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

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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

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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

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

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

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/

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

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.

A Tayside property expert has predicted a rise in local house prices from next summer as the number of first-time buyers increases.

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

House Prices Soar to Highest for Five Years

Statistics have revealed that house prices in England is on their highest level for five years as revealed on this article by Iona Bain of FT Adviser on September 18th, 2013.

The house price index for England, released by the Office for National Statistics on Tuesday, shot up to 182.4 in July, a 0.9 per cent increase on the previous peak in January 2008. 

The index for the whole country rose by 3.3 per cent, compared to the 3.1 increase in the 12 months up to June 2013. 

However this overall figure masked major variations in places such as Scotland, where house prices fell by 2 per cent, and in Wales, where the drop was smaller at 0.7 per cent. 

The rise in England’s house price index was mainly driven by a 9.7 per cent increase in London, the only place in the UK where property values have outpaced inflation. 

The southeast and East Midlands, which saw property price rises of 2.6 per cent and 2.4 per cent respectively, also contributed to the new high. 

If the southeast and London were omitted from the statistics then the overall rise in prices would be 0.8 per cent, the ONS stated. 

Last week the Royal Institute of Chartered Surveyors called for the Bank of England to impose a cap, or ‘speed bump’, on house price inflation. 

The southeast and East Midlands, which saw property price rises of 2.6 per cent and 2.4 per cent respectively, also contributed to the new high. 

If the southeast and London were omitted from the statistics then the overall rise in prices would be 0.8 per cent, the ONS stated. 

Last week the Royal Institute of Chartered Surveyors called for the Bank of England to impose a cap, or ‘speed bump’, on house price inflation. 

But Steve Davies, co-manager of the Jupiter UK Growth Fund, described the suggestion as “unworkable”. 

He said: “We believe the FPC is most likely to consider a cap on loan-to-value ratios. Nobody wants to go back to the days of 110 per cent LTV mortgages that were being issued by providers like Northern Rock before the financial crisis. Perhaps we will see an explicit ban on LTV mortgages of 95 per cent or more.” 

Industry figures have also called for more housebuilding to dilute a potential bubble. David Brown, commercial director of LSL Property Services, said: “Having enough houses to go round is the only real way to keep prices from spiralling too far and will be vital in creating a sustainable housing market that is accessible to all.” 

Research published by the Building Societies Association this week showed that only 2 per cent of the British public believed the housing market was in danger of “overheating”, with just 7 per cent of Londoners sharing this concern. 

One-fifth of consumers said the market was in recovery mode, while a similar number described it as stable. 

Claire Walsh, IFA for East Sussex-based Pavilion Financial Planning, said: “The problem is simply that there isn’t enough housing out there, and demand will keep going up and outstripping supply if the government does not take action.”

People also flock to London for their careers, with huge pressure on rental and housing stock. 

“By contrast, I would make a loss if I were to sell a property I own in Dundee, given that I bought it in 2007 when the market was peaking.”

Article Source: http://www.ftadviser.com/2013/09/18/mortgages/mortgage-data/house-prices-soar-to-highest-for-five-years-a8Zhc9Z1qawYRhmabQVicP/article.html

Are We Becoming a Nation of Estate Agents?

This engaging article by 4 news on September 12th, 2013 shows the latest trend on profession chosen by a number of Brits and turned out that many of them joined the real estate industry.

Once voted as the second least trusted profession, a record number of Brits are now becoming estate agents. Channel 4 News asks what's behind the sudden trend - and if it's here to stay.

They may be among the most hated of all professions. But new figures from the Office for National Statistics (ONS) show that an additional 77,000 people joined the real-estate industry over the last year - one in every four jobs created last year.

This means that 562,000 people are now employed as estate agents or property developers - the largest number since records began in 1978 - and they show there has been "an upturn in market activity and confidence so far this year which has given estate agents the confidence to invest in people," said Miles Shipside, commercial director at Rightmove.

Joshua Rayner, managing director at Rayner Personnel, told Channel 4 News: "The last 12 months have been the busiest I've seen in more than ten years of property recruitment, reflecting the growing volume of property transactions.

"I've noticed estate agents are valuing their staff more than perhaps they did in the past. Keen to capitalise on the opportunities, today they're looking to offer long-term career paths and really reward their top performers."

On the up?

Chancellor George Osborne said austerity measures pursued by the government are leading to economic recovery. Treasury officials believe the economy has entered the "next phase" of recovery - only months after economists feared the UK was set to plunge into an unprecedented triple-dip recession.

However, despite the upturn and feel good factor, Mr Shipside told Channel 4 News that "the market is still recovering from the heavy blows of the last five years.

"Estate agents, like many other businesses, cut staffing heavily in a bid to become more streamlined when the credit-crunch hit.

"We have not yet seen a marked increase in the number of new branches opening - just the number of people employed by existing branches, and, even then, both branch and staff numbers are down on historic levels."

House prices rise

In June house prices rose by 3.1 per cent year-on-year to £242,000 on average, marking the strongest annual upturn in the last six months.

On a monthly basis, values rose by 0.4 per cent, equalling the increase recorded in May. House prices in London have soared by 8.1 per cent year-on-year, but growth remained patchy, and in Scotland and Northern Ireland prices edged down by 0.9 per cent and 0.4 per cent respectively.

Wales recorded the strongest annual house price growth in the UK, at 4.3 per cent, while England saw a 3.3 per cent rise.

The Royal Institution of Chartered Surveyors (Rics) report said house prices are rising at their fastest pace since their 2006 peak last month.

The number of would-be buyers looking to enter the market in July also saw the strongest growth in four years, in further signs that a recovery is "round the corner", the survey said.

'Vigilant'

But Bank of England Governor Mark Carney has also urged caution. He told the treasury select committee the bank remains "vigilant" over a house price bubble, as prices and demand are pumped up by government stimulus schemes.

It could recommend banks set limits on how much households can borrow, he said.

"Overall, my view is that the announcement has reinforced recovery," he said. "There has been a change in the pace of activity without a question. This is welcome but we should not be satisfied with it."


Article Source: http://www.channel4.com/news/estate-agents-homes-housing-bubble-mortgage

Housing: Foreign Players in the Property Game

This interesting article by Hannah Kuchler of FT on September 9th, 2013 reveals foreign property buyers interest in purchasing new homes in London would cause problems to the domestic would be homeowners.

Foreign property buyers may be looking beyond London’s most pristine streets to purchase in less desirable parts of the capital but some estate agents argue they are not distorting the housing market for one simple reason: most live and work in London. As mansions on the streets of Kensington have been bought up by Russians and Italians, and even new-build developments in less prestigious areas are being advertised in Singapore and Hong Kong, some have feared a new housing bubble fuelled by foreign money.

Tales abound of whole blocks of flats left empty by arm’s-length investors awaiting capital return, but estate agents insist that changes in the market simply reflect the international metropolis that London has become. Yolande Barnes, director of residential research at the estate agent Savills, argues that blaming foreign investors for fuelling a boom in London house prices is “verging on the xenophobic”.

“There’s a lot of money in London, whether it is from UK nationals or foreign nationals, and simply not enough housing,” she says. “It’s true that the middle class has never been able to live in Mayfair. But ‘Mayfair’ has now become a lot bigger – and includes Bermondsey.”
She says the number of foreign buyers – about 38 per cent of purchasers of prime London property overall – is close to the 35 per cent of Londoners who are born overseas. As few are predicting the mass departure of migrants, analysts do not think the bottom is likely to drop out of this market any time soon.

The housing charity Shelter says the UK is building half of the 250,000 homes required each year to meet rising need. A shortage of housing has meant the proportion of homes in the capital owned with a mortgage dropped by 18 per cent in the decade to 2011, while private renting rose by 63 per cent, according to census data.

Some in the property market do worry that the surge in overseas buyers causes problems for domestic would-be homeowners.

“It is fantastic that London has this magnetism, but the reality is that prices have skyrocketed and are, for many locals, simply out of reach,” says Charles McDowell, an estate agent specialising in prime London property. “It has existed at the top end of the market for a long time, but the overseas interest in the mid and low market housing is relatively new.”

Liam Bailey, global head of residential research at Knight Frank, the estate agents, says foreign buyers might be looking beyond traditional areas such as Kensington and Chelsea precisely because they live and work in the city. The eurozone crisis has drawn more European professionals to London to develop their careers or businesses, he adds. “This is especially noticeable in areas like the City fringe and the Southbank – areas which were not on the radar of wealthy foreign buyers a decade ago.”

Foreign buyers are more dominant in the new-build market, purchasing nearly three-quarters of new homes in central London. Most of these are advertised at overseas events in places such as Singapore and Hong Kong before being offered to UK buyers, according to research from Knight Frank.

But the new-build market is a small section of the whole, about 20 per cent of all transactions in 2012, and buyers do rent out the flats they purchase, says Savills’ Ms Barnes. “It seems to be a popular notion but if the lights are out at 8pm it is because the residents are out in London enjoying themselves or working long hours – not because they are empty properties.”

Mark Prisk, the housing minister, warns not to “throw the baby out with the bathwater” when talking about foreign buyers. He says money from foreign buyers willing to buy off-plan helps developers get new schemes built – which leads to a greater supply of housing for everyone. “It is a mistake to think if we bar people from abroad from investing in housing, this will help. All it will do is it will never get off the ground.”

For Henry Overman, a professor of economic geography at the London School of Economics, there is a simple explanation for London’s house prices: you just need to “do the maths”. “In the [2011] census the population went up by 4m but we built 1.4m homes in a decade,” he says, adding that the trend was seen outside London where there were far fewer foreign buyers. “In southern Manchester, property prices are pretty high relative to incomes, which is put down to a supply constraint and domestic demand ... prices are high in most successful places in Britain.”

While few dispute that there is a shortage of housing in London, some argue there are areas of the market that appear overheated. Analysts at Fathom Consulting, the research and consultancy company, say valuations of prime central London property are more vulnerable. The price of a typical property in the most expensive parts of London is 6.5 times the national average – up more than 20 per cent in the year from mid-2012.

Danny Gabay, director of Fathom Consulting, says prices of high-end central London property are more driven by global equity prices and currency flows than house prices in the rest of the UK. He believes that the withdrawal of quantitative easing by the US Federal Reserve is the biggest threat to house prices in the most expensive central London areas, which he thinks are about 10 per cent overvalued. 

“The gradual withdrawal of monetary stimulus by the world’s central banks risks removing one of the key supports to global asset prices, including prime central London,” he says.

But owners of some of London’s most prestigious properties could put their faith in the new governor of the Bank of England, according to Mr Gabay. If Mark Carney can convince markets that policy tightening in the UK remains a “very distant prospect”, prices could just about stay steady, he says. 

Article Source: http://www.ft.com/intl/cms/s/0/a222aba8-18f8-11e3-bdb6-00144feab7de.html#axzz2eMmdwLqY

UK’s Flagship Funding for Lending Scheme Boosts Property Market

Funding for Lending scheme provided a strong foundation for growth in the property market in which mortgage borrowers in the UK are benefiting from as revealed on this August 2nd, 2013 article by the Property Wire.

The latest figures from the Bank of England shows that net lending by banks and building societies participating in the Funding for Lending Scheme increased by £1.6 billion in the second quarter of 2013.

The biggest net lenders between March and June this year were Nationwide, Lloyds, Barclays and Virgin Money, the Bank of England said.

The reaction for the home lending industry is positive. Paul Hunt, managing director of Phoebus Software said mortgage lenders’ progressive attitude has helped boost the market as their willingness to lend through the provision of innovative products is helping first time buyers.

‘In particular banks have used the Funding for Lending scheme to allow more competitive mortgage rates and by providing higher loan to value mortgages which has resulted in a significant jump in first time buyers loans recently,’ he explained.

‘The revival in first time buyer numbers demonstrates not only the underlying buyer demand, but that lenders have pushed the market forward to unlock this demand. Further relief for banks and building societies has been found in the scheme, as it has provided lenders with the means to drive growth in mortgage lending,’ he added.

According to Brian Murphy, head of lending at the Mortgage Advice Bureau (MAB), said it has also helped mortgage costs come down.  ‘The success of the Funding for Lending Scheme’s has been clearly demonstrated by banks and building societies boosting lending and reducing costs, with benefits of cheaper funding rife in the mortgage market,’ he pointed out.

He explained that since the start of the scheme average fixed rate mortgages have fallen by at least one percentage point across two, three and five year deals, while total product numbers have soared to over 10,000 for the first time in five years.

‘Yet as mortgages rise in number and fall in price, it’s been borrowers with sizeable deposits who have reaped the greatest rewards. In the past 12 months the typical purchase loan to value (LTV) has actually fallen slightly for homebuyers, stifling improvements in market access for those with smaller savings pots,’ he added.

‘As FLS enters the third quarter of 2013, we hope to see lenders extend the benefits of falling funding costs to higher risk sectors, combating the risk of rising house prices locking out a larger proportion of potential buyers,’ he also said.

Article Source: http://www.propertywire.com/news/europe/uk-propety-lending-boost-201309028185.html

Renting Cheaper Than Buying in London, the South East and Scotland

According to this interesting article by Nicole Blackmore of The Telegraph on August 31st, 2013 renting is cheaper for first-time buyers in London especially in South East and Scotland than buying property.

Inflated house prices mean mortgages are less affordable than renting for many, even with a 20pc deposit. 

It is cheaper for potential first-time buyers in London, the South East and Scotland to continue renting than to purchase property thanks to rapidly rising prices.  

New research from mortgage lender Santander shows inflated house prices in London mean potential first-time buyers would need to find an additional £478 a month to buy, sparking fears that more people will be priced out of the market.

The average monthly mortgage repayment for first-time buyers in the capital is £1,342, compared to the average monthly rent of £864.

Data released by the Council of Mortgage Lenders this week showed first-time buyers in London are having to stump up a record £64,000 average deposit just to get on to the property ladder.

In the South East the average first-time buyer would have to pay £56 more a month to buy a property than rent, with this figure rising to £84 in Scotland.

However, renters living outside these three areas who have a 20pc deposit could save an average of £1,740 a year if they buy their own property.

The average monthly rent in the UK, excluding London, the South East and Scotland, is currently around £480 compared to monthly repayments of £335 for the average first-time buyer – a saving for homeowners of £145 a month.

The research into typical first-time buyer properties found the average price across the country, outside of London, South East and Scotland, is £85,955. This means that a first-time buyer applying for an 80pc loan-to-value mortgage would require a deposit of £17,191.

Phil Cliff, director of mortgage marketing at Santander UK, said: “When we first conducted this research in 2010, London was the only UK location where it was cheaper to rent than buy. Now, a demand for housing and rising house prices has seen both the South East and Scotland join its ranks.” 

Article Source: http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10274296/Renting-cheaper-than-buying-in-London-the-South-East-and-Scotland.html

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Only 32% of Sellers Drop Price of House

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

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

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

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

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

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

But seller confidence remains patchy, indicating a regional divide.

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

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

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

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

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

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

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