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UK Properties See Average Values Rise by 7%

[ Posted March 30th, 2010 ]

According to data from February’s House Price Index released by the Land Registry, the UK saw an average increase in  residential property prices of 7% when compared to the same period in 2009, although prices fell a little in February which appears to confirm suspicions in the industry that the market is slowing down. February’s data from the index showed that the average property price in the UK now stands at just over £164,000, with a monthly change from January to February of minus 0.3%.  It is true, however, that the general picture across the country is variable. For example, properties in London rose by 11.9% over the course of the last year with properties in the north east falling in value by 2.3%. Monthly house price figures also see-saw by region, with the north west seeing the largest monthly rise-rising by 3.6%, whilst property prices in Wales fell by 2.4%.

February was also the fifth consecutive month in which property prices rose in London, with the average property price there now standing at £333,394. The largest annual increase in London’s property prices was seen in Kensington and Chelsea, where prices rose by 17.5%, with the highest monthly increase being seen in Kingston standing at 2.7%.

The largest annual fall in house prices was seen in Barking and Dagenham, with property prices falling by 4.4% whilst Bexley saw the largest monthly fall of 0.7%. In total nine of England and Wales’ regions saw average property price increases during the last year, with Brighton and Hove at the forefront recording an increase of 13.5% with Hartlepool seeing the largest annual decline of 10.4%.

The chief economist at the Royal Institution of Chartered Surveyors, Simon Rubinsohn, stated that the figures back up other reports that illustrated the fact that property prices fell slightly in February. Mr Rubinsohn added that, despite the drop, the YOY house price gains continued unabated, currently standing at 7%. He concluded that “The report, however, does not significant regional variations.”

Analysts have commented that the increase in both domestic and overseas demand for both residential and commercial properties should give some renewed pressure on house prices, although there is some agreement that this trend will likely be offset by the increasing number of properties coming onto the market and the continuing strong mortgage rates being offered by many lending institutions.

Industry Insiders Identify Flaws in New Stamp Duty Measure

[ Posted March 27th, 2010 ]

The decision of the Chancellor to scrap stamp duty for first-time house buyers purchasing properties worth up to £250,000 for two years whilst increasing the duty to 5% for residential properties worth more than £1 million from April 2011 has largely been welcomed by the British property industry.  Analysts, however, are more cautious, with some indicating that the proposal is unlikely to revive the market and indeed may even result in a number of unfavourable outcomes – especially in London which has more properties in the £1 million and over range that will be hit by the new stamp duty rate.

The British Chancellor, Alistair Darling, argued that the change in the stamp duty rate will provide help for nine out of ten first-time buyers who are still struggling to obtain good mortgage values in the current market. Some, however, might well find that they will not be classed as a first-time buyer despite the fact that they are: for example, a newly-married couple where one person has previously owned a property would not be classed as a first-time buyer. The Chancellor’s figures have also come under fire from some quarters. Martin Ellis, housing economist with the Halifax, the new proposal will actually provide help for an extra 40% of first-time buyers rather than Mr. Darlings rather more generous assessment of nine out of ten.

According to the Royal Institution of Chartered Surveyors the stamp duty change is likely to result in more transactions at the lower end of the housing market, although the impact of the change will be negated by the continuing lack of housing supply along with restricted mortgage lending. The RICS believes that the housing system requires much greater reform if more people are to benefit.

They RICS has stated that the current structure should be replaced with “a marginal system, similar to income tax.” They believe that such a system would iron out any distortions in the market and could be done on “a revenue neutral basis.” The RICS went on to state that the tax should be further re-shaped with the introduction of a new band for more expensive properties.

Others, such as the National Association of Estate Agents, also called for wider reform, stating that “stamp duty is a tax on aspiration and also smothers the natural demand of the market – although this (the new reform) is a decent first step.” The new measure was criticised by Liam Bailey, the head of research at Knight Frank as a ‘tax on London’, due to the higher concentration on expensive properties in the capital as well as the exclusion of many people seeking re-mortgages or other buyers from seeing any benefits that may otherwise be needed to help stimulate the economy as a whole.

Deposit Costs Stymieing Purchases

[ Posted March 24th, 2010 ]

With deposits typically needing to be in the range of 25% of a home’s value the actual overall costs associated with purchasing a home can be devastating and in many cases simply unattainable for most first-time buyers on the market today. Despite being offered some of the best mortgage deals heard of in the past few years thanks in no small part to the numerous government incentives offered in order to help stimulate the economy many people simply cannot afford to purchase a home currently.

A recent survey of people ages 18-30 emphasized this point, with a total of 85% of all respondents reporting that they felt they could not afford to purchase a home of their own right now. Should they even try to buy it roughly 54% said they would need to first borrow money from friends or family in order to have enough of a financial base for the purchase. Further, 18% stated that they would need over £10,000 in financial support to facilitate a home purchase, while 9% said they would need closer to £40,000.

These figures are particularly bad news for many of those looking to just get into a number of different real estate sectors, residential not being the only area affected, yet it does not necessarily mean terrible news for those who are seeking out a re-mortgage of sorts as the higher cost requirements are also contributing to higher overall mortgage value. This, coupled with the fact that mortgages are being offered at up to 125% of a property’s actual value, means that existing home owners are granted significantly more leverage than normal to obtain money and pay off residual debt – should they be lucky enough to own a home in the first place.

With growing costs and continuing focus on the real estate market in many rural areas as well this trend can be expected to hold true for quite some time both for first-time purchasers as well as existing homeowners. While some various groups have recommended placing caps on certain aspects of the market these notions are just as commonly opposed as they are supported and therefore little or no change can reasonably be expected to happen in the near future.

CML Reports Lending Increases in February

[ Posted March 22nd, 2010 ]

Reports from the Council of Mortgage Lenders indicate that over £9.2 billion was distributed to UK residents as loans in February, accounting for a roughly 6% increase over January’s slump following the end of the Stamp Duty Holiday. While the slump was anticipated following the large increase towards the end of 2009 and a recovery was anticipated the amount for February was somewhat unexpected, with figures reaching significantly higher than those normally anticipated for the month.

This information comes at the same time that Halifax reports the overall decline in activity in the housing market by 1 to 1.5% throughout the country. While this may be seen by a number of people as somewhat of a contradiction given the increase in gross lending figures it serves to indicate that similar houses are demanding higher prices therefore keeping lending numbers up even though overall sales are declining. Still, thanks in no small part to the ongoing good mortgage rates offered by many lending institutions this is not deterring many purchasers.

Generally speaking the majority of loans given out to home seekers in the past month have been standard fixed-rate or flexible mortgages, though a large number of funds have been allocated to self-cert mortgages thanks to those with large amounts of disposable cash beginning to dominate the market. Additionally commercial mortgages have grown in some areas thanks to many individuals and businesses looking to capitalize on the current suffering commercial property scene.

In terms of total funds given out in lending these figures for February are staying in line with overall projections for 2010. Overall a total of £150 billion is expected to be distributed by lenders to the housing market throughout the course of the year while later months are expected to see higher overall gross lending numbers. While this may be seen as a positive sign of the economy’s overall recovery it is still too early to make solid predictions as current unrest over the Euro may bleed over to the UK market as well and further developments must be watched carefully as the year progresses.

Rental Demands Boosting Private UK Landlords

[ Posted March 20th, 2010 ]

UK landlords are facing the likelihood of renters coming into the rental market with elevated expectations, a phenomenon that has been linked to a fall in the supply of new properties coming onto the market for the second successive quarter. According to figures from the most recent residential lettings survey conducted by the Royal Institution of chartered Surveyors, the rise in expectations has come as the number of new instructions has fallen, and this has signalled an end to the downward trend regarding rents which has been a feature of the market since Autumn 2008.

For the three month periods to January 2010, the total net balance of chartered surveyors reporting rising rents was zero, a figure that follows on the back of five successive quarters of negative figures, and a stark comparison to April 2009 during which 58% more chartered surveyors reported falling rental prices. This figure marked an historic low for the survey.

As well as this, expectations linked to rentals continue to climb, with 33% of respondents confident that rental prices will continue to climb during the coming quarter, a rise from the previous figure of 22%.  Many have ascribed this more positive outlook for rents to the perpetual fall in the supply if flats and houses in the property marketplace. Around 23% more chartered surveyors recorded a fall in the number of new landlord instructions for the current period, a figure which has risen from 18% during the previous quarter.

Some analysts have factored the bad winter weather into the figures, although others believe that the upswing in the housing market has drawn a large number of ‘accidental’ landlords out of the rental market, a point also made strongly in the report.

Market demand is still strong, and 16% more respondents have seen demand continue to rise. One of the main sources of increased demand for decent rental properties are potential first-time buyers finding difficulties in getting into the property market in their own right, due to the stringent conditions laid down by lender, especially with regards to large deposit demands.

RICS spokesperson, Jeremy Leaf, stated that movements in the housing market have affected lettings, and the RICS survey had ’seen a steady increase in the number of new instructions in the housing market in the past few months.’ He stated also that the number of to-rent properties had simultaneously seen a decrease in number.

This news has led many to find renewed interest in the UK rental property sector, with more and more applications being seen for buy-to-let mortgages in recent months. This is especially true with many people looking to get a good fixed-rate mortgage on a home purchase to lock-in the continuing good mortgage deals still available, though unfortunately this is still difficult for most people given the uncertain lending conditions facing most people at this time.

“Arctic February Did Not Hit UK Housing Market”: NAEA

[ Posted March 18th, 2010 ]

According the latest information from estate agents, Britain’s bitterly cold and windy February weather didn’t adversely affect the number of properties sold, although February did see fewer sellers coming onto the market. It appears that house-hunters in Britain braced the wintry weather conditions in order to look for new homes, according to February’s market report by the National  Association of Estate Agents. The actual number of houses sold rose from six (5.7) in January to seven (6.8) in February, although it appears that the inclement weather did adversely affect the number of people registering with estate agents. During February, only 258 people registered with estate agents for the purposes of house hunting, as compared to 291 in January. February’s figure represents the lowest recorded number of the last annual period.

Figures also show that the number of properties available for sale saw a slight rise-from 55 houses per branch in January, to 56 in February, although this still indicates that there are four house hunters for each available property. The percentage of sales made to first-time buyers also rose 1% in January, from 23% to 24%.

According to Gary Smith, President of the NAEA, the figures indicate that there is ‘an increasing appetite for property that will feed recovery as the weather improve over the coming months.’ Mr Smith also stated that the growing confidence in the market is reflected in figures that show first-time buyers making up a quarter of the market. He cautioned, however, that supply and demand was still an outstanding issue, and that he and his organisation would continue to press the government prior to March’s budget. The figures and finding of the NAEA report, however, are at variance with those of the Royal Institution of Chartered Surveyors, who stated that the adverse weather conditions had resulted in far fewer home viewing and had affected prices and activity within the housing market. This view was amplified by the Nationwide Building Society, who agreed that the snowy weather had indeed had an effect on the market, as had the ending of the stamp duty holiday at the end of 2009.

Also, recent figures published by the Department of Communities and Local Government showed that house prices were 8.9% higher in January as compared to the same time last year. It is also clear, however, that first-time buyers are still finding things tough as mortgage lenders stick to stringent criteria, such as the necessity for a sizeable deposit from new borrowers. Nevertheless even a number of buy-to-let mortgages have been successfully granted in the past month in order to allow for greater activity in the markets – something that is seen by many as a positive sign of the property market’s recovery.

Knightsbridge Holds Gold Property

[ Posted March 15th, 2010 ]

While it is no secret that Knightsbridge holds many properties that are amongst the highest priced in London most people will be shocked to believe that a flat smaller than a standard sized snooker table could be valued at more than £200,000. Located in a small apartment building and originally converted form an old broom cupboard in 1987 the tiny flat measures a paltry 11 feet by 5.5 feet – a snooker table, in comparison, measures a full 12 feet by 6 feet.

Currently owned and lived in from time to time by Ray Barker who purchased the flat in 2006 for £120,000 in order to avoid a long commute back to Bath every day from his office in London the ‘cozy’ living arrangements come with two rooms – a sectioned off shower/toilet/wardrobe area and the main ‘living’ room for sleeping.

The ability for such a small home to be valued at £35,000 more than the average England home is somewhat of a shock to many home owners, yet at the same time is no real surprise given the current state of the housing market in London. Knightsbridge, a premier location and in high demand for many upper-class owners, demands some of the highest prices in the country and residents can be expected to be hard pressed to find a more expensive home elsewhere. This is a perfect example of the fact that although many incentives have been made to encourage home buyers to purchase more properties, including offering some of the best mortgage rates in years and making the market much friendlier to first-time buyers and re-mortgages alike, simply property prices alone can be staggering and difficult to overcome.

To put this small flat into contrast, however, the ’smallest home in Great Britain’ known as the Quay House is located Conwy, Wales and measures a full 10 feet by 6 feet. Lived in up till 1900 by an over 6 foot fisherman (6 foot 3 inches, to be exact) the home is now a major tourist attraction for domestic and international travellers alike.

Current real estate experts expect that if Mr. Barker were to sell his Knightsbridge home today he could expect to comfortably demand a price between £150,000 to £200,000, though whether or not Mr. Barker is willing to part with his comfortable home-away-from-home where he can ‘answer the door, wash up, go to the loo and make a cuppa all at the same time’ is another story.

UK Landlords Upbeat About Private Rental Sector

[ Posted March 13th, 2010 ]

According to a recent survey of private landlords in the UK, there is much more confidence in the private rental sector with regards to the outlook for 2010 than there was even one month ago. The survey shows that around 61% of private landlords in the UK feel confident about the current buy-to-let sector in general, a figure that is up on February’s figure of 57%.

Many reportedly feel that, although they are emphasising the increasingly positive mood within the private home rental sector, they also continue to underline such issue that remain concerns such as government funding as well as issues surrounding student accommodation.

Respondents also said that the market has shown recent positive signs that lending is making a comeback-which is a great sign-as this has been perhaps the biggest stumbling block of the last two years. Many respondents were, however, still worried about universities plans to build more accommodation on halls of residence, which may cause lowered demand for accommodation in the private rental sector.

Most respondents also wished to see an increase in levels of lending. Around 40% of respondents stated that they were currently feeling less confident than previously about the market conditions in general, and they largely ascribe their pessimism to the lack of lending. Respondents also went on to suggest that even the financing available to borrowers is simply too expensive and that the private rental sector also still contains far too many bad or unbalanced debts and regulations.

There are also widespread concerns about any future rises in interest rates. According to James Davis, the founder and Chief Executive Officer of Upad, said that the latest survey marks the fourth month in a row since Upad launched the index that landlords have voiced their increasing confidence in the housing market.

He went on to say that it would be interesting to see how the coming months – and the forecoming capacity of UK banks to lend or not, especially if they would continue to stay true the historically low mortgage rates and allow good fixed-rate mortgages – would affect confidence in the sector. Mr Davis concluded by saying that he felt the results of the current survey appear to suggest that the market is regularly continuing to grow in strength.

UK Property Prices Fall in February

[ Posted March 11th, 2010 ]

The latest property index has shown that a larger number of properties available for sale resulted in UK residential real estate prices dropping unexpectedly in February by 1.5%, which represents the first drop since June, 2009. This drop follows on from a revised 0.4% rise in January, and resulted in prices being 4.5% up in the three month period to February, as compared with the same period last year, according to Halifax’s index.

The Halifax index also goes on to state that a variety of factors, such as inclement weather, increased supply, and the end of the tax holiday enjoyed by some house buyers all played their part in contributing to the drop in prices. Despite this, however, the report pointed out that property prices still remained 8% higher than in April 2009.

Martin Ellis, housing economist at Halifax, said that the increase in properties available for sale has aided in the reduction of the supply and demand imbalance. He went on to state that the poor weather seen in the UK during January and February-coupled with a low stamp duty threshold of £125,000-combined to adversely affect housing demand. According to Halifax, as of February 2010, the average house price in the UK stood at £166,587.

Halifax’s index is just the latest in a range of figures and reports indicating a slowdown in the UK housing and property market. The Nationwide Building Society also detailed a 1% drop in housing prices in February, and, along with this, the Bank of England also indicated that mortgage approvals dropped to an eight-month nadir in January.

Despite this cooling indicators, however, Hometrack recorded a 0.3% climb in house prices in February as compared to January. Added to this, regions such as London and the south east defy all cooling, and simply continue to climb. Hometrack’s figures also indicate that, in February, the housing market also saw the first Y-O-Y rise since March 2008. These figures stood at 0.4%, with house prices themselves rising across a quarter of all UK postcodes, something not seen for over two years.

Many analysts warn, however, that the housing and real estate markets in the UK lack genuine stability and solid foundations.  To underscore this, the number of agreed sales rose by only 10% in February, as compared to an average of 30% in past years. In combination with this, supply rose by just 4.6% as compared to an average previous yearly rise of 14%. Also, buyer registrations rose by just 8.3% as compared to an average rise of 24% for the same month over a consistent previous eight year period. This may be due to the fact that fewer first-time buyers are currently entering into the market due to economic difficulties and fewer bad credit mortgages are being issued as well due to changes in lender decisions.

Property Lending Recovers More Slowly in Scotland

[ Posted March 8th, 2010 ]

A new report has shown that the property lending market in Scotland has begun to recover, albeit at a slower rate than has been seen in the lending market for the UK in general. The report released by the Council of Mortgage Lenders illustrated that house-buying activity continued its recovery during the last three months of last year, showing that there were 14,200 loans granted for house buying purposes in the fourth quarter of 2009. This represents a rise of 4% by number and 5% in terms of value on the figures of the preceding three month period.

The report by the CML also indicated that general growth in Scotland’s housing market was slightly down on that seen in the UK as a whole, with Scotland seeing a 9% rise in house-buying activity in the final quarter of 2009 as well as a 62% YOY rise. The increase seen in Scotland from the final three months of 2008 was 22% by volume and 19% by value, which goes to show the extent to which the market in Scotland recovered during 2009 from its low point in the first quarter of 2008 when figures of 7,600 loans with a total value of £785 million were seen according to the Council for Mortgage Lenders.

Due to the slower market upswing Scotland’s portion of all house-buying loans fell to just 8% for the quarter, which represents the lowest market share for almost three years. The 9% share for 2009 overall was don from 2008’s high point figure of 12%.

Scotland’s number of first-time buyers remained unchanged, standing at 5,400 in the fourth quarter. However, the value of lending to first-time buyers rose during the finals three month period-from £475 million to £479 million, with the number of loans also rising from 4,100-at a value of £368 million, YOY. Re-mortgaging volumes have stayed low in Scotland, however, and this is very much in concert with what is happening in the rest of the UK.

Scotland saw 9,000 loans for re-mortgaging totalling £900 million for the fourth quarter, a figure down from 10,000 loans totalling £1 billion over the preceding three months. In 2009 as a whole, Scotland saw 39,000 in total worth £4.4 billion for the purposes of re-mortgaging, figures down from 74,000 worth £7.4 billion in 2008. Just like in the UK as a whole, a lot of Scottish borrowers  are still likely to have difficulties obtaining the more alluring new deals and top mortgage rates which tend to only be on offer to people capable of putting down larger deposits, according to the report. aims to provide every client with cheap, affordable and best mortgage loans in the UK market, however the actual mortgage rate available will depend on client's financial circumstances and credit history. Although, has made every effort to ensure that the mortgage rates listed are correct, it bears no responsibility in case of an error. 
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