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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

Carney Warns on Property Bubble

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

Noisy Neighbours are a Turn Off for UK Home Buyers

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

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

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

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

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

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

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

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

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

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

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

Do Wind Turbines Impact Property Values in the UK?

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

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

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


Concerns about UK property values

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

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

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

What will the government do?

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

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

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

Financial Reasons to Invest in London Property

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

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

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

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

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

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

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

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

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

Only 32% of Sellers Drop Price of House

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

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

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

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

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

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

But seller confidence remains patchy, indicating a regional divide.

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

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

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

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

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

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

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