ISG Lands £20m High-End London Resi Scheme

This article by Iain Withers of building.co.uk on October 30th, 2013 speaks about contractor that will restore the three grade ll-listed buildings into luxury homes.

ISG has won a £20m job to restore three 19^th century London buildings into luxury homes.
The Grade II-listed buildings – 92-96 Portland Place, 98 Portland Place and 10-12 Park Crescent – are part of London’s Nash Terrace overlooking Regent’s Park, designed by architect John Nash.

The project is ISG’s fifth development for Amazon Property in 12 months, including luxury apartment schemes at the former Paramount Studios in Soho, as well as in Bayswater and Westminster.

The three buildings were originally constructed as upmarket London residences, but have been used as commercial office space in recent years.

They will be converted into 15 luxury apartments.

Alan McCarthy-Wyper, managing director of ISG’s construction business, said: “Amazon Property has built an enviable reputation for acquiring prestige properties in landmark London locations and refurbishing them to the very highest standards that appeal to a global residential market.

“I am delighted to be able to support Amazon Property return these buildings back to the use originally intended by John Nash in the early 1800s.”

Article Source: http://www.building.co.uk/news/isg-lands-%C2%A320m-high-end-london-resi-scheme/5062871.article







 
FREE WEBINAR: Market Yourself to The Right Client and Earn Yourself £3000+ a Month Sourcing Property" Wed, 06th Nov, 8 PM, register here http://tiny.cc/B-VickiWusche

UK Mortgage Approvals Highest Since February 2008

This article by Katie Allen of theguardian on October 29th, 2013 tells us the argument about Help to Buy scheme risks may create another bubble according to figures.

The Bank of England mortgage lending figures are at their highest for more than five years. Photograph: Yui Mok/PA

 

Mortgages approved by British lenders jumped to their highest level for more than five years in September, fanning fears the housing market was already heating up even before the latest government support kicked in.

Banks, building societies and other lenders approved 66,735 mortgages in September, the biggest monthly total since February 2008, before the global financial crisis took hold.

The figures, from the Bank of England, were just ahead of City forecasts of 66,000 and compared with an upwardly revised 63,396 in August. Mortgage approvals are seen by economists as a good early indicator of where the housing market is headed.

They follow government data on Monday showing house prices rose in every English region in September and are likely to be seized on by those who argue that the government's Help to Buy scheme risks creating a new bubble.

"All the stimulus thrown at the housing market risks starting another dangerous boom-bust cycle," said Rob Wood, chief UK economist at Berenberg Bank.

"The key issue is not where prices are today, rather it is where they will be in a couple of years. Prices and activity are rising fast now. We expect house prices to rise 10% year on year next year … The measures that selectively boost the housing market, like the Help to Buy scheme, should be scrapped."

The plan to kickstart the property market and help homebuyers struggling to get on the property ladder gives a taxpayer-backed guarantee to lenders offering 95% mortgages that are open to first-time buyers and home movers on newbuild homes worth up to £600,000. Despite criticism from the International Monetary Fund and many economists, the scheme was expanded this month.

In an attempt to quell criticism of his scheme, the chancellor, George Osborne, recently asked the Bank of England to monitor its impact and report back in a year. Howard Archer, economist at IHS Global Insight, said the latest numbers underlined the need for policymakers to be ready to act "quickly and decisively if signs of the housing market overheating become increasingly widespread and pronounced".

Archer said it appeared a number of factors were supporting the property market even before the latest phase of Help to Buy was launched: improved consumer confidence, higher employment and extended low mortgage interest rates, the first stage of Help to Buy and the Funding for Lending scheme – a Bank of England initiative to increase the flow of cheap finance to credit-starved businesses.

"We are currently a long way off from an overall housing market bubble emerging. Nevertheless, there is a mounting danger that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme," Archer added.

Others argued the housing market was still well below its peak and there were few warning signs of a bubble forming.

Samuel Tombs, UK economist at the thinktank Capital Economics, emphasised that mortgage lending, at £1bn, was only "a touch" above the average of £0.7bn over the previous two years. Mortgage approvals were still close to 40% down on their typical pre-recession levels, he added.

"Given that interest rates on Help to Buy mortgage products look expensive and lending criteria are strict, we doubt the scheme will boost mortgage demand much. Note too that banks appear to have little appetite to substantially increase the size of their mortgage books," Tombs said.

"For now, then, there remains little evidence that a renewed boom in the housing market is developing."

The Bank data contained some evidence that businesses found it easier to get finance in September. After dropping sharply in August, lending to non-financial businesses rose by £720m, the biggest increase since January.

"While it is important not to read too much into one month's figures, the size of the September increase in business lending reported by the Bank of England provides a significant boost to hopes that banks are now becoming more prepared to lend to businesses, given the improved economic situation and outlook," said Archer.

The Bank's data showed, however, that within the overall rise, lending to small businesses fell in September.

The British Chambers of Commerce said small businesses needed more help to get funds.
"It's good to see overall business lending rise, as this has an impact on business confidence. Yet these new figures show that while large firms have little difficulty tapping debt markets, SMEs – and particular young, fast-growing firms – continue to struggle to access growth capital," said Adam Marshall, its director of policy and external affairs.

"Both policymakers and financial institutions need to do more to help fast-growing SMEs access finance."

Article Source: http://www.theguardian.com/business/2013/oct/29/mortgage-approvals-february-2008-help-to-buy

 

House Prices Near Top 30 State Schools are '12% Higher'

This article by Harriet Meyer of theguardian on October 27th, 2013 reveals that third of properties close to the top state schools command a premium of more than £80,000 according to the survey by Lloyds.

House prices near the best state schools, such as King Edward VI School Handsworth, attract a premium of more than £30,000, says Lloyds. Photograph: Andrew Fox/Alamy

 

Parents are paying "premiums" of on average £31,500 for a home in an area with one of the UK's leading state schools, according to resarch from Lloyds.

The findings are are likely to reignite the controversy surrounding schools selecting by parents' ability to afford to live somewhere.

Property prices within postcodes with the top 30 sought-after secondary state schools are 12% higher than the average price in the rest of the county, at an average of £295,972, or almost nine times average annual earnings for a full-time male employee at £33,740.

Properties close to the top state schools command a housing premium of more than £80,000 in almost a third of cases.

The north-west has the largest premium, with average house prices in the postcode of the top 10 state schools in the region trading 28% – or £43,142 – above the average house price in their county.

This is followed by Yorkshire and the Humber, with a premium of 18%, and London at 15%. In contrast, house prices in the East Midlands that are close to the best performing state schools are on average 6% lower than in neighbouring locations.

The most expensive catchment area of a state school in Britain is that of the Henrietta Barnett all-girls grammar school in Barnet, north-west London, where the average house price trades at a premium of 87% or an average of £402,600.

Homes within the postal district of Tiffin girls' school and Tiffin school in Kingston-upon-Thames commanded the second highest premium, with house prices in the KT2 postcode trading at more than double the average for the borough at £207,591.

However, more than a third of England's top 30 state schools are in locations where the average property price is less than the average of those in neighbouring areas. With an average price of £94,843, properties in the catchment of King Edward VI Handsworth school in Birmingham, B21, for instance, are 42% or £67,738 below the county average.

Meanwhile, prices in the surrounding area to Kendrick school and Reading school were £108,033 lower than the county average.

The research is based on average asking prices in June 2013 and GCSE results taken from 2012.

Nitesh Patel, housing economist for Lloyds Bank, said: "All parents want to ensure their children have access to the best schools, so it is not surprising that homes in areas close to the top performing state schools typically command a significant premium over neighbouring areas.

"However, with the availability of suitable homes in short supply, high demand has led to average prices in many of these areas being out of reach for many buyers on average earnings."

Article Source: http://www.theguardian.com/money/2013/oct/27/house-prices-state-schools-higher

Surveyor Report a Strong Month for UK Housing Market

This article by the Property Wire on October 24th, 2013 tells us the another strong month for the housing market in the UK with the volume of residential valuation going up compared to August, according to Connells Survey & Valuation.

The UK housing market experienced another strong month in September, with the volume of residential valuations 55% higher than August, according to chartered surveyors Connells Survey & Valuation.
 
The firm says in its latest report that strong growth in every sector of the market brought the total number of residential valuations conducted in September 2013 to 65% higher than the same point last year.

Particularly strong growth was recorded in the areas of buy to let and remortgages, which saw increased of 66% and 64% respectively month on month. This equates to much higher annual rates of growth, following a comparatively slow month in September 2012.

‘September has felt like a tipping point. A year since the first real effects of Funding for Lending, and five years since the collapse of Lehman Brothers, the financial world appears to be at the start of a much sunnier period. In just 12 months, the situation has shifted unrecognisably with last quarter’s economic growth likely to come in above 1%,’ said John Bagshaw, corporate services director of Connells Survey & Valuation.

‘However, many borrowers have been reliant on remortgaging to fuel a good proportion of their new found optimism. If not for record low product rates, many families could now be struggling to pay their mortgage while keeping the lights on at the same time. The real question now is how long these excellent new deals can last before the Bank of England decides to raise interest rates,’ he explained.

The report also shows that improvements in total levels of activity have also translated into more new buyers, as first time buyer activity in September grew by 52% compared to August. This leaves the number of valuations on behalf of first time buyers in September 54% higher than in the same month a year ago.

Meanwhile valuations further up the property chain, on behalf of existing home owners wishing to move, have grown almost as quickly as those for first time buyers, up 46% since August, bringing home moving activity to levels 52% ahead of September 2012.

‘Over the last year first time buyers have witnessed a reversal of fortunes. Every part of the home-buying industry is straining to keep up with a rejuvenated lending system. After five years of relative inactivity, the only danger now could be the pace of improvement,’ Bagshaw pointed out.

‘What’s certain is that more people are able to buy a home. And the next rungs on the property ladder are looking far more solid than even a few months ago,’ he added.

The data also shows that after a minor seasonal slow down in August, buy to let activity has bounced back strongly in September. The number of valuations on behalf of buy to let investors increased by 66% between August and September. This leaves buy to let activity up by 77% since September 2012.

‘September and early October are the very peak season of the rental market. But valuations for landlords hoping to expand their property portfolios now will only bring new homes onto the lettings market by around the end of the year. That’s why this is such positive news for the buy to let sector, because landlords are clearly confident that demand will still be there in several months,’ said Bagshaw.

‘Progress on the supply of rental homes will remain vital for tenants who haven’t yet joined the ranks of first time buyers. Luckily, there has never been a better time for landlords to expand portfolios, with buy to let mortgage rates the lowest they are likely to be for years,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-housing-market-surveyors-201310248383.html

Lack of Protection Leaves Generation Rent Vulnerable

This article by Gregor Watt of Money Marketing on October 24th, 2013 discusses the importance of having protection for people in the rental property.

Gregor Watt looks at the plight of people stuck in rental property and the importance of having protection.

Despite the launch of Help to Buy 2 and the general pick-up in the mortgage market, many people are either stuck in rental property or are choosing to rent rather than buy.

The strong historical link between house purchases and protection sales means that this section of the population is harder to reach for protection sales, leaving many renters financially vulnerable if they are unable to work.

LV= head of protection Mark Jones says: “It’s important to realise that renting does come with certain pitfalls that often aren’t signposted. When buying a property, you are encouraged to take out an insurance policy to guarantee repayments in the event that something happens to the mortgage payer. No such prompt exists in the rental market.”

With the cost of rent increasing and general price inflation continuing to outstrip wage inflation, renters are under similar financial pressures as homeowners.

Although Help to Buy will help people borrow more money, the lack of new property being built means the supply of new homes is still far short of demand. The Council of Mortgage Lenders says the number of new properties being built is currently around 110,000 a year but this is some way short of the 232,000 new households the Government says are looking for housing every year.

This shortage has caused a rise in the cost of renting in recent years.

According to LSL Property Services, the cost of renting in the UK hit an all-time high last month, with the average monthly rent hitting £757 a month, up by 2 per cent since this time last year.

This figure disguises some sharp regional variations, with rents in London up by 4.4 per cent on a year ago, while the East of England has seen an increase of only 0.8 per cent.
LSL Property Services commercial director David Brown says: “A new peak in tenant demand has driven rents to new heights, well above all previous records. Higher rents in almost every region show that, despite Government schemes, buying a first home is still a difficult aspiration. This is not only down to low salary growth but also a general shortage of supply – which is the underlying reason why homes are getting more expensive.”

Housing is the single biggest monthly expenditure for many people. LV= says rent accounts for 39 per cent of monthly expenditure on average, rising to 44 per cent in London and the South-east.

Jones says: “We know that one-third of Brits currently rent and that 65 per cent of these people have no insurance in place. This would leave a huge number of people in the UK in a vulnerable position if they found themselves unable to cover their rent and living expenses.”

The high cost of buying a house is also changing people’s attitudes to buying property. Figures from the Office of National Statistics show that the percentage of people who own their own home has fallen back to 64 per cent from a peak of 69 per cent in 2001.

Earlier this year, the Halifax reported that 21 per cent of 20 to 45-year-olds had given up on owning their own homes, rising to 45 per cent of over- 45s but this drop in home ownership does not mean that this growing section of the public do not have the same protection needs as homeowners.

Expert view: We must do more to persuade renters of their protection needs

 

Ian Smart, head of product development & technical support, Bright Grey

With all the activity around the increase in first-time buyers, it would be easy to forget about generation rent – those people who will continue to rent for years to come, either through choice, because they enjoy the flexibility of renting or because they are struggling to afford a first-time buyer deposit.

According to research from Castle Trust, more than six out of 10 tenants believe they will never get on the property ladder. High property prices and stagnated earnings mean that many young people will spend their twenties and thirties in the rental market. It also means that the need to have protection insurance may not occur to them until they are much older.

But not having a mortgage does not mean protection needs should be ignored. Tenants have monthly rental payments. They have to pay for food, gas, electricity and council tax. If they lost their job due to an accident or serious illness, how would they survive financially?

The need to protect themselves against unforeseen circumstances such as these is just as important for people renting as it is for homeowners. While life insurance may not be appropriate for someone who does not have a mortgage or dependents, income protection is.

The recent focus on income protection has seen more providers improve their proposition to cover as many people as possible under an own-occupation definition. This will make it easier for consumers to claim and will ultimately increase consumer confidence in the product and make the case for taking out income protection an even stronger one.

However, more work needs to be done to persuade those people who are renting, that protection insurance is not something to be taken out only when they have
a mortgage.

Many renters will be saving hard for a deposit to buy their own home and this means money will be tight. But ironically this is all the more reason to take out
a protection product.

It would be awful to see the deposit they had worked so hard to save for disappear because they had to use the deposit money as a financial buffer.

Posing pertinent questions, albeit uncomfortable ones, will open people’s eyes to the potential consequences of not having a financial safety net in place. It is natural that clients will want a cost-effective option and taking into account all the solutions such as deferred periods or shorter payout terms can get around the issue of price.

Ultimately, individuals need to be responsible for protecting their incomes against illness or disability. It is unrealistic to rely on the state, especially with all the changes and cuts to welfare spending by the government.

Taking out a mortgage may be the number one trigger for people to sort out their protection needs but we need to switch people on to the need for protection well before then.

Article Source: http://www.moneymarketing.co.uk/news-and-analysis/protection/lack-of-protection-leaves-generation-rent-vulnerable/2001906.article

Countryside Living Means Paying a Premium for Property in the UK

This article by Property Wire on October 22nd, 2013 reveals a new research country homes command a significant price premium compared to those in towns and cities.

Homes in the country command a significant price premium compared to properties in towns and cities across the UK, according to new research.
 
This premium ranges from £86,218 in the South East of England to £11,570 in the North East of the country, the research from the Halifax has found.

But when it comes to value rural house prices have underperformed those in urban areas since 2009. In the past four years, the average price of a home in the countryside has risen by 2% compared with an average 10% increase in urban areas.

While prices have risen more rapidly in urban areas in most regions since 2009, a key factor behind the bigger increase in urban house prices has been the relative strength of prices in Greater London.  Excluding London, urban prices have risen by 6%.

The research report says that the recent outperformance of house prices in urban areas may also partly reflect the overall increase in the number of first time buyers since 2010 as they represent a larger proportion of the market in urban areas.

Over the same period, there has been a modest decline in the number of those moving home; a group that is more important in rural property markets.

‘There is a significant premium on property in the countryside across Great Britain. Country living remains a widespread aspiration, but relatively high prices put rural homes out of the reach for many,’ said Martin Ellis, housing economist at the Halifax.

‘Potential first time buyers are particularly affected by high property prices, and consequently they account for a smaller proportion of home buyers in the countryside than in urban areas,’ he explained.

The research also found that the average house price in the countryside is equivalent to 6.3 times gross annual average earnings. The comparable ratio for urban areas is 4.9.

There are only five rural areas where the ratio of prices to earnings is below the historical long-term average of 4.0; Copeland in Cumbria at 2.7, Stirling at 3.4, East Ayrshire at 3.5, the Western Isles at 3.7, and Pendle in Lancashire at 3.9, so are the most affordable rural areas in the country.

The Cotswold is the least affordable rural area in Britain measured by the house price to earnings ratio with an average house price that is 9.4 times local gross annual average earnings. Six of the 10 least affordable rural areas in the country are in the South West.

Chiltern is the most expensive rural area in Britain with an average house price of £407,012. This is more than four times higher than in the least expensive rural area of East Ayrshire where the average price is £100,119.

First time buyers account for 40% of all mortgage financed purchases in rural areas, significantly lower than in urban areas where first time buyers account for 52% of such purchases.

Getting on the rural property ladder is at its most challenging for first time buyers in southern England. First time buyers account for only a quarter of all purchases in Cotswold and East Hampshire. In contrast, first time buyers account for over half of all purchases in Copeland, St Edmundsbury, Pendle, the Western Isles, Fenland, Moray, North Warwickshire and Carmarthenshire.

Article Source: http://www.propertywire.com/news/europe/uk-rural-property-premium-201310228374.html

Property Taxation Changes Could Threaten UK Housing Recovery

This article by Robyn Wilson of cnplus.co.uk on October 18th, 2013 reveals that UK housing recovery can be threatened by property taxation according to a report.

Erratic changes to property taxation could threaten the UK’s housing recovery, according to a new report commissioned by the Berkeley Group.

In a 45-page report co-authored by the London School of Economics, experts challenged current government policies hindering developer confidence in the housing market, which they said risked future investment in the sector.

Creating the Conditions for Growth identified levies such as the mansion tax as “real issues that could stop the market in its tracks” and called for a complete review of property taxation.

Berkeley managing director Rob Perrins said: “We have had years of reactive changes and deliberate inaction.

“The idea of a mansion tax is just the latest example of a political response rather than a coherent approach to creating a fair and predictable system.

“What we need is a comprehensive review of property taxation, looking at stamp duty, council tax, inheritance tax and the annual charge all at the same time.”

Berkeley highlighted three main reasons to address taxation immediately, placing housing as a core contributor to economic growth.

Meeting the housing requirements of population growth was another main factor for the group, as was London’s increasing need to build more affordable housing across an ever-differing income scale.

If effectively addressed, the report concludes that the UK could benefit from much-needed, stable investment.

Article Source: http://www.cnplus.co.uk/news/sectors/housing/property-taxation-changes-could-threaten-uk-housing-recovery/8654465.article

House Prices Soar by £7,000 in Past Four Weeks

This article by Sarah O'Grady of Express on October 21, 2013 reveals the figures that market burts back into life while house prices have soared in the a month.

The £6,923 jump in the past four weeks is confirmation that Britain is enjoying a housing boom.

The £1,750 weekly uplift puts the price of a typical three-bedroom semi at £252,418, according to ­analysts Rightmove.

The biggest leap was recorded in London where new sellers added an extra £50,484 to their average asking prices this month. Experts said the rise was being driven by renewed interest from buyers following the introduction of the Government’s Help To Buy mortgage scheme.

Fears of a housing bubble were also eased as the number of new sellers coming to market was up eight per cent – although shortages were ­driving up prices in some regions.

James Hall, director of estate agents Fishneedwater, said: “Wow, the property market is back, and then some. We’re seeing a huge amount of pent-up demand hit the market at the same time.

“People feel a lot more confident about the economy and, due to the introduction of Government schemes, are finally able to get mortgage finance.

“Even mortgage rates at higher loan-to-values are exceptional.

“People are piling back into property. Owners and sellers will be pinching themselves. 

Bidding wars are becoming an everyday occurrence in some areas of the UK. There’s just not enough property going round and this is sending prices ever higher and creating levels of interest for individual properties not seen for many years.”

 
Bidding wars are becoming more regular as there is not enough property to fuel demand [GETTY]

Government initiatives like the £80billion Funding For Lending Scheme and the £12billion Help To Buy plan have helped push mortgage lending to a five-year high, figures showed last week.

Buyers taking advantage of record low interest rates and easier borrowing criteria meant total home loans hit an estimated £49.3billion in the three months to September, the Council of Mortgage Lenders said.

That was a third higher than the same period last year and the greatest quarterly total since autumn 2008.

Average house prices are now higher than the previous peak seen in January 2008, according to the Office for National Statistics which also revealed first-time buyer house price inflation is just under five per cent.

Miles Shipside, Rightmove director and housing market analyst, said: “Some agents currently report that there is a buying frenzy in parts of the UK with available stock so low that their shelves are now bare.”

The Rightmove research to mid-October showed that across England and Wales asking prices rose by 2.8 per cent month-on-month, following two months of falls, to reach £252,418 on average.

Prices across the country are 3.8 per cent higher than they were a year ago.

Alexander Gosling, director of online estate agents Housesimple.co.uk, said: “The property market really is gathering a head of steam and not just in London.”

Article Source: http://www.express.co.uk/news/uk/438168/House-prices-soar-by-7-000-in-past-four-weeks

Property Asking Prices Continue to Rise in Most of the UK

This article by Property Wire on October 17th, 2013 tells us that UK's residential property asking prices continue to rise according to the latest sector index.

Residential property asking prices in the UK are continuing to rise, up another 2% on last month and now 12% higher than a year ago, according to the latest sector index.
 
The prices in England and Wales are now up 5.5% on last year and the North East, North West and Scotland were the only parts of the UK not to record price rises in the last month.

The Asking Price Index from Home.co.uk also shows that the supply of property for sale across England and Wales is down 18% on last year.

On a monthly basis prices in England and Wales have risen 1%, the largest monthly rise since May 2011. London and the South East still continue to show strong growth and more areas of the UK are contributing to the recovery.

Scotland is now the only area of the UK that is still recording house price deflation, down 1.4% over the last 12 months.

The index  report says that the imbalance between demand and supply continues to dominate the market dynamic. The supply of fresh property stock across England and Wales has contracted by a further 18%, and in London new stock is down by 31% compared to last year.

Growing demand from buyers chasing ever fewer properties has driven down the typical time on market by an average of 8% over the last 12 months.

However, the recent price rises being recorded across the majority of the UK still conceal the bipolar nature of the market. Over the last five years, prices across England and Wales have risen 3.4%, whereas four out of nine English regions, plus Scotland and Wales, have shown price falls over the same time period.

Annual price growth is largely driven by London with a rise of 11.7% with prices in the South East up7%. The South West is vying to become another high performance region, with price rises of 4.6% over the last 12 months. Annual house price rises of 4% in the East Midlands and 3.5% in the West Midlands means that capital invested in those regions is now keeping up with inflation.

A growing concern is that regional house price bubbles are beginning to emerge where demand for housing continues to far outstrip supply. A lack of attractive non-property investment opportunities coupled with the widely reported surge in home prices is making potential vendors hold back, the report suggests.

As a consequence, the flow of new property stock across England and Wales is down 18% on this time last year. Three of the nine English regions are recording even tighter supply figures. Sales stock entering the market is now down 21% in the East and South East, and may well approach the 31% drop seen in Greater London. The flow of new supply in Wales and Yorkshire is relatively strong, with only a 5% fall in stock. Subsequently, average prices in these regions are being kept in check, with rises of 1.5% and 0.6% respectively over the last 12 months.

According to Doug Shephard, the firm’s director, London's property investment bubble continues to expand at an alarming rate. He describes the 2% jump in average prices in the last month alone as ‘simply astonishing’, and pointed out that the increasingly severe shortage of new stock is fuelling the accelerating rate of growth.

The average price of a house in London has broken through the £400,000 barrier for the first time and is 15.3% higher than five years ago. The growth is not showing any signs of slowing down and even the South East, with annual price growth of 7%, doesn't come close the capital's performance. Currently, only 60% of the properties for sale within a 10 mile radius of the centre of London are priced below the Help to Buy scheme threshold of £600,000.

‘House price growth is now sweeping north and west from the capital. Welcome news for home owners, but troubling for potential buyers whose salaries are not increasing anywhere near as fast,’ said Shephard.

‘Price rises in London and its surrounding regions have now established a solid two year trend, and one may well conclude that these property markets have fully recovered.

However, a true recovery cannot be complete without considerable improvement in the underlying economy, which is currently looking like a one horse race. Until real wage growth matches house price inflation, housing affordability will become increasingly difficult and a distant dream for many,’ he explained.

‘The ongoing availability of government backed cheap lending is already encouraging overall price rises over and above inflation. A key concern is that the impending Help to Buy scheme will only exacerbate affordability problems. Further market stimulus may be justified in selected areas such as the North, but certainly not across the whole UK, as that would significantly raise the risk of another property crash,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-property-asking-prices-201310178359.html

Jump in Residential Buy-to-Let Property Investment

This article by Adam Williams of Mortgage Solutions on October 16th, 2013 tells us that buy-to-let market sustained its growth because landlords continue to expand their portfolios.

Landlords continued to expand their portfolios in the third quarter of the year as the buy-to-let market sustained recent growth.

The Mortgages for Business index found that all areas of the buy-to-let market barring semi-commercial investments grew during the July to September period.

The number of buy-to-let products available rose by 4% compared to the previous three months and the survey highlighted a strong acceleration in residential buy-to-let purchases.

Despite this growth remortgaging figures remained high during the quarter, making up 62% of the total market. Mortgages for Business said this showed a demand from landlords for extra leverage.

The number of buy-to-let products on the market jumped from 465 to 484 quarter-on-quarter. The number of lenders operating in the sector remained flat at 27.

David Whittaker, managing director of Mortgages for Business, said: "It's encouraging to see a sustained improvement in the choice of different mortgage products for landlords - and that competition should help drive cheaper deals too.

"Rates remain low, and yields are consistently high, which is encouraging landlords to increase activity. Confidence is generally high - among both lenders and investors - which is sparking even more growth in the sector. There are some other factors driving landlords to remortgage - for example the continued turning away from the property market by some Irish banks and RBS.

"However, for the most part there's such a huge amount of interest in buy to let because of the potential returns on investment. Yields are even higher just as landlords are starting to see prices rise more seriously too, so we're expecting this surge of interest to continue. Fundamentally, demand from tenants is as healthy as ever, and will remain so for the foreseeable future."

Article Source: http://www.mortgagesolutions.co.uk/mortgage-solutions/news/2300883/jump-in-residential-buy-to-let-property-investment

Housing Market Confidence Continues to Improve

This article by What House? on October 15th, 2013 reveals the rapid growth of potential home buyers.

Confidence among prospective homebuyers is rapidly improving with some 10% of Britons, equivalent to 5.1m people, planning to buy a home over the next 12 months, up from 8%, or 3.7m people, in January 2012, according to research conducted by Santander Mortgages.

Improving consumer sentiment is being fuelled partly by the government's Help to Buy scheme which is helping more people acquire a new home with a deposit from just 5%.

The research reveals that younger people are the most likely to purchase property, with 18% of those aged 18 to 34 saying they are likely to purchase a new home. This compares with 9% of 35- to 54-year-olds and 5% of those aged 55 or over.

Phil Cliff, director of Santander Mortgages, says: "The UK has seen a number of encouraging economic statistics emerging in recent weeks and months and our findings suggest a significant increase in confidence in the housing market. Help to Buy is certainly stimulating the market and the extension of the scheme from January 2014 should see existing homeowners who have been unable to move entering the market again."

By region, Londoners are the most confident about their chances of purchasing a home in the next 12 months, with one in five believing it is likely they will do so.
 
Those in London are also most confident that the value of their home will rise over the next year, with 79% of respondents to the survey believing it will do so compared to just 2% who believe it will fall.

Article Source: http://www.whathouse.co.uk/news/housing-market-confidence-continues-to-improve-329#.Ul38XhB360Q

Help To Buy: Lloyds Boss Questions Scheme

This article by Yahoo! news UK & Ireland on October 14th, 2013 reveals the viewpoint of Britain's biggest mortgage lender about Help to Buy that it might create bubble in property prices.

To watch the video, click here.

The chief executive of Britain's biggest mortgage lender says he fears Help to Buy could create a dangerous bubble in property prices - just weeks after giving the Government's scheme his unequivocal support.

Antonio Horta-Osorio - head of Lloyds Banking Group - told the Financial Times that unless steps were taken to increase the number of new homes being built, there was a risk of a "substantial increase in house prices."

He said the scheme should also be tweaked to focus "outside London and the South East", while planning and building rules should be relaxed.

The Lloyds boss also called for more social housing projects so that rising mortgage approvals do not drive up house prices.

Just six weeks ago, in an interview with Sky's business presenter Jeff Randall, Mr Horta-Osorio described Help to Buy as "absolutely the right thing to do."
 
The Halifax, which is owned by Lloyds, is a major lender under Help to Buy, which was recently extended to include a Government guarantee on high-risk mortgages, allowing people to buy a home with a deposit of just 5%.

Mr Horta-Osorio made his comments as a leading forecaster said the efforts to revive the mortgage market had been "well-timed" and would not lead to another housing market bubble.

The Ernst and Young ITEM Club believes house prices will rise by 3.5% across Britain this year and by 6.6% in 2014.

The boss of Britain's so-called 'bad bank' also fuelled the debate by suggesting that Help to Buy could speed up the repayment of its £42bn taxpayer loan by lifting house prices.

Richard Banks, who runs UK Asset Resolution (UKAR), which manages the loans of failed lenders Northern Rock and Bradford & Bingley, said this could help lift customers out of negative equity - where loans exceed the value of their homes.

In an interview with the Times, he said: "If house prices go up outside London, it is a good thing for us as quite a few of our customers are trapped by their high loan-to-values.

"If higher house prices mean sufficient customers are able to and choose to remortgage with another mortgage provider, it may facilitate UKAR being able to pay off the Government loan more quickly."

While support for Help to Buy has been strong, so too has opposition with former Bank of England governor Lord King and the International Monetary Fund urging caution.

Recent official figures showed mortgage approvals running at a five-and-a-half-year high in August, while data from Nationwide showed house prices rose at their fastest annual rate in more than three years in September.

The strongest growth remains in London and the South East.

Lenders including Halifax, RBS and NatWest have started offering mortgages under Help to Buy while Santander, HSBC, Barclays, Virgin Money and Aldermore also plan to join it.

The scheme is expected to offer £12bn in mortgage guarantees over three years and some estimates suggest 180,000 loans could be taken out under the initiative.

Article Source: http://uk.news.yahoo.com/help-buy-lloyds-boss-questions-scheme-101121891--finance.html#SU0xXFM

Homeowners Put Their Faith in Their Local Estate Aagents Early Doors

This article by Doncaster Free Press on October 11th, 2013 reveals that homeowners would rather choose to sell-up their properties in a local estate agent than putting it on the market according to new research.
 
A survey commissioned by Johnston Press and conducted by SPA Future Thinking has found that most vendors shape their views about estate agents over significant periods of time - even when they’re not necessarily looking to sell.

And when it comes to moving and selling their home, vendors – on average - talk to only two estate agents before making a final decision on which to appoint.

The research demonstrated that adverts in local newspapers can directly affect a vendor’s appointment of an estate agent – with 79% of those asked believing it is important for the estate agent they instruct to advertise in their local newspaper.

“Where and how an estate agent promotes their business plays a crucial part in a homeowner’s decision when it comes to putting their property on the market,” said SPA Future Thinking’s Chris Bland.

“People form opinions about local estate agents long before they think about selling. For many that could have been through years of looking at the property sections of their local press and shaping their perceptions over time.”

The research, based on almost 600 homeowners – those with property on the market, prospective vendors and those not yet looking to sell – revealed:

• 30% of vendors invite only one estate agent to give them a valuation before appointing an agent to manage their property sale – with only 10% of those selling talking to 4 or more estate agents before appointing one

• 35% of vendors who don’t read local newspapers already had a view on which agent to use before they entered the property market. The equivalent figure for those who do read local newspapers is 56%

• 40% of people not yet looking to sell already have a view on which estate agent they will use

The survey also demonstrated that advertising in the local newspaper drives interest in properties and therefore traffic to digital sources, with 82% of buyers surveyed claiming to have further investigated properties (visited in person, visited the website, discussed with family/friends etc) having seen a local press advert.

Article Source: http://www.doncasterfreepress.co.uk/news/business/property-insight-homeowners-put-their-faith-in-their-local-estate-agents-early-doors-1-6137474

U.K. House Prices Rise to Record as First Timers Drive Demand

This article by Eshe Nelson of Bloomberg on October 11th, 2013 tells us the rise of house prices in UK last month that influences first-time buyers back to the market.

U.K. house prices rose to a record last month as easier access to credit drove first-time buyers back to the market, Acadametrics said.

Values increased 0.5 percent from August to an average 235,534 pounds ($376,000), the London-based real-estate researcher and LSL Property Services Plc (LSL) said in a report today. London is leading the property-market recovery, with annual house-price growth in the past three months more than double any other region in England and Wales.

The second phase of the government’s Help to Buy program was introduced this week, providing government-guaranteed mortgages to buyers with smaller deposits. The acceleration has fueled further concerns that the initiative may stoke a bubble. Mortgage approvals rose to the highest in more than five years in August, the Bank of England said last week.

“We’ve seen banks ease criteria on mortgages for people with small deposits, which has opened the door to new buyers who have spent years on the outside looking in,” said David Newnes, director of LSL Property Services. “Demand has increased significantly in a short space of time, and raced ahead of the supply of homes.”

Nine of the 10 regions tracked by LSL recorded price gains in the latest three months compared with a year earlier, according to the report. London price growth was 8.5 percent, compared with an average of 3.5 percent. In Wales, the pace of the decline eased.

Nationally, house prices rose 3.8 percent, or 8,526 pounds, in September compared with a year earlier.

House sales rose 12 percent this year compared to 2012, with the increase in transactions predominantly in the first-time buyer sector of the market, Acadametrics said.

LSL said concerns about a housing bubble developing are overblown. While prices are rising, it is only a “fledgling recovery,” Newnes said. “It is not a boom or a bubble. It is a market correction, albeit a fairly quick one.”

The whole country will benefit from Help to Buy because it supports buyers in the southeast, where prices are higher, and in the north, where wage growth is slower, Newnes said. He added that the program must be complimented by more house building so supply keeps pace with demand.

Article Source: http://www.bloomberg.com/news/2013-10-10/u-k-house-prices-rise-to-record-as-first-timers-drive-demand.html

Cash Buyers Helping to Drive Forward Property Market Recovery in UK

This article by the Property Wire on October 9th, 2013 reveals the large part of cash buyers in driving the recovery in the UK's property market.

Cash buyers are driving a large part of the property market recovery in the UK, much more than buyers with a mortgage, according to new research from residential property services company Hamptons International.
 
In the first half of this year, more than a third, 35%, of house sales in England and Wales were made by cash buyers. This represents an increase of 11% compared with the same period in 2012 and the number of people buying with cash today is at its highest point since 2008.

At a time when mortgage availability is improving and confidence in the property market is returning, Hamptons International’s research suggests that the number of cash buyers in 2013 has grown at a much faster rate than mortgages.

Of the additional 20,000 property sales in the first half of 2013 compared with the same time last year, Hamptons International estimates that 70% can be attributed to cash buyers with a 13,600 or 11% increase in cash sales and just 6,300 or 3% increase in mortgaged sales.

‘Contrary to popular belief, much of the recovery in house sales in recent months has been driven by increased cash buyer activity rather than simply increases to mortgage lending,’ said Johnny Morris, head of research at Hamptons International.

‘While there is no doubt that increased mortgage activity helps to improve sentiment and increase liquidity in the market, the growth of cash buyers in the market has overtaken that of mortgage buyers,’ he added.

The South West has the highest proportion of cash buyers at 39% in the last 12 months compared with an average of 33% across England and Wales. By contrast, London on average has the smallest proportion at just 24% although this figure rises to 60% in Prime Central London.  The average price of a house in the South West is £173,000, in London is £386,000 and in prime central London is £935,000.

‘Many cash buyers are downsizers planning to take advantage of the capital locked away in their properties. The South West has both the highest rate of owner occupation in England and the highest proportion of older age groups in its population,’ explained Morris.

‘London on the other hand, has the highest property values in the country and while cash transactions in prime central London are more commonplace than anywhere else in the country, less than seven per cent of London sales over the last 12 months happened in this market,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-property-cash-buyers-201310098328.html

UK Property Market Strongest for 11 Years

This article by Mark Deans of FX-MM on October 8th, 2013 reveals the study that suggests that the property market in UK is in its strongest for eleven years.

Several of today’s papers carry a story about the University of Newcastle upon Tyne, a member of the prestigious Russell Group of academic institutions noted for their research.

They gleefully point out that, during a rebranding project, the university’s marketers applied for trademarks for alternative new and catchy names. One was “Research University of Newcastle upon Tyne”. Another, perhaps put suggested by alumnus Roger Mellie, was “Central University of Newcastle upon Tyne. Either the marketers at Newcastle have a poor grasp of the Grey Street vernacular or the media have been conned into regurgitating a rumour first attached to Newcastle Polytechnic more than two decades ago.

Whichever is the case, the individuals concerned have neglected their study of history. The same could be said of those who rejoice that the British government’s Help to Buy Scheme is boosting consumer confidence by pushing up house prices. Can it only be six years ago that Northern Rock collapsed because it had helped stoke an asset price bubble by lending money to people who could not afford to pay it back? Last night the Royal Institute of Chartered Surveyors reported that its house price balance had risen from 41% to 54%, its highest level for 11 years. And that was the situation in September; wait until Help to Buy kicks in.

The news has done no harm to sterling though. Coincidentally (for the RICS data were only released at midnight) the pound was the top performer among the dozen most actively-traded currencies yesterday. It was not a stellar performance; sterling’s biggest gain was the three quarters of a cent it won from the Canadian dollar. But every little drop helps fill the bucket and the pound edged higher on all fronts. It was not a busy day in the FX market. Ranges were mostly narrow and the pound’s average gain was a measly 0.2%, equivalent to quarter of a Japanese yen or a third of a NZ cent.

The day’s few ecostats provided little inspiration. Euroland investor confidence deteriorated slightly from 6.5 to 6.1. Euroland gross domestic product (GDP) for the second quarter was confirmed to have expanded by 0.3%. Canadian building permits reversed the previous month’s sharp increase with a -21.2% fall. NZ business confidence improved to 38% and Australian business confidence tripled from 4 to 12. One of the two Chinese services sector purchasing managers’ indices slipped half a point to 52.4.

Ahead of London’s opening Swiss unemployment was boringly steady at 3.2% while retail sales there were up by an annual 2.4%. Germany’s trade surplus was almost unchanged at €15.6bn and France’s deficit was on target at -€4.9bn. There is not much remaining on today’s list, only German factory orders and Canada’s housing starts and balance of trade. Whatever state-sponsored US data there might have been will not appear because of the government shut-down. There is very little on that agenda likely to affect the price of cod, and no reason to expect that today’s FX market will be any more exciting than Monday’s.

Article Source: http://www.fx-mm.com/29638/trading-commentaries/daily-brief-moneycorp/uk-property-market-strongest-for-11-years/

UK Property Market Comes Back to Life

This article by Richard Watts of Investment Europe on October 7th, 2013 reveals the recovery of the UK property market after the series of breakdown.

As the UK property market comes back to life, the UK mid-cap equity market is increasingly the place to find interesting opportunities, according to Richard Watts,portfolio manager of the Old Mutual UK Mid Cap Equity Fund. 

Housing has a unique place in the UK economy. There is a special sense of fulfilment in home-ownership. ‘First-time' buyers have a priority on the political agenda, while rising home values translate to near-instant voter gratification. A revival in the housing market is front-page news.

This national attitude to our homes creates a number of anomalies. One is the traditional approach to investing in the housing market through direct purchase, buying or upgrading a home or taking on buy-to-let. Home-ownership can be immensely rewarding, but a house is a particularly illiquid investment, while mortgages create a conduit from Bank of England base rates to disposable income that is short, brutal and sometimes nasty.

The flotation of Foxtons, the London-area estate agent, is a sign that the equity market is increasingly providing an alternative route to participation in the property market. A basket of shares might not keep you warm at night, or not in a literal sense, but it is a lot more liquid, shouldn't require a six-figure mortgage and its sensitivity to interest rates is a little less direct.

The Foxtons IPO was heavily over-subscribed, rising 16% on the first day, valuing the business at over £650m. Foxtons have some 40 offices, mainly in central London. It is an exceptionally well-run company, with special strength in marketing. The average price of its house sales is £400,000, which puts it in the sweet spot in terms of transaction growth as the recovery develops. It is the right section of the market for the second phase of Help to Buy, which will provide mortgage indemnity for homes worth up to £600,000. In our view, Foxtons is in a position to increase its footprint potentially to 100 offices and possibly more.

Foxtons is not the first estate agent to come to the market. Countrywide floated in March and has outperformed the FTSE All Share (ex investment trusts) by 40% since then (to 24 September). Savills, since its near-term trough in the midst of the eurozone crisis on 4 October 2011, has outperformed the FTSE All Share by 134%.

Estate agents are an interesting and expanding area of the equity market, but the heart of the sector in equity terms is the housebuilders. The sector has seen tremendous outperformance in recent years, with key companies such as Persimmon and Barratt Developments, which over the past three years have outperformed the FTSE All Share by 126% and 156% respectively. In our view, despite inevitable set-backs, the sector should continue to offer robust, market-leading returns.

Current demographics suggest the demand for new housing in the UK should run at around 260,000 units per year, but the market is only supplying half that, around 130,000. It is highly unlikely that supply will reach, let alone overtake demand, on almost any scenario.

The block has been financing, with capital constrained banks requiring significant cash deposits. The government - and everybody who reads a newspaper or watches television or listens to the radio - is aware of this and given the economic benefits of house-building it has taken some bold measures.

The first phase of Help to Buy, under which the government lends new home-buyers 20% of the price towards a 25% deposit, is already having a significant impact, with 30% of new-built homes being reserved through the scheme. The second phase starts in 2014, providing mortgage guarantees, and should stimulate the market further. The schemes are intended as temporary kick-starts, but the first phase is proving so popular its £3.5bn funding is likely to expire at some point in 2015 - a date whose proximity to the next election suggests to us that it could be replaced, should need arise, by something either as good or better. In the meantime, the banking sector should by then be further on the road to recovery, opening the possibility that affordable commercial mortgages will increasingly become available.

A less publicised but important change is in planning law. Under the new National Planning Policy local authorities are required to maintain a five year plan. In the absence of such a plan, where any planning application is denied, it will be automatically granted on appeal.

This has unleashed fresh tracts of buildable land, a flow unlikely to be completely staunched as plans come to be adopted more widely. So much for the environment - what about the stock specifics? Housebuilders have done well - is there more to come? In my view there is and the numbers tend to support a positive argument. The key decision is whether the UK property market will continue to recover into the medium to longer term.

Let's take Barratts as an example. We believe they are capable of achieving a return on equity of around 18% on a 2-3 year view as they build out land acquired in recent years at attractive profit margins. We expect the industry to be building around 170,000 units a year by the end of this period, significantly higher than current levels but still well below the demographic requirement. From this level, we believe it fair to assume that Barratts' unit sales can continue to grow at relatively modest minimum of 4%-5% a year - given natural demand, government support and ongoing economic recovery - that would leave Barratts with around 75% of its earnings free to distribute as cash to shareholders, which at current share prices implies a dividend yield at around 10%. That is a high yield for a well-run business in a growing market and we would expect most investors to accept something significantly lower, possibly down to around 5% - and that, in turn, implies a much higher share price.

One of the most satisfying aspects of investing in UK mid-cap equities is the dynamism and variety of the opportunities. As the property market comes back to life, it is likely there will be mid-cap companies there to reap the benefits. And as they say in the property business - we are eager for further developments!

Article Source: http://www.investmenteurope.net/investment-europe/opinion/2299147/uk-property-market-comes-back-to-life-says-old-mutuals-watts

Tips for Buyers to Survive Estate Agent's Tricks

This article by Henry Pryor of theguardian on October 6th, 2013 reveals the guidelines that buyers should follow when dealing with estate agents.

Estate agents are not your friends. They work for the seller and are paid by the seller to get the best deal for the seller.

You wouldn't play poker with all your cards face up on the table, so don't be tempted to explain why you're moving, how much you have to spend (say "we hope that we won't have to spend more than X"), or that you need to be in by January. These will all be used against you when you fall in love with the right home. The agent will know how far he can push you, how little time you have to find something, or that you have already lost out on five other houses and you've threatened divorce if you don't get this one. Don't be panicked into buying and most of all, don't be afraid to make an offer.

Here are my tips for buyers:

■ Agents get paid when deals are done. They are therefore keen to find a buyer who is serious. To make sure you are the first to be called when a new property becomes available, make sure the agent knows you are ready to go. Cash in the bank is better than someone who needs a mortgage. Someone in rented accommodation can move faster than someone with a property to sell.

■ Ignore tempting discounts or incentives to buy a new-build property. If someone is paying your stamp duty or moving costs then it's in the price and you will pay for it over the next 25 years of your mortgage.
■ Confirm every conversation you have with an agent. Viewing appointments, offers made, bids rejected together with the terms of any offer. Agents like people who know what they're doing and you will look like you have bought and sold before.

■ Ignore invitations to rush to see a property or to be panicked into bidding. Fewer than 10% of homes for sale in any one month sell. Proceed in your own time – there are 24m other homes in the UK.

■ Don't get your finance from the selling agent's financial services company. Get a quote, but then discuss it with your own mortgage adviser.

■ Don't assume that the guide price is anything more than an indication of the owner's greed or the agent's enthusiasm to get the job. Be confident and make an offer. A house is worth what you and the seller agree, not what the agent thinks it's worth.

■ Double-check everything you are told. Is it quiet on a Friday or Saturday night? Are there neighbours from hell? Is the road a rat-run and does the roof leak?

■ Don't be fooled into thinking that a bank valuation is for your benefit. It's for the lender and you have no comeback on the surveyor.

■ Don't expect an agent to send you new properties when they are available. Keep in touch, go and see possible properties and look serious. You'll be amazed how much you will learn from frequent contact.

Article Source: http://www.theguardian.com/money/2013/oct/06/tips-buyers-estate-agent-tricks

House Prices Rising at Quickest Rate in Three Years

According to Halifax the rise for eight consecutive months brings annual growth above 6%, making it the highest annual rate since June 2010 as revealed on this article by Harriet Meyer of theguardian on October 3rd, 2013.

House prices are rising at their fastest annual pace for more than three years, according to figures from the UK's largest lender.

Halifax said prices rose by 0.3% in September, the eighth consecutive monthly increase, resulting in an average figure of £170,733. The lender's annual growth figure, which compares quarterly averages year-on-year, showed a 6.2% rise – the highest annual rate since June 2010.

Prices remain some way off the peak of £199,612 recorded by the index in August 2007, but a background of low interest rates, improving consumer confidence and government schemes such as Help to Buy and Funding for Lending, are stoking demand.

The lack of available homes has also contributed to the upward march in house prices, with demand outstripping supply in recent months.

However, Halifax's housing economist, Martin Ellis, said the lack of supply should ease as more people are encouraged to put their homes on the market. He said: "There are signs that supply is beginning to respond to the pick-up in demand, which if continued should help to constrain the upward pressure on prices. The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale. Levels of house building are also increasing, albeit from a very low base."

Halifax's report follows similar findings from Nationwide that the housing market revival is gathering pace. It showed UK house prices rose 0.9% in September, with the annual rate of growth running at 5% nationally and 10% in London – in both cases the strongest figures since 2010. As recently as May, the UK annual rate was just 1%.

Fears have been growing that stronger than expected price rises this year could lead to a bubble, with borrowers over-stretching themselves. The government has brought forward the launch of the new phase of its flagship Help to Buy scheme from January to next week, and concerns have been raised about the further upward pressure this will place on house prices as demand is stoked further.

Howard Archer, UK economist at IHS Global Insight, said: "There is a mounting danger that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme now starting in October."

The Help to Buy scheme will offer state-backed mortgages to people with deposits as low as 5% who want to buy a new-build or an existing home.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Bringing forward the launch date of the second phase of Help to Buy has revealed just how much pent-up demand there is from buyers, with brokers already receiving plenty of inquiries about how the scheme will work and where they can get a mortgage. Lenders will have to work hard now to catch-up, ensuring they launch 95% LTV products that are competitive."

Article Source: http://www.theguardian.com/money/2013/oct/03/house-prices-quickest-rise-halifax

Mark Carney Reinforces Warning on Rising Interest Rates for Home Owners

This article by Larry Elliott and Philip Inman of theguardian on October 2nd, 2013 discusses the Bank of England chief Mark Carney says regarding the house building and prices increase will affect the recovery of the property market.

Mark Carney, the Bank of England governor, has delivered a warning to home owners about the risks of rising interest rates as Threadneedle Street made clear it was keeping a close eye on developments in the housing market.

Carney said that people should check to see if they could still afford their repayments on their home loans, when he said, "rates rise, as they will, when the recovery takes hold".

Speaking on ITV News Anglia, he reinforced the message from another senior bank official, Paul Fisher, saying both borrowers and lenders should be careful not to overstretch themselves.

Fisher, Threadneedle Street's executive director of markets, rejected the idea that a property bubble was emerging but stressed that the bank was alert to the risks of another boom-bust.

His comments came as latest construction figures revealed a strong increase in private house building, offering a counterpoint to mounting fears that the ground was being laid for a new housing crash.

Fisher said the market was clearly gathering momentum after years in the doldrums and prices had again started to hit the headlines.

"I must say that don't see any evidence of bubble behaviour as yet, with mortgage lending still subdued relative to what is likely to be normal levels of activity. The housing market is recovering from a number of years of very low transactions, with house prices having risen well below the inflation rate."

Recent house price surveys have shown that the cost of property is increasing by about 5% for the UK as a whole and by 10% in London.

The bank said this week that the number of home loans approved by lenders in August was the highest since February 2008.

Fisher said: "It is not surprising if we see an adjustment of relative prices when the market recovers, and of course London has special demand pressures which are not present elsewhere in the UK, especially for high-end housing.

"But we may well see a response in new housing supply in due course, limiting the effects of demand on house prices."

Fisher's comments on housing supply were boosted by construction figures also released on Wednesday which showed the strongest growth in private house building since 2003.
A CIPS/Markit survey showed that Britain's construction industry grew for the fifth successive month in September.

Private house building has grown strongly over the last year in response to the government's Help to Buy deposit guarantee for new homes.

The Bank of England's Funding for Lending scheme, which has cut mortgage rates, is also credited with increasing the supply of cheap credit to buy homes.

Tim Moore, senior economist at Markit, said: "Construction is no longer the weakest link in the UK economy. The third quarter of 2013 ended with output growth riding high amid greater spending on infrastructure projects and resurgent house-building activity. The reversal in fortunes has spanned commercial, residential and public-sector construction projects."

The Markit/CIPS UK construction purchasing managers' index (PMI) came in at 58.9 for September, down from a near six-year high of 59.1 during August. A figure above 50 indicates expansion.

Undaunted by warnings from within his own government of a potential asset bubble, David Cameron announced this week that the government had brought forward the second phase of its Help to Buy scheme for mortgages, from early 2014 to this month.

He said: "Let me assure you that the bank will not be complacent about allowing financial stability risks to build through an over-expansion of the housing market. Both borrowers and lenders need to be careful not to overstretch themselves.

"In line with the recent financial policy committee statement, we will be keeping a very close eye on developments, and the bank has a range of tools that can be used in mitigation of those risks."

Howard Archer, UK economist at IHS Global Insight, said the construction sector was exhibiting "marked sustainable improvement following extended, deep weakness".

Archer said: "Indeed, the construction sector highly likely saw even stronger expansion in the third quarter than in the second quarter when output grew 1.9% quarter-on-quarter.

"The construction PMI averaged 58.3 in the third, which was up substantially from 50.4 in the second quarter and was the best quarterly performance since the third quarter of 2007.

"This fuels belief that GDP growth in the third quarter could very well have accelerated to close to 1%."

However, output across the construction industry remains well below its peak and analysts estimate that 100,000- 150,000 construction workers are either working in other sectors or without jobs.

According to the Office for National Statistics the construction industry is operating 14% below its pre-crash level.

Article Source: http://www.theguardian.com/business/2013/oct/02/mark-carney-warning-interest-rates

Home Loans Rocket to a 5-Year High

This article by the Express on October 1st, 2013 shows the confirmation from the Bank of England regarding the rise of mortgage approvals as property market strengthens.

 

Mortgage approvals soared to a five-year high in August as the property market recovery goes from strength to strength, the Bank of England confirmed yesterday.

Lenders approved 62,226 mortgages – up from 60,914 in July and the highest since February 2008.

Remortgages approved also rose to 36,225 – the highest level since February 2011.

Jonathan Hopper, managing director of property search consultants Garrington, said: “The mortgage market is out of the infirmary and running, not walking, back to health.

“The resurgent property market is matching it step for step.

Average prices are on the up in every region for the first time in a long time

Jonathan Hopper, managing director of Garrington property search consultants

“It’s telling that the Nationwide House Price Index is now showing average prices are on the up in every region for the first time in a long time.”

 Article Source: http://www.express.co.uk/news/property/433443/Home-loans-rocket-to-a-5-year-high

Help to Buy Property Lending Scheme Phase II

This engaging article of the Property Wire on September 30th, 2013 discusses the second part of government's Help to Buy scheme on which it will be launch three months early.

The second phase of the UK government’s flag Help to Buy scheme is being brought in three months early and banks will start offering taxpayer subsidised mortgages on properties up to £600,000 from this week.
 
In a surprise announcement for some, Prime Minister David Cameron announced at the weekend that he was bringing the scheme forward and that state backed lenders, the Royal Bank of Scotland and Lloyds Banking Group, have signed up to the scheme and are ready to go.

Other lenders are expected to follow soon although it is understood that actually money will not be available until January. The details are expected to be made available later this week including fees. It was also announced last week that the scheme will be monitored by the Bank of England on an annual basis.

The announcement comes at a time when property industry commentators have been raising concerns that government intervention in the housing market to boost sales could create a property price bubble but last week the Bank of England said there are no signs of this happening, yet.

This second phase of the scheme extends Help to Buy beyond the new housing market and also allows buyers to get a loan on a home up to £600,000 with just a 5% deposit. It is well acknowledged that first time buyers in particular are struggling to find enough money for a deposit, especially in London and the south east of England where prices are much higher than the rest of the country and rising faster too.

This phase two of the Help to Buy scheme will be available for £12 billion of guarantees on up to £130 billion of mortgages and remain open for three years.

‘Despite the economy recovering, we know many families are finding it tough to get a mortgage deposit together. We are committed to helping as many people as possible across Britain to get on with their lives, to buy their first home, to move to a bigger house as their family grows,’ said Ross McEwan, incoming chief executive of RBS.

The bank said it would be offering a range of ‘competitive’ 95% mortgages to first and next time buyers in the UK and that it aimed to help 25,500 first time and next time buyers through the scheme.

Reaction has been mixed. In particular there is concern about prices rising too quickly in some regions as a result and also worries about the effect on the private rental market which has been boosted by the lack of lending to buyers.

According to Camilla Dell, managing Partner of Black Brick, the Help to Buy scheme is good news for first time buyers who, for many years, have been unable to get on the property ladder and have been forced to rent.
 
But she questions its overall positive effects on a property market that has been steadily improving. ‘The consequences of the government’s intervention into the market in this way may not be for the better. Undoubtedly, the market sub £600,000 is likely to rise and get quite competitive, particularly as the second phase isn't limited to just new build,’ she explained.

‘The knock on effect is also likely to cause changes in the lower end of the rental market. Help to Buy will take hundreds of tenants out of the market and could cause rents for properties valued up to £600,000 to fall. In central London, this is likely to be seen on one bed and studio flats.

‘So, wwhether it will be for the best remains to be seen overall, I'm not sure it will be. The problem with Help to Buy is it’s a bit like credit cards as people take on debt they can't afford, which is dangerous. In my opinion, the government should really be addressing why housing is so expensive in the first place, rather than finding a way to fund it. We need to build more homes so that supply eventually meets with demand, and that's where government’s focus should lie,’ she added.

Property expert Henry Pryor is not convinced, saying that the first phase of Help to Buy made sense for people looking to buy a new build home. He pointed out that in general this second phase, which was due to be launched in January 2014, was felt to be flawed and risked bucking the market and critics have included past and current Governors of the Bank of England, the treasury Select Committee, the International Monetary Fund, lenders, builders, all the main opposition parties and even the Business Secretary Vince Cable.

‘Everyone felt that this was a step to far and risked creating a price bubble. What's odd is to try to solve a supply problem by subsidising demand. Give 10 people trying to buy six houses more money and guess what they do with it? Ironically the Tory party aim of helping those who can't afford to get into the housing ladder will result in making those very homes they want to buy more expensive. It's nuts,’ he said.

However, others are more positive about bringing the scheme forward. ‘Allowing buyers of second hand homes earlier access to Help to Buy will stop the autumn market stultifying while everybody waits for the New Year.  It will therefore assist in avoiding the artificially pent up demand from the autumn overflowing into January,’ said Jonathan Hopper, managing director of property finders.

‘It is good news that the government owned banks have agreed to take part in the scheme so quickly, however we urge the other mortgage lenders to get on board quickly and offer the scheme to their borrowers,’ he added.

Brendan Cox, managing director of Waterfords estate agent, believes that it is possible that the move could fuel a housing boom as people who were previously unable to buy will be unleashed to the housing market and this is bound to send a ripple effect up the chain.

But he also pointed out that the Bank of England and the government have said they are going to keep a very close eye on this to make sure a boom doesn't happen although they haven't actually said what measures they intend to put in place to prevent it.

‘Stock levels remain low and this new dimension will surely only further increase prices as the supply and demand factor pushes prices upwards,’ he said, adding that it is also going to have an effect on the rental market.

‘We could see a levelling out of rental prices as tenants take this opportunity to buy their first home but we mustn't forget even raising 5% will be beyond a lot of tenants reach,’ he added.

‘Cutting the wait short for 95% government backed mortgages will clearly give renewed hope to frustrated would be home owners across the country, according to Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA).

‘The equity loan aspect of Help to Buy has been a resounding success and there is no doubt that the appetite exists for the new mortgage guarantee to fly off the shelves. That said, higher loan to value (LTV) mortgages have already become more readily available as funding has improved and competition intensified. In that respect the government needed to get the scheme out earlier to have any real impact. The first time buyer market in the UK has been driven off 95% LTV loans for many years so fully restoring that market will be helpful and should boost transactions,’ he explained.

‘The announcement’s timing during conference season does make Help to Buy’s political purpose even more explicit in terms of boosting party morale and electoral prospects. While the Bank of England is preaching caution and careful monitoring of house price inflation, bringing the mortgage guarantee forward by three months opens the government up to accusations of pushing too far, too fast. But with central controls in place to deal with any downsides of the scheme, it should still be possible to manage this intervention successfully,’ he pointed out.

‘Clearly the state supported lenders are the first to open for business and accept applications for the scheme. But with final terms and conditions still to emerge, not to mention costs, most lenders will need time to reflect before deciding what their offer will be. It is vital we guard against the assumption that all lenders will be able to accept Help to Buy applications from day one, which may result in even greater frustration from staff and customers across the country.

‘It is also likely that we will see interventions in the scheme over its planned three year lifespan, so lenders and borrowers also face the uncertainty of regular changes in terms and conditions. IMLA members’ concerns about Help to Buy’s possible effects on house prices have been partly eased by the revised controls regime, but considerable uncertainties remain: not least because the housing market is now firmly in the party political headlights,’ he added.

It will cause ‘a wave of excitement’, according to Brian Murphy, head of lending at the Mortgage Advice Bureau. ‘The Help to Buy mortgage guarantee has a clear purpose and will answer a real need by giving options to first time buyers and those home owners who have seen their equity eroded and been unable to make their next move. It is undoubtedly a welcome initiative from a consumer point of view,’ he said.

‘A key ambition over the next three years must be to re-establish 95% lending as part of a balanced and normally functioning market. With the government behind it, the market looks set for continued growth which will hopefully prompt a greater level of overall transactions and more willingness from lenders to get behind those buyers with limited deposits,’ explained Murphy.

‘Clearly there will be a flurry of activity as lenders bring their implementation and delivery plans forwards, once the final details of the scheme are confirmed. The important thing is for consumers to get clear, consistent messages about the mortgage guarantees, how they work and where they are available. Rather than becoming an overnight sensation, it would be in everyone’s best interests if the scheme is managed in a steady and sustainable way,’ he added.

Ben Thompson, managing director of the Legal & General Mortgage Club, reckons that the government didn’t want to leave it too late, but added that remains unclear exactly what the scheme details and specifics are for lenders, and in that regard precisely who will participate other than RBS and Lloyds Banking Group.

‘It is clear that there are potential first time buyers and movers who are having to spend significant time saving for a substantial deposit and this has to be fixed in order that families can live in suitable accommodation and enjoy home ownership in the same way that previous generations have. Bringing the scheme forward potentially enables some to buy or move a few months earlier than originally planned, in some regions saving a little more money, as house prices in some parts are climbing. It's therefore important not to leave this too late,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-help-buy-scheme-201309308291.html