UK's Help To Buy Scheme is Threatened by the Rising House Prices

This interesting article by the Property Wire on August 29th, 2013 shows the unity of mortgage brokers and intermediary lenders in raising their concern about inflated house prices being the gravest threat to the success of the Help to Buy scheme.

According to the latest outlook report from the Intermediary Mortgage Lenders Association (IMLA) almost two thirds of intermediary lenders and brokers, 60% and 59% respectively, single out a house price bubble as the most likely factor that may undermine the government scheme.

The research shows lenders already anticipate a 2.7% increase in the average house price by the end of the year, pushing it to £166,418 according to the Land Registry measure. Lenders’ prediction is based on the market’s performance in the first half of 2013 and the initial impact of the Help to Buy equity loan scheme.

If this same growth rate continues for the duration of Help to Buy, the average house price will reach £180,265 by the end of 2016, an overall rise of 11% in four years. This would bring house prices close to their last peak of £181,975, which was recorded in November 2007. There are concerns that the rate of increase could be even greater with the upcoming Help to Buy mortgage guarantee offer still to launch in January 2014.

Brokers also register significant concerns about a potential lack of lender support for Help to Buy, with almost half, 48%, worried this will jeopardise the scheme.

Just 20% of intermediary lenders openly share this sentiment yet 47% see capital weighting requirements as a major barrier to success. The detail of capital relief is still to be confirmed by the Treasury and will greatly influence lenders’ ability to back the initiative.

The same proportion of the lending community is concerned that an over reliance on government funding will handicap Help to Buy, while 27% cite structural weaknesses in the mortgage market. This market imbalance is of as much concern as a change of government in the next general election with 27% saying so.

Despite these concerns both groups agree that first time buyers will see the greatest benefit from the upcoming Help to Buy mortgage guarantee with 100% of lenders and 89% of brokers taking this view.

Lenders are more optimistic than brokers about home movers benefitting at 80% compared with 56%. While the guarantees will also be available to existing home owners seeking to move to another lender, just 13% of lenders and 6% of brokers see the scheme as benefitting home owners remortgaging their properties.

‘Pleasing though it is to see increasing levels of activity in the market and a swell of consumer interest, these findings spell out the importance of keeping control over any future growth,’ said Peter Williams, executive director of the IMLA.


‘There is a clear consensus that first time buyers stand to benefit most from the second part of Help to Buy. But if house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other. Moreover the exit from the scheme will need to be managed very carefully so it without causing serious harm to the market,’ he explained.

‘If people are struggling to raise deposits in the current climate then a further 11% increase in house prices will lift the property ladder even further out of reach for some. House builders are attempting to bridge the ever growing chasm between supply and demand which is going to be essential to ensure we help more people to access the property ladder without creating new hurdles in the form of inflated house prices,’ he pointed out.

‘In the meantime, the pressure is on to ensure Help to Buy is more inclusive than divisive. Agreement on capital weightings and on the fee lenders will be charged to participate are crucial to ensuring the scheme is made affordable for lenders as well as consumers if we want to see a similar impact as the current equity loan scheme,’ he added.

Meanwhile, most of the 10,148 reservations for new build homes have been in the regions, official data on Help to Buy shows.

Interest in the Midlands has been most keen, with nearly four times as many reservations of new build homes than in London.  Reservations in the East and South East have also been high, as have those in the North West of England.

The regional take up of the equity loan part of the Help to Buy scheme has lifted confidence in these areas, with many mothballed housing schemes now springing back to life as a result of the increased demand from buyers, according to property firm Knight Frank.

House builders have been quick to report that they envisage increasing their output in the coming year and there was an encouraging rise in the number of new private housing starts between April and June, rising 7% on the quarter, indicating Help to Buy was having an effect.

The firm said it is worth noting that it is not working in isolation. ‘The government’s funding for lending scheme has helped drive down the cost of mortgages, and this, coupled with a slight loosening in lending criteria and the ultra low bank base rate has led to a sharp rise in the number of first time buyers, an encouraging sign for a return to a more fully functioning housing market,’ it says.

Article Source: http://www.propertywire.com/news/europe/uk-help-buy-scheme-201308298172.html

Carney Warns on Property Bubble

This article of the Belfast Telegraph.co.uk reveals Gov. Carney's warning to policymakers of another house price rise risk and pledge to take response if he has to, to recover the property market.

Bank of England governor Mark Carney has warned policymakers are "acutely aware" of the risk of another house price bubble and vowed to step in and take action to rein in Britain's resurgent property market if needed.

The new central bank boss said lenders could be asked to restrict borrowing terms or even be forced to hold more cash on their balance sheets to dampen down an over-heated property market.

His warning came as he also sought to reassure that interest rates were set to stay at record lows for at least three years as part of an effort to shore up his flagship "forward guidance" policy following a poor reception in the City.

In his highly anticipated first UK public speech, Mr Carney insisted: "Rates won't go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely."

The guidance, set out earlier this month, contained a series of caveats that have prompted fears that the Bank rate might rise sooner than expected - sending bond yields up.
But Mr Carney said: "We do not intend even to consider raising it before unemployment falls to 7%."

He added the Bank stood ready to launch more economy boosting measures if future rate expectations begin hindering the recovery.

Mr Carney, who succeeded Lord King at the helm last month, also unveiled new plans to bolster bank lending by another £90 billion.

Facing mounting criticism over stringent demands for lenders to bolster their financial reserves, Mr Carney said all banks and building societies that meet the new capital requirements will be allowed to reduce asset holdings elsewhere on their balance sheets. This will reduce holdings by £90 billion once all eight major banks and building societies meet the capital rules.

"That will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy," he told business leaders at a CBI event in Nottingham.

Article Source: http://www.belfasttelegraph.co.uk/news/local-national/uk/carney-warns-on-property-bubble-29534154.html

 

Charlie Bean: UK Housing Market is not Heading Towards Property Bubble

According to the Deputy Governor of the Bank of England, Charlie Bean he does not see that the housing market in UK will lead to another rise in property prices as stated in this article by Sikhanyisiwe Ncube of Newspoint Africa on 27th August, 2013.

Charlie Bean, the Deputy Governor of the Bank of England said that he does not believe that the UK's housing market is heading for another property bubble.

Bean said, "We wouldn't want to see a house price boom emerging which would have potential problems further down the road. I can't say we see signs of that at the moment. At this stage, you certainly wouldn't say there's a problem."

Bean said during a Federal Reserve Bank of Kansas City conference in Jackson Hole, Wyoming that the central bank is expecting an increase in housing transactions and pointed out that the housing prices are rising in line with the inflation in the country. A home value indicator compiled by the Royal Institution of Chartered Surveyors increased to its highest level in seven years.

Politicians in the UK have said that the government's schemes to help stabilise the housing market will not result in a housing market bubble, as suggested by some in the previous few days. Experts dismissed suggestions of a housing market bubble and said that package of measures to boost housing market is working towards increasing house building and housing supply in the country. UK's largest house builders, who have always claimed that the lack of mortgage availability has restricted recovery in the property market, have backed the claims by the government.

Article Source: http://newspoint.co.za/story/413/4042-uk-housing-market-not-heading-towards-property-bubble-bean

Noisy Neighbours are a Turn Off for UK Home Buyers

According to research home buyers in the UK are most turned off or pissed to noisy neighbors rather than hearing noises coming from train and traffic as revealed in this August 26, 2013 article by the Property Wire.

Noisy neighbours rather than trains and traffic noise put off people from buying a home in the UK the most even if the price was reduced, according to research.
 
Over half, some 54% of home buyers wouldn’t buy a home next door to party animal neighbours while 32% would be put off by a train line, 31% by traffic noise from a motorway and 29% by frequent DIY.

Other noise also puts people off, including 33% who wouldn’t buy because of dogs barking or cockerels crowing and 26% put off motorbikes or diesel vans starting up immediately outside the front of the house every morning.

The research by estate agents haart also found that women are more concerned by troublesome neighbours than men, with nearly two thirds, 58%, of female respondents opposed to living next to a party house compared to 46% of men.

The older generation are also particularly apprehensive, with 74% of those aged 65 and over unwilling to put up with party animals next door. Young adults aged 16 to 25 proved to be the least cautious.

Other noises that affect the desirability of a property include close proximity to an airport which would put 39% of people off buying.

Some would buy if there was a generous discount offered with the highest reduction required to put up with neighbours having regular parties, where people would want an average of 22% off the cost of the property.

Being near an airport would merit a discount of 21%, next to a very busy main road or motorway a 19% discount and being next to commuter trains running regularly an 18% discount. While dogs barking daily would need a price drop of 16%, loud DIY also 16% and noisy vehicle start up 15%.

‘Brits are renowned for our prudent behaviour, and this survey highlights just how significant this mind set is when it comes to buying a home. It is usually quite simple to scope out whether a property is affected by noise from nearby traffic, train lines or motorways, however, it’s not so easy to spot the livelier neighbours in just a handful of visits,’ said Paul Smith, chief executive officer of haart estate agents.

‘Home buyers should make sure they check out a property at different times of day and week if possible and speak to the neighbours and get their view of the street and area before you decide to buy,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-buyers-homes-neighbours-201308268158.html

Do Wind Turbines Impact Property Values in the UK?

In this article Mark Benson of PropertyCommunity.com on August 24, 2013 covers what could be the possible impact of wind turbines to UK's property values and speculations states that it could lead to a fall in property prices.

The subject of wind turbines has taken centre stage over the last few days with news that the UK government has commissioned a report into how wind turbines impact the value of property in their vicinity. The very fact that the UK government, along with many other governments around the world, has over the last few years been actively pushing the introduction of more wind farms could put the authorities in a very tricky situation if the rumours are correct.

There is speculation that the forthcoming report, which may or may not be made public, will confirm that billions of pounds have been wiped off the value of properties in the UK located in the vicinity of the ever-growing number of wind farms. There is speculation that the Department for the Environment is actively looking to publish the report as soon as possible while the Department of Energy and Climate Change has attempted to block its release.


Concerns about UK property values

The problem for many people is the fact that by definition wind farms are located in some of the more rural areas of the UK which offer enough wind power to make an investment worthwhile – thereby leading to a direct impact upon rural property values. It is not quite clear whether the impact upon properties in the vicinity of wind farms is similar across-the-board or whether certain areas are impacted to a greater degree.

Quote from PropertyForum.com : “The gap in home values in the UK between London and the South East and the rest of the country is widening, according to new research.”

If you take a step back and look at the situation, many of the more rural areas of the UK host some beautiful homes with matching scenery. For many people it is the tranquil nature of life in rural Britain which adds to the value of many country homes. Therefore, if you are looking out across a raft of wind farms the impact is very different and few people would be willing to pay extra for a view of these enormous renewable energy projects.

What will the government do?

The reality is that the UK government, along with many other governments around the world, has signed up to a variety of legal obligations with regard to renewable energy. David Cameron has already confirmed that we are likely to see a reduction in the number of onshore wind farms with a potential increase in the number of offshore wind farms. While this will be music to the ears of many across rural Britain who were concerned about the potential for wind farms to be built in their vicinity, it will do nothing to help those who have seen a major impact upon their property values already.

While this is all speculation at the moment, a number of newspapers have covered a rumoured situation whereby a property priced at £700,000 fell by around £250,000 in value once plans were approved for the building of a wind turbine. This kind of impact is unlikely to be replicated right across the board but there will be many situations where the demand for rural property is impacted by planning approvals for wind turbines. Is this now something else we need to take into consideration when looking at the acquisition of a property?

Article Source: http://www.propertyforum.com/property-in-the-uk/do-wind-turbines-impact-property-values-in-the-uk.html

Financial Reasons to Invest in London Property

If you are a property investor you might want to consider investing in London property. Here Gulli Arnason of financialnews.co.uk on August 22, 2013 discusses the financial reasons to invest in London property.

Residential property in London has attained a reputation as a safe asset class and as far as any investment is a safe bet, London property appears to be the place to invest with values outpacing all other investment types, and it’s not just the case in the more affluent areas of London like Kensington and Chelsea or Mayfair – up and coming boroughs like Lewisham and Tower Hamlets are seeing prices continue to increase too.  According to a report by estate agent, Savills, Lewisham is set to see its property prices rise by 20% over the next five years. 

But it’s not just Savills that are recommending investing in London property as a sound financial decision. The world’s biggest property agent, CBRE, has produced a report that ranks the UK’s capital city right at the top spot for the most attractive places to invest in property. And, in fact, London was in pole position on the same report last year too. So, with property prices continuing to rise in the capital despite the rest of the UK’s continued economic turmoil, could London make it three years in a row?

Despite property prices hardly being buoyant in other areas of the UK (Craigavon in Northern Ireland has been the hardest hit with property prices having fallen by 18.4% down to an average of £91,530), London prices have remained safe within their own economic environment. property investment opportunities in London are plentiful and can be found all over the capital. The top five places to invest, according to a report by Savills, are the boroughs of Westminster, Kensington and Chelsea, Hammersmith and Fulham, Camden, and Islington. For some of the best property investment options, visit Galliard Homes.

New research by estate agents, Cluttons, has revealed that the average price of a flat in central London has soared above £1 million for the first time ever. Elsewhere in London, however, it is possible to stay well under this price bracket – and the Land Registry of England and Wales shows that the average price of a flat in London (information sourced between January – March 2013) was £391,496. 

A popular place to buy property outside the central London belt – but within easy reach of it – is Greenwich. Here, property owners have the benefit of all the amenities of London on the doorstep but live in an area with more of a village feel. Greenwich park, the Observatory, and the Cutty Sark – along with the Thames, a great selection of pubs, independent shops and the ever-popular market, continue to make Greenwich a popular prospect with buyers. What’s more, with the newly improved tube network, commuting time from Greenwich has been eased considerably. 

There are more financial benefits of investing in property in London if you are to consider the property renovation market. Although somewhat saturated with people turning their hands to property makeovers, there are still opportunities in the property market for those prepared to look. First time buyers can climb the property ladder quickly if they’re prepared to turn their hand to property development. London boroughs on the outskirts of the capital are more likely to hold investment opportunities within an affordable price range. 

Developers, and those with a portfolio of properties, meanwhile, will be able to invest in houses with more attractive postcodes. However, even if it’s just a case of a quick lick of paint, a new kitchen and a new bathroom, thousands of pounds can easily be added to the value of your home in a matter of a few months.

Article Source: http://www.financial-news.co.uk/16900/2013/08/financial-reasons-to-invest-in-london-property/

Only 32% of Sellers Drop Price of House

In order to draw a buyer to buy their property some house sellers cut down their original asking price as revealed in this article by Jack Hatton of Express on August 21, 2013.

The number of house sellers slashing their original asking price to attract a buyer is at a record low as confidence flows back into the market.

Under a third (32 per cent) of current sellers had reduced their asking price, according to property website Zoopla.

It was the lowest figure for the summer quarter since the website’s records began in 2010.

This time last year 37 per cent had been forced into a price cut in a bid to find a buyer.

Zoopla spokesman Lawrence Hall said: “It suggests sellers are feeling more confident and happy to wait it out to achieve their target asking price.”

But seller confidence remains patchy, indicating a regional divide.

Two in five current sellers in the Yorkshire towns of Barnsley, Rotherham and Wakefield have cut their asking prices, compared with one in four in London or Edinburgh.

On average sellers reduced by 6.3 per cent compared with 7.6 per cent a year ago.

However, the figure was currently almost 10 per cent in Poole, Dorset.

The summer holiday season usually sees a surge in price cuts as the market traditionally gets quieter.

But demand from buyers has been gathering pace in recent months after Government initiatives such as the mortgage scheme Funding For Lending.

The Council of Mortgage Lenders reported that last month business was at its strongest since 2008.

Article Source:  http://www.express.co.uk/news/property/423626/Only-32-of-sellers-drop-price-of-house

UK North/South House Price Divide Widens

According to new research, house price split rise between north and south of UK as revealed on 20th August, 2013 article published on propertycommunity.com by Ray Clancy.

The gap in home values in the UK between London and the South East and the rest of the country is widening, according to new research. The strong property market recovery evident in London and the South East has not been mirrored in other regions as the relative value of homes across the UK has changed radically over the last five years.

In stark contrast to the prosperous South, house prices across the North are still below their 2008 levels and markets remain lacklustre. Moreover, the gap in home values is widening and this trend is effectively further centralising the bulk of the UK’s property wealth in London and the South East. The research from online property firm Home.co.uk says that a huge surge in London property prices is well underway and shows no signs of slowing down. The average asking price for a property within Greater London now stands at £389,025, a rise of 6.8% in the last six months alone.

Such growth and further relentless demand all point towards an overheating market. Despite this, the UK government and Bank of England are continuing their support for mortgage lending and loose monetary policies. In August 2013, an average London property is priced 60% higher than the average for England and Wales. The South East, South West and East Anglia also record above average prices whilst the rest of the country, Wales and Scotland fall below the average of £242,541.

Quote from ExpatForum.com : “One in four brokers in the UK claim that the Bank of England’s flagship Funding for Lending Scheme aimed at helping to boost the property market has failed expectations to date.”

Property prices in London are higher than ever before and the market in the capital bears little resemblance to the rest of the country. Property in the surrounding South East has performed reasonably well, yet the price differential is still dwarfed by London’s super premium pricing. Given the pressure on prices in the North and Scotland, the gap with these regions has actually widened over the past five years. For example, an average property in the North East now costs £153,160 which is 6% lower than in 2008. This, in turn, has widened the average price differential from 33% to 37%. The situation in Wales, the Midlands, the North and Scotland is the same: average property price differential has actually grown in the past five years.

‘The London property market is a law unto itself. Relentless demand from both domestic and foreign buyers is creating a market that is seemingly isolated from the grim economic challenges that face the rest of the country. Slower sales and slower price recovery, or even deflation, in other areas serve only to highlight the unique performance of the capital’s property market,’ said the firm’s director Doug Shephard. ‘The North-South divide has evolved to the point where financial policy makers need to treat London differently to the rest of the country. The London property market clearly needs no further stimulus; it’s running too hot already. Only time will tell if the market will overheat and actually realign prices in the process,’ he pointed out.

‘However, the concern is that, if the capital’s property bubble does burst, it may well shake the confidence of the wider market, and financial sector, and make no difference to the price differential. Given the government policies and a wealth of buyers favouring the capital, the property gap between London and the rest of the country is likely to grow further in the immediate future,’ he added.

Article Source: http://www.propertyforum.com/property-in-the-uk/uk-northsouth-house-price-divide-widens.html

UK Homeowners Believe Property Values are Rising

This article on August 19, 2013 by Natasha Al-Atassi of Select Property reveals the confidence of homeowners that the value of their property will continue to rise.

Homeowners are confident the value of their property rose in July.

Summary:

• 18% of households believe their property is worth more now than it was last month
• Just 7.4% believe it is less valuable
• Many homeowners think their property’s value will continue to rise over the year

British households are confident the price of their property is continuing to increase, according to recent research from Knight Frank.
Its latest House Price Sentiment Index (HPSI) released in conjunction with Markit found that homeowners thought the value of their homes had improved for the fifth consecutive month in July.

The HPSI rating for last month was 55.3 as 18% of those surveyed said their property’s value had risen, while 7.4% considered the price of their home to have dropped during this period.

Grainne Gilmore, Head of UK Residential Research at Knight Frank, said expectations over house prices have “gained momentum” as a result of growing confidence in the UK’s property market.

“The more positive news on the UK economy is also feeding into a ‘feel-good’ factor, which is reflected in houesholds’ increased optimism that the value of their home is set to rise,” it was added.

Lots of homeowners believe their property’s value will continue to rise over the next 12 months, as a high future HPSI was recorded in August of 65.8.

This could be the result of a growing demand for properties in the UK after the Royal Institution of Chartered Surveyors recently reported 53% more surveyors said there was a higher buyer demand in July than the previous month.

Article Source:  http://www.selectproperty.com/2013/08/uk-homeowners-believe-properties-values-are-rising/

Will UK Savers Switch Their Funds Into Property?

This article is just a matter of deciding whether UK savers will consider investing into property since Mark Carney confirmed that based rates are likely to increase prior to the election in 2015 as revealed by this article by Mark Benson of propertycommunity.com on 17th of August 2013.

Earlier this week Mark Carney, the Governor of the Bank of England, confirmed that UK base rates are unlikely to increase prior to the election in 2015. There was a slight caveat in that if UK unemployment fell from 7.8% to 7%, the bank would look again, but in the current economic environment this is unlikely. So effectively Mark Carney has fixed UK base rates at 0.5% until potentially 2016.

While much of the focus has been upon reigniting the UK economy and assisting the property sector, many UK savers have been left behind with minimal interest rates which, when taking into account inflation, mean that their savings are actually reducing in real terms. So will savers in the UK look to switch to property investments in the short term?

The UK property market

While yields on UK properties are far in excess of yields available on UK savings accounts there is risk to capital when joining the UK property party this far down the line. The fact that UK base rates are unlikely to move before 2016 does give a guarantee of cheap finance for the foreseeable future which together with the UK government’s Help to Buy initiative gives incredible support to the sector. There are signs that some areas of the UK property market are beginning to overheat but if the UK economy recovers in the short to medium term, however unlikely this may be, it could help to reduce the overvalued look appearing in some areas.

Quote from PropertyForum.com : “The indications have been there some time, the UK property market is very much back in vogue and investors seem to be happy pushing prices higher and higher in the short term.”

It is debatable as to whether there is any significant upside in the short to medium term for UK property, some will suggest there is still more upside while others believe prices are being artificially supported. Therefore those looking to transfer their savings into property assets would be taking some risk with regards to their capital even if this is being slightly offset by rental yields available.

UK savers pay the price

It is ironic that UK savers are paying the price for the UK economic downturn and those who have racked up debts over the years are receiving most assistance from the UK government. This ongoing support of the UK property sector is dragging more and more people out of negative equity, perhaps people who overstretched themselves when UK property pushed too far ahead at the turn of the century.

This situation is having a life changing impact upon pensioners who are being forced to live off their savings, with UK benefits still under pressure, despite the fact that their capital is depreciating in real terms when taking into account inflation. Quite how long savers should be expected to pay the price for the U.K.’s period of excess spending is debatable but the longer this drags on the more harm it is doing to those who have saved for a rainy day.

Conclusion

On the surface it may look an interesting opportunity to switch your savings, which are probably earning negligible interest, into the property sector. Many believe there is potential for further capital growth, property yields are in excess of those available for savers but it is vital that those in this situation are aware of the danger to their capital.

The UK property market cannot continue to rise and rise for ever and a day, especially taking into account the current economic climate, and while it is unlikely we will see a property crash in the foreseeable future, perhaps the rate of growth in property prices will subside?

Article Source: http://www.propertyforum.com/property-in-the-uk/will-uk-savers-switch-their-funds-into-property.html
 

House Builds Up 'But More Needed'

This recent article Shelina Begum of Manchester Evening News on 16th of August, 2013 shows the growth of new house builds and how it is gathering pace.

House builders in England are starting more new properties than at any other time in the past three years, in further evidence that the market revival is gathering pace.

House builders in England are starting more new properties than at any other time in the past three years, in further evidence that the market revival is gathering pace.

But despite the recent pick-up, housing charity Shelter warned that the country is still building less than half the number of new houses it needs each year to tackle the "chronic shortage of homes".

Around 29,510 new homes were started between April and June, marking the highest quarterly total seen since 2010, Department for Communities and Local Government (DCLG) figures showed.

The number of new house builds begun has jumped by one third year-on-year, with particularly strong areas of growth seen along the M5 from Devon up to Worcestershire, as well as Buckinghamshire, Bedfordshire and Cambridgeshire, the report said.

Growth was not confined to the South, with housing starts also strong in Cumbria, South Yorkshire and Lancashire.

The number of housing starts was found to be weaker in a band running from Birmingham to Manchester and spreading across to North Yorkshire.

The figures also showed that 106,820 house builds have been completed over the last year, which is still less than half of the 250,000 annual total Shelter believes is required to meet demand.

A string of reports have pointed to the housing market bursting back into life in recent months, amid a sharp increase in mortgage availability and rising home buyer and seller confidence.

The Royal Institution of Chartered Surveyors (Rics) reported on Monday that house prices are rising at their fastest rate since 2006, while mortgage lenders said that first-time buyer numbers have soared to their highest levels since 2007.

Today's figures have been boosted by Government measures to give home buyers a helping hand including its Help to Buy scheme, which allows both home movers and first-time buyers to purchase a new-build home with a 5% deposit. More than 10,000 reservations for homes were made in the first four months of the initiative
.
Another scheme called Funding for Lending, which was introduced a year ago, has also been credited with generally increasing housing market activity as lenders have slashed their mortgage rates.

Communities minister Brandon Lewis said the figures "clearly show Government action bringing confidence back into the housing market and getting Britain building again".

Housing starts are now 73% higher than a trough seen in spring 2009, although they are still 40% below a peak of activity seen just before the economic downturn.

Kay Boycott, Shelter's director of communications, policy and campaigns, said: "While the Government may trumpet these figures as a growth story, what they really show is that we are still building less than half of the 250,000 homes we need each year to meet demand.

"In an overheating market, house prices are rising at their fastest rate since 2006, yet today's figures show that we're building just over half of the number of homes we were then.

"Unless we see radical action from the Government to tackle our chronic shortage of homes, house prices and rents will quickly rise even further out of reach for millions of people across the country struggling to find a stable home of their own."

Article Source:  http://www.manchestereveningnews.co.uk/business/property/house-builds-up-but-more-5737690

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Property Prices ‘Could Take Over a Decade to Recover’

Business advisors PwC affirmed that Northern Ireland's property prices may not recover ground lost in the past six years until 2015 as shown in this August 14th, 2013 article by News Letter.

The latest Northern Ireland Economic Outlook (NIEO) published this morning says average property prices are 53% below their 2007 peak, although the decline is slowing.

Nevertheless, average prices still fell by 5.9 per cent in the year to the end of March 2013, the report says.

Even if that decline bottoms out before the end of 2014, PwC says it could still take over a decade for property process to claw their way back to close to their 2007 level.

PwC Northern Ireland chief economist Dr Esmond Birnie, says the region must live with the legacy of falling house prices for a long time to come:

“An overspill from the Republic’s credit and property bubble, rampant speculative investment, and remarkably loose lending policies, drove Northern Ireland average property prices up by 250 per cent in the decade to September 2007.

“That was around twice the UK average increase of 145 per cent and a huge correction has driven prices back to pre-boom levels.”

While some types of property in popular areas of Northern Ireland are demonstrating real recovery, average property prices have some way to go before they are clearly on the turn, he said.

“That means real recovery in the property market will be long, difficult and wholly dependent on factors ranging from reduced household debt to more liberal lending policies.”

PwC says that the average house price to (average) earnings ratio has fallen to its lowest level in more than 10 years, at 3.04. In terms of this measure of affordability, the housing market has returned to the levels of the early 2000s.

In the wider economy, PwC says the province is showing signs of recovery but points out that it is the slowest recovery amongst the 12 UK regions.

Nonetheless, the firm says Invest NI enjoyed a remarkably successful year in 2012/13 in terms of attracting inward investment, delivering a 41 per cent increase in foreign direct investment (FDI),

“Now that the economy is showing the first signs of recovery we need to focus on attracting FDI, encouraging R&D and innovation and building internationally competitive businesses that can create sustainable, skilled employment.”

 Article Source: http://www.newsletter.co.uk/news/business/property-prices-could-take-over-a-decade-to-recover-1-5384408

British House Price Inflation Jumps to 2006 Levels - RICS

This news on August 13th, 2013 by Reuters showing the survey chimes with data from mortgage lenders showing returning confidence in the property market.

(Reuters) - British house prices are rising at their fastest pace in seven years, according to an industry survey on Tuesday which may add to concerns that government lending incentives are creating a new property bubble.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance jumped to +36 in July from +21 in June and just +5 in May. That was the best reading since November 2006 and one of the sharpest improvements over a three-month period since the survey began in 1978.

The survey chimes with data from mortgage lenders showing returning confidence in the property market. Halifax last week reported annual house price inflation jumped to 4.6 percent in the three months to July and was likely to rise further in the coming months.

Government data released on Tuesday showed that efforts to boost the housing market were proving popular with buyers. It said 10,000 new homes had been reserved by buyers since April under the first phase of its Help To Buy scheme.

Britain's central bank indicated last week that it was likely to keep interest rates at a record low for at least another three years. Combined with government initiatives to lower the cost of mortgage finance and to help people onto the property ladder, that could sustain the upward momentum in house prices for some time.

Prices are now rising in all regions of the country, suggesting confidence is rippling out from London and the South East, RICS said.

The balance on a national basis turned positive in March.

In another sign that market confidence is returning, the balance measuring new buyer enquiries rose for a sixth consecutive month to 53, its highest level in four years.
The strength of the property market will fuel criticism of the second phase of the government's housing stimulus scheme, due to come into force next January, which will offer state mortgage guarantees.

The International Monetary Fund has already warned the scheme will push up prices rather than increase supply, but finance minister George Osborne insists the scheme will go ahead and run for three years, as planned.

The Bank of England will also be watching house prices closely. Governor Mark Carney sounded fairly relaxed about property inflation when he gave his first press conference last week, but the bank's commitment to keep rates at record low is contingent on inflation expectations and financial stability remaining anchored.
(Reporting by Christina Fincher and William James; Editing by Catherine Evans)


Article Source: http://uk.reuters.com/article/2013/08/13/uk-britain-property-rics-idUKBRE97B0XK20130813

Home Prices Edge Up as Sellers Hold Out for More

According to this article by Dean Herbert on August 12, 2013 of the Scottish Express, Scotland's flagging property market has taken another step towards recovery after both selling and asking prices for houses increased for the first time in a year.

The latest quarterly figures showed that between April and June this year, homes were sold for nine per cent less than their asking price, while the average price for a property stood at £153,102.

This marks a small decrease from 10 per cent in the first quarter of the year, as the gap between asking price and selling price narrows.

Despite the increase in asking and selling prices, those with property on the market can still expect to receive an average of £14,590 below their asking price.

The difference between the seller’s expectations and the figure they sell their property for is branded the “reality gap” in the figures released by property website s1homes.

The biggest reality gap is for owners of detached properties which are selling, on average, 18 per cent below their asking price.

Regionally, Stirling and Clackmannanshire saw the largest increase in the reality gap with properties there selling for 23 per cent below asking prices. Flats and terraced houses are fairing better with the average selling prices for both remaining higher than the asking prices.

Mark Smith, managing director of s1homes, said: “I think what this quarter’s report shows is that there are distinct signs there’s a bit more confidence in the overall market which is leading to prices starting to creep back up, particularly at the lower end of the market.

“That’s not necessarily good news for the first time buyer but will encourage those who see property primarily as an investment.

“What’s also apparent is that owners of detached properties are firmly sticking to their guns despite no evidence of buyers being willing to meet their expectations.”

The quarterly report was generated by comparing the asking prices of the 30,000 homes for sale on the s1homes site with the actual prices achieved as recorded by the official government agency Registers of Scotland.

It comes just a month after it emerged that sales have soared by more than eight per cent as the property market recovers from the slump.

The latest figures show the number of homes sold has grown year-on-year for the last three quarters.

Article Source:  http://www.express.co.uk/news/uk/421444/Home-prices-edge-up-as-sellers-hold-out-for-more

For My Generation, an Affordable Home Seems an Impossible Dream

On this August 11, 2013 issue of The Guardian, Emma Wiseman discusses the reality that homelessness remains a big issue especially that house prices rise and rents soar much faster than wages.

Britain is booming. House prices in England and Wales have reached their highest ever level, which is great news for the wealthy, the government and the forgetful. Because in 2008, the last time this happened – the last time houses turned to gold, the bricks of mansion blocks flaking saffron – we learned quickly that booms go bust. We learned that our houses should not be treated as centrally heated investments, that we should start thinking about success in different ways. We learned also, that what is good news for one person can be crushingly, life-alteringly bad for another.

How many of us are really cheering at the rise of house prices? Scrolling through property website Zoopla is my low-level self-harm – fork scratches instead of razors. Savills says the average price of its London stock has reached £3.2m, so here are the houses I will never own. Here are the kitchens I'll never argue in, the bathrooms I'll never paint regrettable shades of green. But mine is a sad and secretive habit.

In my world, my world that reaches horizontally to the London suburbs and vertically into the internet, my friends don't talk about house prices. They talk about the impossibility of paying rent. And we're working, we're all delighted to be working. We're working in kitchens, offices, bars, other people's front rooms, and the conversation when we get home is never of houses but of rising rents and frozen salaries.

There is no point in saving, now. Not only is interest so low as to be meaningless, but, without a charity cheque from a deceased relative or rich parent, my peers will be 62 before they can afford their own home. Largely due to foreign investors, rents have gone up eight times faster than wages; for my generation, the threat of homelessness feels far more real than concerns about home-owning.

Every week, more friends are trickling down motorways from their homes of over a decade, another weekend of shovelling mattresses into vans in the awful tarmac sun, another forwarded email: "Does anybody want my wardrobe?"

When possible, they move into their mums' houses; when possible, their mums give them their savings. Last year, parents gave their children £2bn to help with housing costs; Shelter has launched a campaign imploring the government to build more new, affordable homes, because the current situation, it says, is unsustainable. The increase in the supply of mortgages (one in 10 of which is buy-to-let) and a chronic shortage of housing mean prices are rising at the fastest rate ever. We need more homes. We are overheating. We are the summer of 2008.

Last Thursday, Channel 4's provocatively named How to Get a Council House visited my east London borough, a diverse and thick-aired place, where each week 24,000 people hope to get one of the 40 council properties available. To me, it painted a portrait of a system that is as humiliating as it is impenetrable, but Twitter's hashtag showed that much of Britain was seeing something quite different.

The hashtag #howtogetacouncilhouse revealed a humming swarm of racism and anger. "What a bunch of lazy, scrounging, teenage pregnant scum"; "Can someone knock me up please? I'm bored of paying a mortgage"; "How to get a council house? Become a Somali, have eight kids and then get a £2m house in London for a grand a month". If their opinions didn't exactly mirror those of Kirstie Allsopp, they certainly reflected them in a dirty puddle. She claims that young people are "losing the concept that you make sacrifices to get on the ladder". Sian Astley, a TV presenter, agreed. "Many twentysomethings seem to want Hollywood and handbags, rather than pensions and property… Hard work reaps rewards."
People shock me, constantly. Who still believes this? Who, in these times of zero-hours contracts still believes that the unemployed, the poor, the young, are simply not working hard enough? Who still believes that it is possible to buy a house on a single income, without an injection of family money?

There's a moment in Noah Baumbach's new film Frances Ha, where Greta Gerwig's character is told by her flatmate (a bohemian writer whose parents' wealth is evident in his every eye-roll): "You're not poor." Saying you're poor, he says, "is offensive to actual poor people". And yet. And yet she is living on the very edge of comfort. She, like so many people I know, is floating. It was a reminder that as summer 2013 fades to a close, gradations of poverty get ever murkier.

When did social housing become the last stop, the final sigh? When did it stop being desirable, a place of hope and gardens? Today, those claiming housing benefits are routinely dismissed as scroungers, yet more and more, there are clues that this is a title that might better fit their landlords. Landlords who are profiting from exploiting their tenants' desperation – these are the people screwing the system, not the tenants. They just want a bed.

Simon Childs, a reporter for Vice magazine, went to the Property Investor show in London, where he sat through a talk by Mike Frisby, a "housing benefit expert" with Cameron hair who teaches landlords how to squeeze every penny from the local housing allowance. Key to this, he said, was charging the highest possible rents on the lowest value properties (the difference is paid by the council and taxpayers), and remembering that you can get more money from four single LHA tenants than a family of four. One in 12 families in Britain is on the waiting list for social housing. But, increasingly, as a housing benefit cap (at £500 per week for couples and £350 for singles) is being introduced, private landlords are turning down tenants on benefits, simply because they won't be able to afford the rent.

And me? I have this great idea. Where all my friends and I club together and buy an office block. And in it we build a modest utopia, with amazing broadband and a really good bin rota. I just want out of it, really, all this. All this news that means the carpet you walk on is a mirage, moving. I don't want to be at the mercy of hungry landlords or to scratch together that extra 3% stamp duty on top of the £250,000 I'm borrowing for a tiny flat above a fried chicken shop. I want to sit there, in a home I can afford, and eat pasta with my friends and wait for the bubble to burst. And then, we can start again.

Article Source: http://www.theguardian.com/commentisfree/2013/aug/11/housing-renting-rising-property-prices

Lack of Funding and Land Prevents People from Building their Dream Home

According to almost half of homeowners in the United Kingdom the lack of funds, is the major reason why they're unable to build their dream home as revealed by Propery Wire on August 8, 2013 article.

Over half of home owners in the UK say that a lack of funding is the key factor that is stopping them from building their dream home. As well as 54% of home owners not having readily available finance, 17% blame a lack of land in the right place, according to a survey from BLP Insurance, a housing warranty insurance provider. The survey also found that 14% didn’t have the time needed to be able to make the commitment to building their own dream home and many highlighted the inconvenience of the building work and the lack of expertise including not having the right contacts for builders and architects. Other worries were having a young family and the additional stress that the building work would cause including the fear of dealing with so called rogue traders. This news comes as the government looks at new initiatives to help generate housing as local governments come under increased pressure to supply more and more new homes. There have also been calls in the last month for the public sector to start releasing land to make way for new developments and get the building boom under way again. Government figures show that the number of new homes built in the year to March in England was 108,190, down 8% on the year before and 49% below their peak in 2007. Private house builders have accounted for a growing proportion of the homes built in Britain in recent months following the government's Funding for Lending scheme, which cut the cost of borrowing. ‘The lending community are starting to wake up from the hibernation brought on by the recession and there are now more products and funding vehicles on the market which are available to self builders to allow them to get their projects underway. But more still needs to be done to make access to funding easier for a much wider group of aspiring self builders,’ said Brian Kilroy, business development manager at BLP Insurance. ‘Private land owners are starting to realise the financial potential locked in their land and the availability of smaller plots have increased over the last 12 months paving the way for aspiring private house builders to construct their dream home. There is no real immediate solution to solve the problem of lack of land and local councils are under significant pressure to find space for more homes to keep up with the demand while also protecting the green belt areas,’ he explained. Building your own home is often a lifelong ambition and isn’t something that should be entered into lightly. BLP Insurance believes it is vital that people also take measures to protect your financial investment and seek housing warranty insurance to protect the property should any defects occur.    ‘This will ensure that your home and your financial investment is fully protected in the event that anything goes wrong structurally at a later date. It also means that help and advice is on hand throughout the building process offering the developer further reassurance,’ added Kilroy. Article Source: http://www.propertywire.com/news/europe/dream-home-survey-uk-201308088097.html

Greater London House Prices Set to Grow Almost 7% this Year

This August 7, 2013 article by the Property Wire claimed that house prices in greater London are set to grow by 6.9% this year with annualised rate of 3.2% over the next five years.

The growth will come as the UK government’s Help to Buy scheme is extended to all home buyers from next year bringing more financed buyers to the market without an equivalent increase in stock, according to real estate firm Cluttons.

In its third quarter Residential Property Forecasts report it points out that the consequence of this pace of uplift in house prices will push ownership in and around London out of reach of yet more households.

Even in London where earnings tend to grow slightly ahead of the national average, it is unlikely that average earnings will keep pace with this rate of house price growth over the next two years as the economy struggles back to strength.

The position is more acute in prime central London where Cluttons has revised its forecast of 5% house price growth to 8.4% this year with an annualised average of around 4% to the end of 2018.

Credit ratings agency Fitch has also warned that Help to Buy could artificially push up house prices without increasing the number of homes built, which corroborates Cluttons' expectations of affordability re-emerging as the central issue for buyers given that mortgage lending has improved.

The upturn in prices has caused a return of bidding wars in the capital which has tempered the capacity of first time buyers to enter the market. Greater acceptance of buy to let mortgages for those wishing to rent and buy or rent further from London has further reduced the availability of stock traditionally available to first time buyers.

‘Improved consumer confidence, an easing in mortgage credit and the raft of government policy intervention measures to bolster new buyer demand will drive further capital growth and this has led us to revise our forecast to 8.4% price growth this year,’ said Sue Foxley, head of research at Cluttons.

‘The prospect of rising base rates over the medium term proffers a further concern with the ratio of residential values to gross earnings already over seven in London. With few signs of a dramatic increase in supply that would have the potential to change the balance of this equation, the rental market will inevitably move up the agenda for London’s households and policy makers,’ she explained.

Cluttons also reports that rental demand in Central London remains strong but individual and corporate rental budgets are subdued which is translating into RPI, nil or slightly negative rental growth.

Cluttons forecasts London rents to grow by 3% this year, with an annualised average of 4% per annum to the end of 2018 which is in line with long term average earnings growth for London.

Article Source: http://www.propertywire.com/news/europe/greater-london-house-prices-201308078090.html