Housing Demand Soaring - Surveyors

This article by Cambridge News on November 12th, 2013 tells us the increase of price houses surge to an 11 year high.

The number of surveyors reporting house prices lifting across the country has surged to an 11-year high as the Government's new Help to Buy scheme fuels "soaring" demand from buyers.

The Royal Institution of Chartered Surveyors (Rics), which released the findings for October, said urgent action must be taken to tackle the problem of demand outstripping the supply of homes for sale, which is "nowhere near" the levels needed to cope. 

Sales volumes are running at their highest levels in more than five and a half years as more people flood into the market to snap up properties, its latest UK survey found.

Rics said that nearly three-fifths (57%) of surveyors reported price rises during the month, the highest percentage since June 2002, reflecting the imbalance between supply and demand.

Over the three months to October, surveyors sold just over 20 homes typically, the highest average since February 2008.

Looking ahead, surveyors said they expect house prices and sales volumes to edge higher in the next three months.

Meanwhile, demand for rented property is increasing at its slowest pace in over a decade as more people make the jump on or up the property ladder, Rics reported.

A balance of 11% of those surveyed reported rises in interest from potential tenants in October, the lowest proportion in more than 10 years.

But Rics said that while the new phase of Help to Buy - to give borrowers with deposits as low as 5% a helping hand to buy a new-build or existing home - is "widening the net" of people who can get mortgage access, surveyors across the UK are reporting a "problematic" lack of new instructions from sellers.

Rics said that as "soaring demand" pushes prices higher, almost every region is reporting an increase in sales, demonstrating that recovery is "spreading beyond the traditional economic powerhouses of London and the South East".

The new phase of the Government's Help to Buy scheme, which offers state-backed mortgages to people with deposits as low as 5%, was fired into action last month after the start date was brought forward from January.

State-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland are already offering mortgages under the scheme and other major lenders including HSBC and Santander have confirmed plans to come on board at a later date.

Simon Rubinsohn, Rics chief economist, said: "A greater willingness by lenders to increase loan to values on mortgage products allied to the Help to Buy scheme has meant that more and more first-time buyers are in a position to enter the market.

"In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand and, in order for the market to function correctly, this imbalance urgently needs to be addressed.

"House building starts have picked up recently but we are still well behind in terms of the amount of properties needed."

Fears have been raised that the upward pressure on house prices could lead to a "bubble", with borrowers over-stretching themselves. Ultra-low interest rates and a string of Government schemes are currently helping to keep mortgage payments relatively affordable.

Rics recently suggested that the Bank of England should use its powers to limit house price increases to 5% a year to remove the "froth" from price booms.

It said that an annual increase of around 5% could trigger caps on how much people could borrow relative to their incomes or the value of the property.

Recent figures from the Department for Communities and Local Government (DCLG) showed that house builders in England are starting more new properties than at any other time in the past three years.

But housing charity Shelter has previously warned that the country is still building less than half the number of new houses it needs each year to tackle the ''chronic shortage''.

Council of Mortgage Lenders chairman Nigel Terrington warned last week that the housing market risks becoming "addicted" to the Help to Buy scheme unless a clear exit strategy is set out. Mr Terrington said that Help to Buy must not "morph" into the UK's version of United States mortgage giant Fannie Mae.

Mr Terrington said of Help to Buy: "It should be a time-limited intervention to correct what is seen by the Government as a temporary failure in the market to provide high loan-to-value mortgages in quantity. It must be a temporary fix - not a permanent feature."

Housing minister Kris Hopkins said: "We are pulling out all the stops to get Britain building."

He continued: "Already, we're well on track to deliver 170,000 new affordable homes by 2015, and our plans to invest £19.5 billion public and private funding over this spending review, and £23 billion in the three years after that, will help towards the fastest rate of affordable house building for two decades.

"Housing starts are now a third higher than at the same time last year and it is clear house building will remain a critical part of our economic recovery.

"In addition, our Help to Buy schemes will help thousands of aspiring homeowners buy new homes with a fraction of the deposit they would normally require - helping to boost the housebuilding industry even further as well as supporting responsible lending.

"On average households have asked to borrow around £155,000 for houses worth about £163,000, which is below the UK average price of £247,000."

Roger Harding, director of communications, policy and campaigns for Shelter, said: "Despite Government rhetoric, Help to Buy simply isn't affordable for the vast majority of people on average incomes in large swathes of the country, while city economists are warning that it risks raising house prices further.

"Apart from high earners and those lucky enough to access hefty help from the bank of mum and dad, the chance of a home of their own continues to slip further and further out of reach for many young people and families.

"If the Government is really serious about meeting people half way and helping them to realise their aspirations, it needs to take decisive action to tackle our shortage of affordable homes."

Article Source: http://www.cambridge-news.co.uk/National-News/Housing-demand-soaring-surveyors-2-7972640.xnf

FREE ￡197 Property Download "5 Instant Ways to Raise Finance For Your Property Deals"http://tiny.cc/B-FreeGiveAway 

Strong Start for Help to Buy, say Lenders

This article by BBC News Business on November 11th, 2013 reveals that house prices in the UK have returned to their pre-crisis levels.

 

House prices in the UK have returned to their pre-crisis levels according to some figures

 

Two major lenders have reported a strong uptake in the first month of the government's extended Help to Buy mortgage guarantee scheme.

Royal Bank of Scotland (RBS) and Halifax said they had received a total of 2,384 applications, potentially worth £365m in mortgages.

The scheme is designed to encourage lenders to offer mortgages with deposits as low as 5%.

But critics are concerned it could help to create a UK housing bubble.

RBS and its subsidiary NatWest, and Halifax - owned by Lloyds Banking Group - are among the few lenders to offer mortgages under the government's extended scheme.

The first phase of Help to Buy was launched in April, but only provided help to first-time buyers buying new-build homes. The extended scheme applies to all buyers and all types of homes.

RBS said it had so-far approved 169 of its 1,075 applications, and five customers had already completed their purchases.

It said the majority of applications had come from young couples with a joint salary of less than £50,000. The average price of the property being bought was £167,565.

Halifax said more than 80% of its applications under the scheme were from first-time buyers.

It said the majority of applications had come from outside London and the south-east of England, where property prices are rising fastest.

It also said that five purchases had so-far been completed.

Bubble worries

  The government welcomed the figures, saying that the scheme was supporting "responsible lending", helping borrowers would can afford mortgage repayments, but not a large deposit.

"Four weeks in and its clear that Help to Buy is already delivering," said Prime Minister David Cameron.

"Most Help to Buy applicants are first-time buyers, young and have a roughly average household income. This is all about helping hardworking people get on the first rung of the property ladder."

But critics have expressed concern that the scheme could create a bubble in the housing market, making home affordability an even bigger problem.


The latest figures from the Office for National Statistics suggest average house prices in the UK have now recovered from the slump seen during the recession.


Figures from Halifax suggest house prices have yet to hit their 2007 peak, but have risen steadily for the last nine consecutive months.

Nationwide Building Society says prices are currently 5.8% higher than a year ago.

But estate agents argue that much of those price rises are seen in London and the south-east of England, while prices in other parts of the country are rising more slowly, or in some cases actually falling.

Article Source: http://www.bbc.co.uk/news/business-24892649

FREE ￡197 Property Download "5 Instant Ways to Raise Finance For Your Property Deals" http://tiny.cc/B-FreeGiveAway




 

House Prices: 'South-East Set to Outpace London' for First Time in a Decade

This article by Jennifer Rankin  of theguardian on November 6th, 2013 reveals that house prices in London are at its highest compared with the house prices in UK.

London house prices are at an all-time high compared with the rest of the UK, but 'affordability constraints' could soon bite. Photograph: Alex Segre/Rex

 

House prices in the south-east are set to outpace those in London over the next five years for the first time in more than a decade, as buyers priced out of the capital turn increasingly to commuter-land.

 

Upmarket estate agent Savills said its research showed the era of rising home ownership is over and predicted that more than a million people will move into rented accommodation by 2018, with renters also facing higher prices.

But prices for house purchase are forecast to rise even faster, with Bournemouth, Brighton, Windsor among the towns across the south expected to see average prices soar by 32% in the next five years. Surging prices will also be seen in affluent parts of the south-west and the Midlands, such as Bristol, Bath and Solihull.

In contrast, house prices in London will rise more slowly, making gains of 24.4%, just behind the national average of 25%, with rises across the UK but more slowly in Scotland, Wales and the north of England.

This compares to 9% growth in UK house prices from 2008-13, although, adjusting for inflation, house prices remain below their pre-crash peak and will barely have recovered in real terms by 2018.

News of accelerating house prices beyond London is bad news for people struggling to get on the housing ladder and find affordable places to rent: in a recent Mori poll for Inside Housing, 57% of people did not believe rising house prices were good for the country.

Lucian Cook, head of UK residential research at Savills, said London prices were at an all-time high compared with the rest of the UK, but predicted they would grow more slowly after 2015 as "affordability constraints" in the capital begin to bite. "As confidence improves, buyers are likely to look to markets beyond London that offer better relative value, though it will be later in the cycle before the north feels this benefit."

If the London property market drops down a gear, this would be a significant shift in the UK housing economy, as the capital is the only part of the country where house prices have fully recovered since the crash. London prices are around 10% higher than their pre-crash value but prices remain 10% below their pre-crash peak in the south-east and almost 25% below in the north-east.

"It is not just about a north-south divide. The gap between London and the south-east is incredibly high at the moment," said Cook.

The housing recovery will be slowest in the north of England, with Barnsley, Hartlepool and Middlesbrough among the towns set to see the smallest price rises. The government has been trying to haul the housing market out of recession, creating the £130bn Help to Buy mortgage guarantee scheme, which critics have warned is in danger of inflating a bubble.

Dismissing talk of an overheating market, Savills said Help to Buy would play a minimal role, predicting it would increase transactions by 12% over the scheme's three-year life.

"Help to Buy will allow some trapped renters to access home ownership even though the costs of home ownership will exceed those of renting," said Cook, but he said the majority of beneficiaries were likely to those who already own a home, rather than first-time buyers.

By 2018, 5.8m households will be in rented accommodation, a million more than today, while the number of home owners will continue to decline. "The age of growing home ownership is well and truly over," said Cook.

Average rents are set to go up by 21% in the next five years and by 26% in London. Roger Harding at Shelter said the statistics highlighted "the dramatic and ongoing impact of our housing shortage on ordinary families. The current rental market is already unstable enough – families now make up a third of all renting households, with many forced to jump from one short tenancy to the next and cope with rising rents. The situation is only going to get worse if the number of private renters rises as steeply as this research predicts.

"This doesn't have to be the future, but unless the government commits to building the affordable homes that we desperately need, house prices will continue to rise and the already overheated private rental market will struggle to cope with the added pressure from a priced-out generation."

Galloping prices in the capital have turned the spotlight on wealthy foreign buyers, but the estate agent insisted they were not driving house price inflation. "Much more important than individual buyers is the state of the economy," said Yolande Barnes of Savills.

"London's economy has behaved fundamentally differently to the rest of the UK, because of the strength of the financial services industry." She also said any Treasury plans for charging capital gains tax on foreign buyers were unlikely to dampen foreign demand in the long-term.

But Savills is predicting a temporary slowdown in demand in "the tiny rarified markets" of Kensington and Westminster, as buyers delay purchases ahead of the election, fearing a future government could introduce a mansion tax. Property prices in the most expensive central London zones are set to fall 1% in the 2015 election year, but could rebound 8% afterwards if a mansion tax is not introduced.

Article Source: http://www.theguardian.com/business/2013/nov/06/house-prices-south-east-london-savills

#FREE ￡197 #Download “How To #Buy #Houses Using Other People's #Money To Make ￡2,000-￡5,000+ a month #Passively” http://tiny.cc/B-FreeGiveAway
 

Survey Reveals Confusion Over UK’s Flagship Help to Buy Scheme

This article by the Property Wire on November 5th, 2013 reveals the confusion about the benefits the Help to Buy scheme can give to first time buyers and home owners.

There is confusion over the UK government’s flagship Help to Buy mortgage guarantee scheme, with 43% of active first time buyers and other home movers confused about the benefit the scheme will give them.
 
A survey found that 31% of consumers who are looking to buy or move admit they do not know whether there is a difference between a 95% mortgage offered by a lender which has signed up to the scheme and a 95% mortgage from a lender which hasn’t.

Results from an independent consumer survey commissioned by the Building Societies Association (BSA), also shows that 18% of first time buyers and 17% of home movers believe that they can borrow more through this scheme than with a standard 95% and 12% of both first time buyers and home movers believe that their monthly repayments will be lower as a result of taking a Help to Buy mortgage guarantee loan.

One in 10 first time buyers but just 5% of home movers believe that the scheme will protect them if they cannot keep up their monthly payments while 12% of first time buyers and 6% of home movers say that Help to Buy mortgage guarantee will protect them if their house price falls.

But not one of these suppositions is true. The Help to Buy: Mortgage Guarantee Scheme has been designed to encourage more lenders to lend to borrowers with small deposits, increasing the availability of this type of loan. The mortgage that an individual consumer receives and the approval process they go through, are subject to the same lending rules whether a mortgage is inside the Help to Buy scheme or not.

In fact, when considering the affordability of the Help to buy: mortgage guarantee loan, until the new FCA rules related to the Mortgage Market Review come into force in April 2014 borrowers may well be subject to stricter requirements then they would be otherwise.
The introduction of and the publicity surrounding the two Help to Buy schemes has had a positive effect on consumer confidence and is likely to increase the overall volume of higher loan to value ratio lending, as some banks get back into this market, says the BSA.
 
Indeed, some lenders, particularly many building societies, have consistently offered loans requiring deposits of five or 10% and continue to do so outside the Help to Buy Scheme. So borrowers may find that they have a wider choice than they expected when shopping around for a low deposit loan.

‘It is unsurprising that some consumers are finding the Help to Buy Mortgage Guarantee Scheme difficult to get their heads round. The situation has been complicated by the launch of two very different schemes both called Help to Buy,’ said Paul Broadhead, BSA head of mortgage policy.

‘It is essential that providers offering loans under the scheme leave applicants in no doubt about the terms of their mortgage loan. I am particularly concerned that a reasonable minority of active first time buyers believe that they can borrow more than normal and that they are in some way protected yet neither assumption is true,’ he explained.

‘In fact a 95% mortgage through the Help to Buy mortgage guarantee is exactly the same as a standard 95% mortgage. It is vital that these myths are dispelled at application to prevent the possibility of consumers misunderstanding their mortgage loan and later feeling misled,’ he added.   

Article Source: http://www.propertywire.com/news/europe/uk-help-buy-confusion-201311058424.html

FREE WEBINAR: “Want to Earn ￡3,000+ a Month Sourcing Property?” (within 6 months) Wed, 6th Nov, 8 PM, Click Here: tiny.cc/TW-VickiWusche

"Want To Earn £3,000+ a Month Sourcing Property?" (within the next 6 months)

We have an exciting webinar for you tomorrow, Wednesday 6th November at 8pm GMT:

"Want To Earn £3,000+ a Month Sourcing Property?" (within the next 6 months)

Click Here: tiny.cc/B-VickiWusche

Our Expert Speaker is Vicki Wusche, Author of 3 Amazon Best Selling Property Books, Full Time Property Investor, Speaker, Mentor and Recently Voted No. 21 in the Telegraph's 'Property Power List 2013'.

Register For This Exclusive Training and Discover.....

1. How to Market Yourself to The Right Client and Earn Yourself £3000+ a Month Sourcing Property

2. The 5 Steps That Will Help You Better Understand How to Create a Truly Successful Property Business

3. How To Understand Everything From Knowing Your Market to The Mindset That Will Keep You Focused

4. The Resources, Knowledge, and Skills That You Can Use To Create a Wealthy Future For Yourself....and much much more....

Click here to register for this training for FREE: tiny.cc/B-VickiWusche

UK Looks Set to Impose New Tax on Foreign Property Owners

This article by Property Wire on October 4th, 2013 tells us the growing speculation that George Osborne is set to impose capital gain tax to non-UK residents.

Speculation is increasing that UK Chancellor George Osborne is set to impose Capital Gains Tax on people who are non resident but sell property they own in the country.
 
It is expected that he will make the announcement as part of his Autumn Statement due at the beginning of next month.

Currently home owners living in the UK pay 18% CGT when they sell their home and 28% if it not classified as their main home. People who own properties in the UK but are not residents are currently exempt from CGT.

The idea to start charging CGT to foreign owners is due to a surge in the number buying homes in London which has become a favourite safe haven for overseas property investors.
According to many real estate analysts the move should be welcomed as it deals with an anomaly between the tax treatment of domestic and overseas buyers and levels the playing field between local and overseas investors.

But the big question is whether it will deter overseas buyers of new properties in London and affect the current boom in the market place which is largely credited to demand from overseas buyers.

According to Yolande Barnes, director of residential research at Savills, the plan will not make London look expensive on the international stage. ‘Our analysis of four major world cities: London, New York, Hong Kong and Singapore has shown London to be particularly good value for overseas purchasers in the past,’ she said.

‘For those holding a residence for five years, total buying, selling and occupation/ownership costs have amounted to 8.5% of selling price in London. Under the proposed new CGT regime, this will increase to just under 12%,’ she explained.

‘This is still substantially less than it would be for the same value property in any of the other cities, except in cases where property is held in a special purpose vehicle or company in which case the new SDLT regime makes it more comparable,’ she added.

She does not believe that a new CGT would deter overseas investors, but pointed out that it will increase the tax take from London properties for the exchequer and the proposed measure puts London more in line with other world cities and addresses an inequity in the tax system.

‘Most importantly, it is unlikely to deter overseas inward investors who are attracted to the capital as a place in which to live and invest. London is a cosmopolitan city which stands out on the world stage as being particularly welcoming to foreigners. Most overseas home buyers are an important part of the London economy and are not depriving Londoners of homes,  they are Londoners themselves,’ she said.

Grainne Gilmore, Knight Frank's head of UK residential research, said it was hard to gauge how demand would be affected without knowing the details of what is planned but she pointed out that tax is not the primary reason why global property investors come to London, but a change would have an impact.

Stephanie McMahon, head of research for Strutt & Parker, said that if the thinking behind the move is to cool the prime property market in London then imposing CGT on foreign owners across the board might not be the best move.

‘There is no doubt that London has seen huge price growth. However, it has to be acknowledged that this has been curbed by other government interventions through various tax measures including Stamp Duty Land Tax. Whilst it is clear that the government are proposing this new measure to take the heat out of London one must ask whether the idea of the ‘bubble’ has been sensationalised. London, Greater London and the country as a whole have very specific dynamics and markets and one cannot talk so generally,’ she explained.

‘There can be no doubt that further taxing will have an impact on transaction levels in the prime area where between 50 to 70% of buyers are foreign. The initial response might be almost opposite to the intention, however, as talk around the issue could cause a flurry of activity but it is likely that it will then slow the transaction levels down dramatically as it did following previous interventions,’ she added.

She gave as an example the situation in New York where the CGT tax has increased from 15% to 23.8% and causes a huge rush in sales during 2012 adding further heat before sales then dropped off this year. Singapore has an additional overseas stamp duty of 15% to cool their market too.

‘Without knowing the full details of how this tax will be enacted and the figures involved it is hard to predict the full repercussions. One thing that is very clear is that governments around the world are looking very seriously at how they can raise revenue and control their markets. I cannot see these conversations going away, and as each government does this, the money moves to the next prime city further increasing the heat,’ she explained.

According to Ed Tryon, director at Lichfields buying agency, Britain’s current taxes on foreign property ownership are considered pretty generous by international standards. ‘Few other asset sectors have performed as well as the prime central London residential market since the economic downturn. Revenue from SDLT and other property taxes have risen significantly, investment and development is apparent on just about every street in the capital,’ he said.

He added that this has created significant additional revenue for the construction industry, retail, hospitality, finance and those who rely directly on this market for their livelihood, so a change could have affects beyond buying and selling.

‘Balancing the countries books should remain a priority but additional taxation stifles growth. The world is a complex multi national market place and the international dollars, rubbles and remnimbi could just as readily flow elsewhere if London loses its competitive advantage,’ he explained.

‘The market has absorbed significant SDLT rises from just 1% in 1997 to 7% in 2013, for £2 million plus purchases, changes to ownership structures, the financial crisis and a lending drought in recent times, its resilience is a testament to London’s attractiveness but there is a balance, tip it too far and the consequences for the whole economy could be catastrophic,’ he warned.

He also believes there are other revenue raising options such as a further increase to the SDLT bands or an additional band in excess of the one at £2 million, the much talked about Mansion Tax for all properties with a value over a certain level and an overhaul of the rather outdated Council Tax bands, although this is unlikely to be popular.

Article Source: http://www.propertywire.com/news/europe/uk-property-tax-sellers-201311048421.html

FREE WEBINAR: “Want to Earn ￡3,000+ a Month Sourcing Property?” (within 6 months) Wed, 6th Nov, 8 PM, Click Here: tiny.cc/B-VickiWusche

Steady Increase in UK property Prices Continues with 1% Growth in October

This article by the Property Wire on October 31st, 2013 reveals that house prices in UK continue to rise at 1% in October.

UK house prices increased by 1% in October and are now 5.8% higher than October 2012 but remain some 7% below the peak of 2007, according to the latest monthly index from the Nationwide Building Society.
 
The rise takes the average property price to £173,678 and according to Robert Gardner, Nationwide's chief economist, the UK housing market appears to be following the more resilient upward trend evident in the wider economy in recent quarters.

He said that the 1% increased over the month in October means that prices are maintaining the momentum that has been building in the second half of 2013. After averaging less than 1% in the first half of the year, the annual pace of house price growth accelerated to 5.8% in October from 5% the previous month.

‘The ability and willingness of potential buyers to transact has been steadily increasing. The ability to buy has been supported by continued gains in employment and policy measures such as the Help to Buy and Funding for Lending schemes, which have improved the availability and lowered the cost of credit. Mortgage rates are close to all time lows,’ he explained.

‘The willingness of potential buyers to step into the market has also been increasing. While employment has been rising steadily for some time, it is only in the last few quarters that consumer sentiment has improved markedly. This may in part be the result of the improved performance of the wider economy. The UK economy expanded at a healthy 0.8% quarter on quarter pace in the third quarter, the third consecutive increase and the fastest pace of growth for three years,’ he added.

Gardner also pointed out that house price growth has accelerated as buyer demand has picked up more quickly than the supply of new homes. But the risk is that if demand continues to strengthen while the supply of property remains constrained affordability could become stretched. Indeed, average wages have continued to decline in real terms even though employment growth has been fairly robust in recent years.

‘Nevertheless, while house price growth has picked up, at a national level prices remain around 7% below their 2007 peak. Moreover, typical mortgage servicing costs remain modest by historic standards thanks to the ultra-low level of interest rates. A typical mortgage payment for a first time buyer is currently equal to around 29% of take home pay, in line with the long term average,’ said Gardner.

Brian Murphy, head of lending at the Mortgage Advice Bureau (MAB), beleives that driving this steady procession is an increased sense of consumer confidence and willingness to enter the market, as Help to Buy and Funding for Lending schemes make mortgage finance more accessible.

But he does not think this will lead to a house price bubble. 'House prices are rising from a low starting point and the national average is still 7% lower than the 2007 peak. Regional variations mean that the dizzying heights of London house prices do not necessarily apply to the rest of the country, painting a far less fatalistic picture than many would suggest,' he said.

'With mortgage rates at historic lows, it’s unsurprising that consumers are grabbing the opportunity to jump on the property ladder with both hands. However, we must ensure that those with low deposits are not left behind at the starting line and that mortgage finance remains accessible and affordable,' he added.

According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), there is renewed vigour in the market, as illustrated in the continuing upward trajectory in the Nationwide index. 'Although there are concerns that a bubble is being formed around London and the South East, other indices confirm that growth is now being experienced in the majority of regions,' he explained.

'Although it will take a while to come into full effect, the Help to Buy mortgage guarantee will provide the market with further impetus, so we expect to see house prices continue to rise until some limiting factors emerge,' he added.

Article Source: http://www.propertywire.com/news/europe/nationwide-house-prices-index-201310318407.html

FREE WEBINAR: “Want to Earn ￡3,000+ a Month Sourcing Property?” (within 6 months) Wed, 6th Nov, 8 PM, Click Here: tiny.cc/B-VickiWusche