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UK commercial property prices cause investor continental drift

[ Posted April 30th, 2010 ]

Speaking on the back of the latest market figures, property market experts have concluded that fast-rising commercial property values in the UK have caused European property investors to alter their sights to continental Europe as they look for stronger returns there.

The chief investment officer of CB Richard Ellis Investors. Ian Gleeson commenting on the phenomenon to the London Business School’s Conference, said: “We are seeing much more interesting opportunities on the continent now. Pricing in the UK is less compelling than it was a year ago, although it does still offer value. Commercial property prices in the UK have climbed 13% since July last year during which time the property market rebounded from a two-year downturn. The tenant market, however, is still weak as average rental values continue to fall.

The managing director with Aviva Investors, Ben Stirling, commented that property returns on continental Europe generally returns at an aggregate 7.5% in the period from 2010 to 2015. It’s forecast for the UK for the same period, by comparison, is around 8.5%. Stirling further commented: “On the face of it, the UK does appear to be an attractive prospect purely from a returns perspective, although a lot of the value in the UK is being delivered in the course of this year, and the anticipated returns profile is less attractive looking forward.”

The two firms stated that they certainly recognise value in both the German and French commercial property markets, with Aviva also interested in western European regions like the Benelux and Nordic areas. areas.Stirling further commented on his worries regarding debt problems in such fringe markets as Ireland and Spain. By contrast, Land Securities chief executive, Francis Salway, is convinced that the London office property market and sector prospects appear to be strong due to the fact that developers have not overbuilt in the way they did in the early period of the millennium and good mortgage offerings exist in order to help stimulate the commercial sector still, particularly for individuals with good finances and credit history looking to open up their own location via a self-cert mortgage.

Salway further commented that London, as a city, is very much global, and many businesses are serving Singapore, New York and Hong Kong rather than Newcastle. “London firms continue to plan their expansion in line with global growth,” he added. According also to a new report, the French commercial investment market doubled its turnover in the first quarter of this year, and totalled almost 1.8 billion Euros as compared to 0.9 million for the same period in 2009.

Number of first-time buyers lowest for two decades

[ Posted April 29th, 2010 ]

According to the most up-to-date research, the number of first-time home buyers in the UK has stayed at an almost twenty-year trough during the past year, and analysts suggest that the latest boost regarding stamp duty will be unlikely to help first-timers get their feet on the property ladder. The survey, conducted by Gfk’s Financial Research survey, indicated that 347,000 home-buyers took our mortgages for the first time for the annual period up to February, 2010. This figure is a slight increase on the figure of 331,374 recorded the previous year which was actually the first time that the figure had dipped below the 350,000 mark since the survey’s inception in 1993.

It is clear also that the number of first-time buyers has not raised significantly even in the wake of the stamp duty holiday incorporated over the course of last year on houses coting up to £175,000. The latest figures compares with a high point of over 700,000 in the yea 2004/05 and the yearly average figure of 561,000. It is also down 100,000 on the trough experienced during the period of the last recession back in the early 1990s, according to the research by Gfk.

They also added that the huge strain put on first-time buyers as a result of current deposit requirements would in al likelihood mean that recent measures taken by the government to offer stamp duty relief to all first-time buyers purchasing houses worth up to the value of £250,000 wouldn’t provide sufficient support despite the fact that mortgage rates are even hitting record lows in some cases.

As far as deposits are concerned, banks are currently insisting upon much higher deposits that in pre-credit crunch times, which has resulted in first-time buyers needing to amass savings of tens of thousands of pounds before they can even begin to think about buying a property.

When linked together with ever-rising house prices, the statistics from Gfk show that the average age of first-time buyers has risen from 31 in 1991 to 32 now. Gfk concluded that the lack of ability to raise a deposit was at the very root of the problem and was ‘locking younger people out’ of the housing market. The figures also showed that more and more over-50s were being granted first-time mortgages, and has lead to an increasing number of the baby-boomer generation buying up homes for their struggling children. Many are also buying for themselves as investments, helping to provide domestic competition in addition to a number of overseas investors also looking at the UK market. Gfk’s director, Ben Steer commented that “The current challenge for lenders is to create products that will assist young people without creating the kind of conditions that sparked the crisis in the first place.”

Fixed-Rate Mortgages Hit Record Lows

[ Posted April 28th, 2010 ]

A recent new analysis of the market conditions currently facing buyers throughout the country indicates that two-year fixed-rate mortgages have recently fallen to a record low of 4.62% – a drop of roughly 3.36% over previous figures. In real terms this equated to a normal fixed monthly payment on a £150,000 mortgaged to a much more manageable £853, a total of a £316 average drop from previous payment levels.

Other more lengthy mortgages have seen significant decreases as well starting from September of 2009, helping to realize even greater good mortgage offerings available to consumers throughout various areas. A three-year fixed-rate mortgage, for instance, has recently dropped to a low of 5.3% on average below last year’s July figures of 5.86% in addition to five-year mortgage rates hitting 5.83% over last September’s 6.4%.

For many potential home owners looking at locking in a good deal this news has been particularly attractive as it means much more affordable short- to mid-term rates for home purchases in various areas, though unfortunately to take the fullest advantage of all offers available a substantial initial down-payment may still be required. This means that some home purchases in areas such as London may still not be suitable for many first-time buyers looking to get situated within the city, however other locations a bit more remote may prove highly attractive given the combination of both lower home costs and affordable financing.

Buyers are still cautioned, however, against jumping into a deal with a lending organization offering a low rate as there may be handling fees associated with the deal that could drive up the costs. Before agreeing to a loan carefully consider how much additional funds will be required to achieve a lower fixed-rate deal and factor in the length of the deal to calculate the actual value of the loan. This will help you determine what your overall payments will be and whether or not they may be worth the commitment or if some other deal may actually offer you the best choice possible.

New survey reveals ignorance of true house-buying costs

[ Posted April 27th, 2010 ]

According to new research around one-quarter of people buying a new house in the UK are completely clueless as to just how much their purchase will really end up costing them. Around 24% of people in the study have no idea about the cost involved, and one in ten believe that house-buying extras will cost only up to another £1,000, whereas in reality their conveyancing fees could well cost this much by themselves, the study shows.

The study also found that the extra costs involved with buying a house after the mortgage and deposit can come as a very unpleasant surprise if they are not budgeted for adequately. Around 4% of those spoken to in the course of the research said that it had simply not occurred to them to take such costs into account. 

It appears that, with house buyers looking solely at the amount they need to borrow to get a mortgage as well as save for a deposit, the other essential costs involved in house buying such as solicitor fees, stamp duty tax and the survey are often not adequately accounted for. When quizzed as to just how they would meet the extra costs incurred by buying a house more than two-fifths of people, around 41%, replied that they would use their savings, with 18% saying that they would most likely add such costs on to the costs of their mortgage.

The research also indicates that the additional costs of buying a house can really add up, with the price of a survey ranging for anywhere from £50 to £1,000, depending on just how much detail is required in the survey. Solicitor fees, depending on where the home-buyer lives, can also range from £600 up to £1,000 for just the most basic of services. Added to this, environmental, local and water searches can add further costs of between £250 and £300, depending on your local council.

Many people, despite being aware of the fact that they will need to pay stamp duty, are not aware of exactly what such costs will come to. The payment is essentially a land tax on the property being bought, and is paid to the government and is a percentage that is based upon the value of the property. Consumers are advised to get as much advice as possible, particularly from a market mortgage advisor (and in particular if you are seeking out a bad credit mortgage or looking to otherwise get into a relatively fixed-rate mortgage with additional costs) so as to fully acquaint themselves with the full costs involved in buying a new house.

Commercial property market recovery in London, regions still uncertain

[ Posted April 26th, 2010 ]

The results of a new survey have indicated that there are signs of improvement in certain sectors of London’s commercial property market, the result of which has pushed office rental expectations upwards at the fastest rate for more than two years. In fact, where London offices are concerned, expectations rose markedly above zero for the first time since 2007’s final quarter. Available space also  declined for the second quarter in a row, according to the figures from the latest UK Commercial Property Survey conducted by the RICS. The figures represent the first anticipated rental rise by RICS surveyors for two years. The figures also showed a positive net balance of 57%, which compares extremely favourably to the previous zero level, represented to largest upward climb on record. This also contrasts sharply with the remainder of the UK which shows available space increasing across all sectors with rental space still in negative territory.

Renting activity continued to increase for commercial properties for the second quarter in a row, despite the fact that domestic and overseas investment demand has toned down a little outside of the London Metropolitan zone despite many favourable mortgage rates. The retails sector still lags behind-especially in London with rising available space still pushing rental expectations, according to the report. In general, the market confidence for the outlook for lettings continued its upward trend, although sentiments were a little deflated as compared to the fourth quarter of last year.

A number of surveyors have raised concerns regarding the possible impact of potential public sector employment cuts following next month’s election on regional lettings activity. There is also concern regarding the changing balance between landlords and tenants. According to Oliver Gilmartin, senior economist with the Royal Institution of Chartered Surveyors, the latest figures suggest that rental expectations for London offices have lifted greatly as a result of the ’still modest recovery in lettings demand’.

‘There are signs that a weaker pound as well as a gradual re-balancing of the UK national economy towards much greater export activity has started to bleed through to industrial lettings activity-particularly in London and the South,’ Mr Gilmartin explained. He went on to say that lettings activity is still rising cautiously across the country, although surveyors remain cautious, concerned that regional office markets could be hit as a result of potential public sector cutbacks as a result of the election could weigh on demand.

Fixed-rate mortgages dip below 3%

[ Posted April 24th, 2010 ]

Mortgage consumers are benefiting from a price war currently being waged between banks and building societies that has contributed to the significant trimming of the cost of deals. Consumers may well have to react quickly in order to get the very best mortgage rates, however as just last week the smaller-sized Hanley Building Society withdrew its highly popular two-year fixed-rate at 2.95% for borrowers with a 25% deposit after only three days. As far as sub-3% rates are concerned, the best current bets are Barclays, the Yorkshire Building Society and the Alliance and Leicester. The Yorkshire Building Society currently offers 2.99% for people putting down a 40% deposit and they charge a fee of £1,795. HSBC’s rate is exactly the same, although they only require borrowers to have a deposit of 30%. Their fee is also lower, at £999, providing good balance for first-time buyers able to take this option.

The Alliance and Leicester offers a rate of 2.89% for borrowers with a 30% deposit, although their fee is 2% of the amount borrowed, so it will be that much higher on a typical level loan of £150,000, standing at £3,000. For those with bigger mortgages, Barclays may be something of an alternative, as it charges 2.98% for a 30% deposit with a fee of £1,999. A further stipulation is that a customer must borrow a minimum of £250,000. Market experts and analysts have reacted fairly positively to the morass of figures, with many believing that such rates in the lending market bode well for the property market in general. According to David Hollingworth, a broker from London and Country, the figures represent fairly good news all round: “The knock-on effect of these price changes that we have seen is that rates in the tier above this are also getting that little bit cheaper.” No doubt market analysts will watch as political uncertainties regarding a possible hung parliament in the upcoming General Election play out with respect to any market ramifications, as well as key market indicators such as unemployment figures and interest rate rises.

The next step for mortgage rates

[ Posted April 23rd, 2010 ]

After the precarious overall situation in the market during the last year, many homebuyers and homeowners alike are beginning to ask whether or not now is a good time to take out a mortgage. Despite the rather parlous nature of recent times, things may finally be started to look up a little, as building societies and banks show some signs of awakening from their lending slumber, although getting a mortgage is still harder now than it has been for a long time.

Borrowers on the lookout for a mortgage have been heartened in recent months, as rate cuts coupled with some better lending deals emerge for those with deposits below 25%.

This aside, the mortgage market is still far from fully recovered, and many lenders are still adopting a safety first mentality, although the recent comparable measure of stability in both the economy and financial sector-as well as the general feeling that house prices have seen the worst of the market-has led to a gradual return of confidence in the sector.

The deepest cuts have come to fixed rates-particularly since the start of the year-principally because of just how costly they were in comparison to trackers. In fact, borrowers capable of summoning up a 25% deposit can choose from two-year fixed deals, from between 3.2% to 4%, with the best five-year fixed deals for the same level of deposit have fallen below 5%.

The cheapest pay rates are still being offered by tracker deals, with some lenders offering a rate of 2.49% to those capable of raising a 25% deposit. Customers attracted towards trackers should be aware, however, that such deals will only become more and more expensive as the base rate climbs, which it will certainly do, from its current historic low of 0.5%. Five-year fixed rates are starting to look better and better to many, and such deals also save on re-mortgaging costs, although raising as high a deposit as possible will afford the best deal. Reckon on a minimum of 25%, although, for the very best deals, 40% is much better.

The outlook for fixed rates to drop further looks bright, with the UK recovery aiding confidence-however slight it may still be. Lending has also increased a little, but life is still hard for borrowers. The main problems is with funding, as banks and building societies lack the liquidity to return to boom-time levels of lending. Also, rates remain at a record low, and the housing market is still fragile, and any future problems with the baking sector will mean a rapid return to uncertainty.

Commercial sector continues to grow in confidence

[ Posted April 22nd, 2010 ]

Reports from the Royal Institute of Chartered Surveyors (RCIS) indicate that over half of all lending agencies (57%, in fact) state that the feel confident that rental prices for commercial lots in downtown London will increase in the coming months. This is the largest increase in confidence on quarterly projections for quite some time, with the strongest interest in development seen since the end of 2007.

The driving factor many people feel behind this growth of lender confidence lies in the current market situation – with a large number of good mortgage offerings having been made available by lending institutions to support the commercial real estate sector (as well as the various government support designed to help out over the past year) the value of commercial property mortgages and investment has increased significantly. This has drawn in more local investors looking to secure holdings and overseas investors looking to secure prime rate overseas mortgages alike.

Perhaps the biggest indicator of the recovering commercial sector is Canary Wharf, with more companies finally investing back in the area after a near collapse that was seen just a few months prior. Now the Canary Wharf group is reporting positive growth on their locations, with further development to be expected as the year progresses as well.

The primary difficulty facing most commercial property up till now has been the delayed effects the recession had upon most holdings. As most commercial properties are dependent upon long-term business finances a lull in profits for an extended period of time may not have an impact immediately but will have far-reaching consequences in the future. This is exactly what happened in many areas throughout business centers such as those in London where just as the economy was beginning to recover the commercial property sector was beginning its full decline – something that the recent trends look to counter, much to the joy of developers and legislators alike.

Property asking prices rise in UK, prospect of hung parliament threatens recovery

[ Posted April 21st, 2010 ]







According to new figures from various groups the UK real estate market continues to show signs of growth, with asking prices rising by 2.6% over the last month.

 

This latest news comes on the back of last week’s data from a survey carried out by the Royal Institution of Chartered Surveyors which showed that selling activity rose to its highest level in March since May 2007. Lenders, however, cautioned that the possible potential for oversupply could result in house prices coming under pressure later this year. Key account managers have commented that, with weather disruptions now in the past, more sellers were entering the market, and they seemed to be ignoring uncertainties that potential buyers were facing.

 

According to the figures the average UK property price climbed to £235,512 between March 7th and April 10th. This rise was a clear improvement on the 0.1% rise witnessed during the previous month. Records of new properties being put on the market also climbed significantly as buyers saw the greatest market choice since last October after many consecutive months of a property supply shortage.

 

These numbers also indicate that the government’s new regulations on the stamp duty for first-time buyers – which was introduced earlier this year for all properties valued at under £250,000 – has given the market a definite fillip, with agencies recording a 35% rise in the number of online property pages viewed online during the course of Easter.

 

Among nine out of ten regions tracked for these studies East Anglia led gains, showing a price increase of 4.9%. House prices in London climbed in every district as compared to the previous year for the first time in two years. The market still remains cautious as to the outcome of next month’s General Election, with many analysts stating that any definitive result would be better for the recovery than a hung parliament.

 

The account managers for various lending agencies went on to say that, with this year’s Spring seller window being an especially price-sensitive one, if asking prices keep climbing all except the most popular locations are likely to lose some of the gains made at some point later in the year. According to the house price statistics the average price of a property currently stands 6% higher than a year ago, making additional consideration necessary on mortgage rate offers for both fixed and flexible mortgages alike.

Dual Homes, Dual Lives

[ Posted April 20th, 2010 ]

The ever-growing high cost of living in London has taken its toll on many professionals and families in the city, causing many young adults to even consider putting off marriage and starting a family until they can afford their first substantial down payment on the purchase of a home of their own. An alternative to the single-home lifestyle, however, has been growing with many home owners thanks to the price increases, and many people are finding interesting alternatives to the traditional one-spot living standard.

While prices in large cities such as London have shown amazing growth other locations have maintained relative affordability, and a growing number of people have found that actually purchasing a home outside of the city and renting one in the downtown area can not only save them money but also provide a breath of fresh air from a constant hectic big city environment.

Either leveraging a re-mortgage for the purchase of a secondary home or even simply purchasing a satellite home initially as a first-time buyer many people have found that now is an excellent time to break out of the norm of many set lifestyles and live in two locations throughout the year on a regular basis. Further, the development of the online business world has allowed many people to maintain productive work lives outside of busy offices, meaning while living outside of the city from time to time business professionals can still maintain high productivity without needing to commute to work every day.

This has been a particularly beneficial trend for many people seeking to downsize from one particularly large home to two smaller estates in different locations utilizing the prime mortgage rates offered by many lenders to essentially land two excellent homes for the price of one. Should the trend continue it may one day become the norm for many home owners – though what this may do to the already strained supply and demand imbalance is still open for consideration.

 
 
 
 
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