheap home insurance, the whole question of how insurers set their premiums is once again brought up.

Massive increase but why?

The Surrey town of Dorking has been revealed as the town that as seen the biggest increase in home insurance online quotes over the last year. The poor homeowners of Dorking have, according to a well known online comparison site, Moneysupermarket, seen their premiums rise from £119 to £174, a massive increase of 46%. The real problem is no one can explain it. A spokesman for the site that came up with the figures explained that the rise could be explained by a combination of factors, listing bad weather events, high crime incidence and high levels of fraudulent claims, however, the statistics don’t back that up.

No increase in house crime

The website police.co.uk that was launched in a blaze of publicity just before Christmas and claimed to give the public more insight into the levels of crime in their own area shows very little activity for Dorking at all when it comes to house crime. In the three months from December to February there were just 14 burglaries in Dorking, bad enough, you might say but nowhere near a crime wave in a town with a population of 170,000 people.

Weather patterns don’t offer a clue

Investigations at the Meteorological Office show that Dorking suffered the same sort of winter that Surrey as a whole shared, it was cold! But no colder than anywhere else in the area, nor did it suffer freak high winds, storms or lightening strikes out of the ordinary. Further enquiries reveal that insurance companies recorded no significantly high claim pockets in the area.

Residents may have to look elsewhere

There is no doubt that insurers use post codes as one of their tools to work out risk assessment factors and although crime and weather don’t appear to be the cause of the premium hikes, being a Surrey town, Dorking will have its above fair share of wealthy inhabitants, so perhaps that is the reason. No one can be sure, but it is for sure that Dorking homeowners will have to look at saving money on their insurance in other ways. They could of course raise the excess allowance on their policies, they could install security measures around the property, and they could spend more time comparing quotes from a different site.

Tags: cheap home insurance, high insurance hikes
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