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
Showing posts with label house buyers. Show all posts
Showing posts with label house buyers. Show all posts
Friday, 11 October 2013
Tuesday, 8 October 2013
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.
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
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.
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
Friday, 4 October 2013
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
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
Friday, 20 September 2013
Property Sales Pick Up But Market Needs First-Timers
A new prediction shows a rise in local house prices from next summer as first-time buyers increases according to this article by The Courier.co.uk on September 19th, 2013.
Lindsay Darroch, head of property at Blackadders, is also confident of sustained recovery by summer 2015.
He said: “I think we will continue to see an improving housing market with activity levels rising. From the summer of 2014, I would expect to see a rise in property prices as the number of first-time buyers increases.
“The consequence of this will be a greater willingness from lenders to fund developers, which will have a positive impact not only in the housing market but on the economy as a whole.”
Mr Darroch said that market activity in the past 12 months has increased by about 20% to 25%.
He said: “Although we have seen an increase in the number of closing dates, prices have stabilized, not increased.
“Sellers are now more realistic about their price expectations and this has contributed to improving the Scottish housing market.
“This realism has been driven by an appreciation that, if they are moving up in the property market, the price paid or received is not as important as the cost of change.”
Article Source: http://www.thecourier.co.uk/news/local/perth-kinross/property-sales-pick-up-but-market-needs-first-timers-1.132593
A Tayside property expert has
predicted a rise in local house prices from next summer as the number
of first-time buyers increases.
He said: “I think we will continue to see an improving housing market with activity levels rising. From the summer of 2014, I would expect to see a rise in property prices as the number of first-time buyers increases.
“The consequence of this will be a greater willingness from lenders to fund developers, which will have a positive impact not only in the housing market but on the economy as a whole.”
Mr Darroch said that market activity in the past 12 months has increased by about 20% to 25%.
He said: “Although we have seen an increase in the number of closing dates, prices have stabilized, not increased.
“Sellers are now more realistic about their price expectations and this has contributed to improving the Scottish housing market.
“This realism has been driven by an appreciation that, if they are moving up in the property market, the price paid or received is not as important as the cost of change.”
Article Source: http://www.thecourier.co.uk/news/local/perth-kinross/property-sales-pick-up-but-market-needs-first-timers-1.132593
Monday, 16 September 2013
First Time Buyers Advised To Focus On Affordability
First-time buyers are advised to make sure to look beyond the
property rate even if higher loan-to-value mortgages are back as
revealed in this article by TheGuradian on September 15th, 2013.
First-time buyers are flooding back to the housing market as economic conditions improve, alongside fears that low mortgage rates won't last and a fresh housing bubble will push house prices beyond reach.
Mortgage lenders reported a 41% increase in first-time buyer numbers in July, while the National Association of Estate Agents says they account for a quarter of house purchases in August, the highest proportion since July 2010.
However, getting a deposit remains a stumbling block for the majority of those keen to buy. The latest figures from LSL Property Services show that the number of first-time buyers who were able to buy without help from their parents fell to 41% in July, from 51% in April.
House price rises in some areas of the country will lead some to fear that they cannot save at the same rate as prices climb, says David Hollingworth of broker London & Country. "If prices continue to rise, the deposits they have worked hard to amass could be eroded as a percentage of the purchase price."
High loan-to-value (LTV) deals such as Northern Rock's 125% mortgage, viewed by many as fuelling the appetite for credit ahead of the financial crisis, are not back on the shelf. However, lenders have started to offer more deals at higher LTVs, and there are plenty of options for borrowers with small deposits.
According to Moneyfacts.co.uk, there are 409 deals for borrowers with 5% and 10% deposits, compared to 321 in August 2012, and some of the rates on offer at 90% LTV are very competitive.
The lowest rates are available on deals fixed for two years. On Friday, Chelsea building society launched a two-year fixed-rate mortgage at a rate of 3.54% for borrowers with a 10% deposit, with a fee of £1,675. HSBC also offers a two-year fix, at 3.59% at 90% LTV with a £1,499 fee.
However, Hollingworth favours Skipton building society's two-year fix at 3.99% at 90% LTV with £160 cashback. "This deal is a good all round package with a low rate, no fee and cashback on top," he says. "There are lower interest rates on offer from other lenders, but the fees can be high, which will add a chunk to the overall value." Borrowers who can stretch to a 15% deposit could consider the two-year fix from Market Harborough building society at a rate of 2.79% and with a £995 fee. Chelsea also offers a two-year fix at 2.94% at 85% LTV.
A two-year fixed rate could appeal if you want to keep your monthly repayments down, but bear in mind that when that period ends you will move on to your lender's standard variable rate, which is likely to be higher. By that point interest rates may also have risen.
To cement your repayments for longer, there are several five-year fixes, although rates are higher. Nottingham building society offers one at 4.39% at 90% LTV with a £299 fee, while Chelsea offers one at 3.84% with a £1,545 fee. Tesco Bank has a deal at 3.69% with a £1,495 fee, and the Post Office has a rate of 3.75% with a £995 fee, both at 85% LTV.
There is still very little for borrowers who can only stretch to a 5% deposit, Hollingworth says, and rates are relatively high. Newcastle building society, for example, has a two-year fix at 5.99% at 95% LTV with a £195 fee.
Brokers warn that borrowing large amounts at record low mortgage rates may not be wise.
Adrian Anderson, director of broker Anderson Harris, says: "The important thing is not to overstretch yourself. So ask yourself: can you afford the deposit and the mortgage payments? Have you opted for a fixed rate to protect yourself against interest rate rises, if you think they are on the cards?"
Yet before buyers reach the stage of getting a mortgage, a lack of housing supply could cause problems. David Newnes, director of LSL Property Services, says: "Pressure is growing on the government's plans to lend a helping hand to the house building sector, as it needs a bigger lift. There's a lack of new homes being built, and as the number of buyers rises in line with the growing population, competition is getting stronger for the supply of properties."
Article Source: http://www.theguardian.com/money/2013/sep/15/first-time-buyers-focus-affordability
First-time buyers are flooding back to the housing market as economic conditions improve, alongside fears that low mortgage rates won't last and a fresh housing bubble will push house prices beyond reach.
Mortgage lenders reported a 41% increase in first-time buyer numbers in July, while the National Association of Estate Agents says they account for a quarter of house purchases in August, the highest proportion since July 2010.
However, getting a deposit remains a stumbling block for the majority of those keen to buy. The latest figures from LSL Property Services show that the number of first-time buyers who were able to buy without help from their parents fell to 41% in July, from 51% in April.
House price rises in some areas of the country will lead some to fear that they cannot save at the same rate as prices climb, says David Hollingworth of broker London & Country. "If prices continue to rise, the deposits they have worked hard to amass could be eroded as a percentage of the purchase price."
High loan-to-value (LTV) deals such as Northern Rock's 125% mortgage, viewed by many as fuelling the appetite for credit ahead of the financial crisis, are not back on the shelf. However, lenders have started to offer more deals at higher LTVs, and there are plenty of options for borrowers with small deposits.
According to Moneyfacts.co.uk, there are 409 deals for borrowers with 5% and 10% deposits, compared to 321 in August 2012, and some of the rates on offer at 90% LTV are very competitive.
The lowest rates are available on deals fixed for two years. On Friday, Chelsea building society launched a two-year fixed-rate mortgage at a rate of 3.54% for borrowers with a 10% deposit, with a fee of £1,675. HSBC also offers a two-year fix, at 3.59% at 90% LTV with a £1,499 fee.
However, Hollingworth favours Skipton building society's two-year fix at 3.99% at 90% LTV with £160 cashback. "This deal is a good all round package with a low rate, no fee and cashback on top," he says. "There are lower interest rates on offer from other lenders, but the fees can be high, which will add a chunk to the overall value." Borrowers who can stretch to a 15% deposit could consider the two-year fix from Market Harborough building society at a rate of 2.79% and with a £995 fee. Chelsea also offers a two-year fix at 2.94% at 85% LTV.
A two-year fixed rate could appeal if you want to keep your monthly repayments down, but bear in mind that when that period ends you will move on to your lender's standard variable rate, which is likely to be higher. By that point interest rates may also have risen.
To cement your repayments for longer, there are several five-year fixes, although rates are higher. Nottingham building society offers one at 4.39% at 90% LTV with a £299 fee, while Chelsea offers one at 3.84% with a £1,545 fee. Tesco Bank has a deal at 3.69% with a £1,495 fee, and the Post Office has a rate of 3.75% with a £995 fee, both at 85% LTV.
There is still very little for borrowers who can only stretch to a 5% deposit, Hollingworth says, and rates are relatively high. Newcastle building society, for example, has a two-year fix at 5.99% at 95% LTV with a £195 fee.
Brokers warn that borrowing large amounts at record low mortgage rates may not be wise.
Adrian Anderson, director of broker Anderson Harris, says: "The important thing is not to overstretch yourself. So ask yourself: can you afford the deposit and the mortgage payments? Have you opted for a fixed rate to protect yourself against interest rate rises, if you think they are on the cards?"
Yet before buyers reach the stage of getting a mortgage, a lack of housing supply could cause problems. David Newnes, director of LSL Property Services, says: "Pressure is growing on the government's plans to lend a helping hand to the house building sector, as it needs a bigger lift. There's a lack of new homes being built, and as the number of buyers rises in line with the growing population, competition is getting stronger for the supply of properties."
Article Source: http://www.theguardian.com/money/2013/sep/15/first-time-buyers-focus-affordability
Thursday, 29 August 2013
Carney Warns on Property Bubble
This article of the Belfast Telegraph.co.uk reveals Gov. Carney's warning to policymakers of another house price
rise risk and pledge to take response if he has to, to recover the
property market.
His warning came as he also sought to reassure that interest rates were set to stay at record lows for at least three years as part of an effort to shore up his flagship "forward guidance" policy following a poor reception in the City.
In his highly anticipated first UK public speech, Mr Carney insisted: "Rates won't go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely."
The guidance, set out earlier this month, contained a series of caveats that have prompted fears that the Bank rate might rise sooner than expected - sending bond yields up.
But Mr Carney said: "We do not intend even to consider raising it before unemployment falls to 7%."
He added the Bank stood ready to launch more economy boosting measures if future rate expectations begin hindering the recovery.
Mr Carney, who succeeded Lord King at the helm last month, also unveiled new plans to bolster bank lending by another £90 billion.
Facing mounting criticism over stringent demands for lenders to bolster their financial reserves, Mr Carney said all banks and building societies that meet the new capital requirements will be allowed to reduce asset holdings elsewhere on their balance sheets. This will reduce holdings by £90 billion once all eight major banks and building societies meet the capital rules.
"That will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy," he told business leaders at a CBI event in Nottingham.
Article Source: http://www.belfasttelegraph.co.uk/news/local-national/uk/carney-warns-on-property-bubble-29534154.html
Bank of England governor Mark Carney has warned policymakers are "acutely aware" of the risk of another house price bubble and vowed to step in and take action to rein in Britain's resurgent property market if needed.
The new central bank boss said lenders could be asked to restrict borrowing terms or even be forced to hold more cash on their balance sheets to dampen down an over-heated property market.His warning came as he also sought to reassure that interest rates were set to stay at record lows for at least three years as part of an effort to shore up his flagship "forward guidance" policy following a poor reception in the City.
In his highly anticipated first UK public speech, Mr Carney insisted: "Rates won't go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely."
The guidance, set out earlier this month, contained a series of caveats that have prompted fears that the Bank rate might rise sooner than expected - sending bond yields up.
But Mr Carney said: "We do not intend even to consider raising it before unemployment falls to 7%."
He added the Bank stood ready to launch more economy boosting measures if future rate expectations begin hindering the recovery.
Mr Carney, who succeeded Lord King at the helm last month, also unveiled new plans to bolster bank lending by another £90 billion.
Facing mounting criticism over stringent demands for lenders to bolster their financial reserves, Mr Carney said all banks and building societies that meet the new capital requirements will be allowed to reduce asset holdings elsewhere on their balance sheets. This will reduce holdings by £90 billion once all eight major banks and building societies meet the capital rules.
"That will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy," he told business leaders at a CBI event in Nottingham.
Article Source: http://www.belfasttelegraph.co.uk/news/local-national/uk/carney-warns-on-property-bubble-29534154.html
Wednesday, 14 August 2013
British House Price Inflation Jumps to 2006 Levels - RICS
This news on August 13th, 2013 by Reuters showing the survey chimes with data from mortgage lenders showing returning confidence in the property market.
(Reuters) - British house prices are rising at their fastest pace in seven years, according to an industry survey on Tuesday which may add to concerns that government lending incentives are creating a new property bubble.
The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance jumped to +36 in July from +21 in June and just +5 in May. That was the best reading since November 2006 and one of the sharpest improvements over a three-month period since the survey began in 1978.
The survey chimes with data from mortgage lenders showing returning confidence in the property market. Halifax last week reported annual house price inflation jumped to 4.6 percent in the three months to July and was likely to rise further in the coming months.
Government data released on Tuesday showed that efforts to boost the housing market were proving popular with buyers. It said 10,000 new homes had been reserved by buyers since April under the first phase of its Help To Buy scheme.
Britain's central bank indicated last week that it was likely to keep interest rates at a record low for at least another three years. Combined with government initiatives to lower the cost of mortgage finance and to help people onto the property ladder, that could sustain the upward momentum in house prices for some time.
Prices are now rising in all regions of the country, suggesting confidence is rippling out from London and the South East, RICS said.
The balance on a national basis turned positive in March.
In another sign that market confidence is returning, the balance measuring new buyer enquiries rose for a sixth consecutive month to 53, its highest level in four years.
The strength of the property market will fuel criticism of the second phase of the government's housing stimulus scheme, due to come into force next January, which will offer state mortgage guarantees.
The International Monetary Fund has already warned the scheme will push up prices rather than increase supply, but finance minister George Osborne insists the scheme will go ahead and run for three years, as planned.
The Bank of England will also be watching house prices closely. Governor Mark Carney sounded fairly relaxed about property inflation when he gave his first press conference last week, but the bank's commitment to keep rates at record low is contingent on inflation expectations and financial stability remaining anchored.
(Reporting by Christina Fincher and William James; Editing by Catherine Evans)
Article Source: http://uk.reuters.com/article/2013/08/13/uk-britain-property-rics-idUKBRE97B0XK20130813
(Reuters) - British house prices are rising at their fastest pace in seven years, according to an industry survey on Tuesday which may add to concerns that government lending incentives are creating a new property bubble.
The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance jumped to +36 in July from +21 in June and just +5 in May. That was the best reading since November 2006 and one of the sharpest improvements over a three-month period since the survey began in 1978.
The survey chimes with data from mortgage lenders showing returning confidence in the property market. Halifax last week reported annual house price inflation jumped to 4.6 percent in the three months to July and was likely to rise further in the coming months.
Government data released on Tuesday showed that efforts to boost the housing market were proving popular with buyers. It said 10,000 new homes had been reserved by buyers since April under the first phase of its Help To Buy scheme.
Britain's central bank indicated last week that it was likely to keep interest rates at a record low for at least another three years. Combined with government initiatives to lower the cost of mortgage finance and to help people onto the property ladder, that could sustain the upward momentum in house prices for some time.
Prices are now rising in all regions of the country, suggesting confidence is rippling out from London and the South East, RICS said.
The balance on a national basis turned positive in March.
In another sign that market confidence is returning, the balance measuring new buyer enquiries rose for a sixth consecutive month to 53, its highest level in four years.
The strength of the property market will fuel criticism of the second phase of the government's housing stimulus scheme, due to come into force next January, which will offer state mortgage guarantees.
The International Monetary Fund has already warned the scheme will push up prices rather than increase supply, but finance minister George Osborne insists the scheme will go ahead and run for three years, as planned.
The Bank of England will also be watching house prices closely. Governor Mark Carney sounded fairly relaxed about property inflation when he gave his first press conference last week, but the bank's commitment to keep rates at record low is contingent on inflation expectations and financial stability remaining anchored.
(Reporting by Christina Fincher and William James; Editing by Catherine Evans)
Article Source: http://uk.reuters.com/article/2013/08/13/uk-britain-property-rics-idUKBRE97B0XK20130813
Thursday, 25 July 2013
West Midlands: Where Help to Buy is Booming
This article by TheGuardian on 23th July, 2013 can benefit first-time buyers in procuring newly-built homes.
Regeneration-led developments at former car factories contribute to success of scheme for acquiring newly-built homes
More than a quarter of demand for homes under the Help to Buy scheme for acquiring newly built homes has been in the West Midlands. The area has accounted for 1,873 out of 6,899 reservations across England. Mark Evans, head of new homes in central England at estate agent Knight Frank, says Help to Buy has opened up the lower end of the market, where people most struggle to raise deposits: "It has had a lot of PR, it has had such a lot of profile and it has helped unlock the marketplace to a certain extent."
Help to Buy has also taken off in this region because the Midlands has plenty of regeneration-led developments at former car factories, according to Margaret Snook of Orbit, the country's largest Help to Buy agent, which operates in the West Midlands and East Anglia. "There doesn't seem to be a shortage of properties in most areas," she says. "In Birmingham, the Black Country, Coventry, there are big [development] sites."
The mortgage guarantee scheme has universal appeal, she adds. "It is not a particular income bracket or type of person. It is families, it is single people, it is couples; people on lower incomes, people on higher incomes." Her impression is that the scheme is heavily weighted in favour of first-time buyers, although there is a strong pull for existing homeowners, who are keen to move. "It is helping people to be more mobile."
This means that aAverage property prices of £130,432 in Wolverhampton look set to rise, but Snook says it is not yet possible to judge whether Help to Buy is driving up prices. "Whether that is directly linked to Help to Buy or rising confidence, it is too early to say."
Author: Jennifer Rankin
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