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Several things you may not know about the UK property market

28th September 2008 | back to article listings BACK    print this article PRINT

10 things you probably didn't know about the UK property market:

1. The Land Registry House Price Index is only based upon 2 million of the 9 million transactions carried out since April 2000, solely those that have sold at least twice, and therefore does not represent the whole of the market as often reported
2. The house price indices based upon the widest range of data (FT) show the lowest house price fall and those from the mortgage lenders (with 100% of their indices based upon people reliant on mortgages) show the highest house price falls (Nationwide/ Halifax).
3. Halifax and Nationwide house price indices only based on their own company’s mortgage approvals, not the UK market as a whole as often reported
4. Many valuers are owned by the lenders and in addition lenders often only have a limited panel of valuers who get nearly all of their business. It would be a big blow to valuer to be taken off a bank’s panel.
5. Valuers are usually paid for paid by the homebuyer but actually act for the lender in terms of the accuracy of their valuation
6. Valuers can be sued by a lender if they ‘over-value’ a property but if they cautiously ‘under-value’ a property then the lender is protected and the buyer is able to negotiate a better price with the unfortunate seller. Professional indemnity legal claim fears are rife in the valuer market at present.
7. The current mortgage shortage applies primarily to poor credit history customers - people with normal credit histories should not find it difficult to obtain a mortgage on reasonable terms provided they have moderate equity in their home, or a good deposit.
8. House prices have outperformed equities by a substantial amount in the last 10 years. The FTSE 100 is down 1% since January 1998 whilst the Halifax index is up 173% over the same period. Investors who purchased property with a 30% deposit mortgage have made 758% over the same period oared basis.
9. Residential property only yields about 3.5% pa net of costs which is remarkably similar to the dividend yield on the FTSE 100 index.
10. First-time buyer affordability measured by mortgage payments as a percentage of take-home pay peaked in 1989 and contrary to many reports, it has never reached the same level in this latest boom, falling short by some 7% a few months ago before falling back again.

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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