According to new figures recently published, property prices has risen by 26% in the east of London since the capital was announced as host city of the 2012 Olympic Games. With precisely two years remaining until the start of the opening ceremony of the London 2012 Olympics, research conducted by Lloyds TSB looked into house price performance throughout the fourteen postal districts close to Olympic Park, the main venue for the Games – good news in particular thanks to the positive mortgage rates offered in many areas.

Certain areas of the capital close to the principal site of the 2012 Olympic and Paralympic Games have witnessed rapid property price rises since the decision to award the Games to London was announced back in July, 2005.

Shoreditch and Homerton, located in the borough of Hackeny, have both witnessed their average property prices climb, by 69% and 53% respectively. The rises are some way above the Greater London average property price rises of 36%.

The borough of Stratford, however, which is the home of the Olympic Stadium, has seen a mere 3% rise in average house prices, a figure that has risen much slower than all of the other postal districts.

Suren Thiru, a housing economist at Lloyds TSB, puts some of the property price rises down to regeneration as a result of the successful Olympic bid in combination with continued decent fixed mortgage rates and increased overseas interest.

‘Some areas close to the Olympic Park have experienced a sharp rise in property prices since London’s successful bid to host the 2012 Olympic and Paralympic Games. Part of this rise is likely to have been due to an increased interest in property in these locations from both buyers and investors as a result of the associated regeneration taking place,’ he stated.
 
‘Looking forward, property prices across East London are likely to receive a boost from the legacy of improved infrastructure and transport links left by the London 2012 Olympics,’ Thiru added.

According to the research, the fourteen postal districts located in close proximity to Olympic Park has climbed  by more than a qaurter since the announcement in July, 2005. This figure is higher than the England-wide average of 20%, but is lower than London’s 36% average. The average property price for the postal districts near Olympic Park currently stands at £262,953.

A large impact upon price rises in East London has come from the incoming upgrade of facilities as a result of hosting the Games, as well as massive inward investment and hugely improved transportation links and developments.

As a result of the fact that a lot of building projects have been axed since the coalition government assumed office that the number of new house builds for the coming year could well drop below the 100,000 mark for the first time since 1923, according to figures from a new report commissioned by the National Housing Federation.

Nearly 85,000 houses at the planning stage of development will now not be built due to the abolition of the previous Labour government’s regional housing targets, according to the report. The majority of proposed houses under the regional targets were set to have been built on the south-west and east of England due to the fact that job prospects in these areas are considered to be better than in the north of the country. As a result of this, it will certainly be that much harder for people living in the north of England to re-locate to more job-rich areas when up-coming government cuts begin to hit.

According to research carried out by Tetlow King Planning on behalf of the NHF, North Somerset Council alone axed plans for 10,750 new homes. In south-west England, the number of planned new house builds has dropped by almost 60,000. Also, plans for more than 20,000 new builds throughout eastern England have also been axed, as well as an additional 2,000 homes in the north and the midlands.

It is reckoned that the figures are especially high in the south due to the fact that regional targets were finalised later than in other regions, and the figures had not yet been challenged by local councils.

London, however, is unlikely to be affected, due to the fact that housing is controlled by the Mayor and extra housing has been promised along with decent mortgage rates to support consumer interest. This is particularly favourable in terms of both commercial mortgage rates and fixed mortgage rates as these have been an issue in the past that has been concerning many consumers. Additionally the housing crisis has not been precipitated by cuts, rather by the Conservative pledge made in opposition back in 2009 to abolish the regional targets in order to reduce central bureaucracy.

The plans, however have been criticised, with David Orr, chief executive of the National Housing Federation, urging an alternative system to encourage new house building:   "With more than 4.5 million people on waiting lists, and 2.5 million people in overcrowded conditions, this is no time to downgrade the need for new homes. To prevent a slump in the number of desperately needed new homes, the Government should urgently replace the regional planning system with transitional arrangements," Mr Orr said.

It seems very much as though there can rarely have been a more difficult time for market conditions for tenants. At a time when mortgages are incredibly difficult to get hold of, they cannot begin to consider buying a property as a first-time buyer or even with the assistance of a re-mortgage through a family or friend and, at the same time, two very important factors have pushed the lettings market markedly in monetary favour of landlords.

The first factor is that, currently, demand is outstripping supply across the country. According to the most recent survey from the Royal Institution of Chartered Surveyors published back in May, the trend for demand outstripping supply is being further exacerbated by potential buyers being either incapable of raising a deposit or to secure a mortgage-or both.

"A large stock of properties to let rapidly disappeared as demand for rented houses dramatically increased," according to Philip Greenaway from Chesterton Humberts in Somerset.

According to Stuart Allen from Broadley and Coulson lettings agency in Durham, "buoyant market with large numbers of tenants who’d otherwise be first time buyers."

The inevitable result if this is that rents will certainly rise. Landlord yields, which are the proportion of the purchase cost of a rental property taken back every year in rent, have risen from 2% back in 2008 to between 4.5% and 7% currently. Exceptions to this are such places as Haringey and Havering in London, which have 10% yields, and Greater Manchester which stands on 9%, according to recent figures.

Another dash to the hopes of tenants is the lack of protection they are afforded. The previous Labout government was due to introduce mandatory regulation of property and lettings management agents, however the current coalition government ditched the proposal a short time after assuming office.

As a result, Christopher Hamer, who is the Property Ombudsman, belives that tenants have been left "exposed to the rogue element in the lettings sector, particularly in relation to client money protection". Despite the fact that his office’s Code of Practise, which offers anywhere up to £25,000 in compensation for tenants being ripped off by rogue lettings agents, has been accepted voluntarily by 7,500 agents, he says that this still results in many more being outside the scheme and means that, consumers have no way to obtain compensation or redress when things go awry. The past 18 months have seen lettings-related complaints to the Property Ombudsman’s Office climb far more quickly in number than figures for people either selling or buying a house.

Many would have felt somewhat shaky in the wake of last week’s reports stating that, by 2015, it is highly likely that house values will be lower than in 2007 – not encouraging news for many first-time buyers and re-mortgagers alike even with continued favourable mortgage rates. According to PricewaterhouseCoopers, there is a 70% chance that house prices in Britain will be below the peak levels seen in 2007 in 2015-in real terms-and this despite the generally anticipated house prices recovery in cash terms. In conclusion, this means that, should the reports be accurate, property prices will fail to keep pace with inflation. The acountants at PwC have warned that, even as far ahead as 2020-after five years of projected fairly steady growth levels, there is still a 50% chance that real-terms property prices will still stand below peak 2007 levels.

 "The possibility of a renewed fall in house prices over the next few years cannot be ruled out as mortgage interest rates start to rise again,” commented John Hawksworth, the head of macroeconomics at PricewaterhouseCoopers.

All of this news appears to stymie a recovery that had been going well up to now. The drops in price that had come in the wake of the credit crunch seemed to have levelled out, and prices have climbed steadily during the course of the last year. Measures such as a Stamp Duty holiday for houses valued at less than £250,000 went a long way towards aiding the recovery.

The wind, however, has now definitely changed. According to figures from the Halifax, average house prices in Britain have dropped now for the third consecutive month. And, just last week, the woe increase as the Royal Institution of Chartered Surveyors indicated that sellers are currently outnumbering buyers. This is converse to last year when fewer seller aided the recovery of the property market.

If the trend continues that sellers keep outnumbering buyers, it appears very likely that already falling prices will continue to slide.

Other analysts and experts are reluctant to make predictions for too far ahead, with many anticipating that prices will be flat over the year generally. This, however, does not necessarily mean that analysts are not anticipating a price fall. House prices have risen 6% since the beginning of the year, so when analysts state that they anticipate prices will remain flat over the course of the year, they mean that prices will drop back from this point back to 0%.

Howard Archer of his Global Insight believes that house prices will most likely be somewhat erratic over the months to come, and will most likely be flat for the rest of the year. He is less optimistic about the long term. “It is hard at this stage to be optimistic about prices in 2011, as the fiscal squeeze will kick in, which will hit people’s pockets and lead to job losses in the public sector."

There is no question for visitors that York is one of the UK’s most beautiful cities, packed with culture, scenery and history. York is also, according to a new survey conducted looking at the most affordable city in the UK in which to rent your home – excellent news for those looking to take advantage of the excellent mortgage rates in the area to secure a buy-to-let mortgage, especially with excellent fixed-rate mortgages still on the market in most areas.

The survey examined the average rent as well as the average earnings for all of the UK’s 55 biggest cities in order to determine which city in the UK is the most affordable. In this survey, York finished in first place, with the average room rental coming in at £270 per month. This figure represents only 13% of York’s average monthly wage, hence its value and affordability. The figure for rental in York of is also roughly £78 cheaper than the UK average.

York’s excellent value for rentals is due, in part to the fact that the city has been fairly heavily hit as a result of the recession. Some of the regions biggest employers, such as Network Rail and Norwich Union have been pushed in job cuts, and this has resulting in many York residents needing to seek new ways to supplement their income.

As a result of this, there has been an increase in the number of house owners seeking to rent spare rooms in York. Also, despite the fact that the economic situation has improved in the city, rents have not risen similarly. Due to this, York presents an excellent proposition for those looking to rent, with rents being cheaper than in any other UK city, with the average income being only just a little below the national average.

At the other end of the rental spectrum, the survey show s that, perhaps unsurprisingly, the UK’s highest rental rates can be seen in London. Despite this, however, the generally higher income levels in the city means that it does not take the top spot on the list of least affordable cities. The least affordable city in which to rent is Southampton, where, if you wish to rent, you will be charged over one-quarter of your monthly income in rent-a huge 27%.

What about the other end of the spectrum – the least affordable city in which to rent.

Nobody will be surprised that the highest rents in the UK are charged in London. However, the higher income levels within the capital prevent it from taking top spot in the least affordable city.

Instead, it’s the one city where I have personal experience of the rental market that is officially the least affordable to rent – Southampton. The actual rental payment in Southampton is only a little less than you would need to pay in London, which is amazing due to the almost £700 disparity in monthly incomes between the two cities.

The Southampton situation is fuelled, in part to the high demand for rental properties from the two large universities in the city as well as the fact that it is a relatively small city.

There have also been predictions that the situation is likely to worsen, with rents set to rise by a huge 10% across the country during the upcoming two years. The reasons are manifold: Rising unemployment, and first-time buyers’ struggling to obtain mortgages are greatly exacerbating the situation, along with the generally poor supply of rental properties.