London rents at an all time high
There has never been a better time to let property in London. Average London rents have broken through the £1,000 a month barrier for the first time.
They rose by 6.9 per cent to £1,006 in the year to this month as tenants locked out of the mortgage market scrambled to secure a place to live.
David Newnes, estate agency managing director of LSL Property Services, said: “Tenant demand continues to reach higher peaks - and there isn’t enough rental property coming onto the market to match it. It’s not unheard of for rental properties to be let within a day of coming onto the market.
“There’s no sign of a let-up. Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer.”
In some cases, gazumping and sealed bids - normally limited to home purchases - are occurring.
Agents say they have also see a sharp rise in the number of corporate tenants looking for accommodation in central London for senior executives.
Amelia Greene, residential lettings partner at Cluttons, said it had recently let a 6,500 square foot house in Onslow Gardens in South Kensington for almost £10,000 a week.
At the other end of the scale, tenants on housing benefit will have caps on their claims imposed next April forcing an estimated 82,000 London households to move as they will no longer be able to afford the rent, according to London Councils.
Housing charity Shelter said 22 per cent of 18- 34-year-olds have had to move back in or continue living with their parents because they can’t afford to rent or buy a home.
All time low for Bank of England interest rates
There has now been no change to the Bank rate for two years, despite the fact that inflation is currently twice the Bank’s target rate.
Bank of England interest rates staying at all time lows is great news for existing borrowers with loans outside of their initial rate as it keeps Standard Variable Rate low (this is the rate mortgages automatically move to after their initial period).
Unfortunately, mortgage companies are predicting rate rise this year and have therefore increased the rate for new borrowers and will continue to do so. If an individual is thinking of purchasing a property it is (purely from a mortgage point of view) beneficial to do it sooner rather than later.
There are strong indications that BBR will rise in May but no indication of by how much for now.
Source: Saul Conway – AS Financial
Is now the right time to sell?
There are many conflicting reports on the future of the London property market. The 2011 Rightmove House Index Report shows the beginning of 2011 to be much the same as 2010 with a slight increase in the house prices in the London area. However The Guardian reported on Saturday that house prices are to fall by 20% over the next two years.
Smart vendors are contacting us now for valuations on their properties to have a good idea of where they stand in the market should they decide to sell before the market dips.
Homeowners should brace themselves for a “short, sharp shock”, with house prices set to fall by up to 20% over the next two years as rising unemployment and public spending cuts take their toll, experts are warning.
“Prices are trending slowly downwards at the moment, but our view is that this is really the start of the second leg of the correction, and we expect prices to fall significantly further,” said Paul Diggle, property economist at consultancy Capital Economics.
He calculates that the average home remains up to 20% overvalued by historical standards – and with the mortgage market still tight and unemployment rising, 2011 could bring prices crashing back to earth.
The impact of any downturn is likely to vary across the country. Miles Shipside of property website Rightmove said prices in each area would be driven by the fortunes of the local population, with the worst-hit places likely to be those where public sector layoffs are worst.
“Forced sales will be the issue, so it depends on the make-up of your area – the level of unemployment and financial hardship,” he said.
The gentle alarm has been sounded, and for those who are already pondering the idea of selling their property – now really might be the best time,
For more information contact your local Greene & Co.
Source
http://www.guardian.co.uk/money/2011/feb/19/house-price-fall-20-per-cent
Rising swap rates put pressure on fixed deals
A number of lenders have pulled their existing fixed rates as the cost of funding has gone up. Although the Base rate has today stayed at 0.5%, the conclusion that we can draw from this is that a rise will be happening sooner rather than later. For all your clients who are dithering about putting offers in, this is invaluable information as we could be coming to the end of historically cheap access to borrowing.
Rising swap rates put pressure on fixed deals
Recent increases in swap rates are starting to force up the price of fixed rate mortgages, say industry experts.
Since November 2010, two-year swap rates have increased from 1.31% to 1.72% and five-year swaps have gone from 2.18% to 2.82% in the same period.
Last week two-year swap rates were 1.62% and five-year swaps 2.75%.
David Hollingworth, director of communications at London & Country, says: “Swap rates have fluctuated over the last two years, but of late they have been on an upward trend.
“We have already seen evidence of lenders increasing their fixed rate mortgages because of swap rates and the sharper fixed deals are under threat.”
But Hollingworth adds that although swap rates play a part in lenders’ pricing they also look at other factors when setting fixed rates.
Alan Cleary, managing director of Precise Mortgages, says two-year swap rates have risen substantially in the past few months as a rise in the base rate looks more likely.
He says: “We are getting closer to a rate rise with every base rate decision and this is starting to affect the price of swap rates.
“Fixed rates, especially two-year rates, are on their way up and borrowers should look to fix now.”
Industry consultant Mehrdad Yousefi says high inflation is worrying the money markets and pushing up swap rates.
But he says: “Over the next four weeks fixed rate deals will cost more but it remains to be seen whether this will continue throughout the year.
“In the second half of the year when the base rate starts to rise, swap rates will start to predict the next base rate could start to rise and products will certainly become more expensive.”
Halifax raised the rates on its two-year fixes by 0.2% today and blamed the increased cost of funding and swap markets.
Are property prices coming down?
Since the abolishment of HIP’s some interesting things have been happening in the property market. According to Rightmove “the market is starting to turn due to increased competition among sellers and fewer potential buyers”. This could be a great time to buy, as each day more properties are coming on the market and prices are also dropping. Our Managing Director, David Pollock had this to say about the current market situation.
“The London market is a different market place to the whole of England. London is in a bubble and therefore it is always a little dangerous to base house buying and selling strategies on whole of UK indexes. Having said that the abolishment of HIPS in the long run will be great for the London and UK market but without doubt there is going to be a period of adjustment. Will prices in London go up, go down or stay the same. Is now a great, average or poor time to buy or sell? The experts don’t and cant seem to agree. My advise is see property firstly as a home and secondly as an investment, its when you do it the other way round that things start to go wrong.”
We will have to wait until the emergency budget is announced to see the true effect on the market as many fear that capital gains tax could be increased but we wont find out until everything is revealed tomorrow.
House Prices Rising
The housing market seems to be going from strength to strength at the moment. Asking prices have risen for 11 consecutive months with and increase last month of 0.7%. The average entry level price for a house is approximately £155,242. If you are looking to buy a house for the first time now could be a good time to get hunting as prices are going to continue to increase, and although stamp duty does not apply on purchases under £250,000 for first time buyers they still need to have a significant deposit to get into the market.
An article from find a property ““The building blocks are present for a sustained recovery, but we do need lenders to step up to the plate and free the purse strings for first-time buyers. That will not only help the buyers themselves, but also the market overall and the wider economy.””
It could also be good to look into a property for investment purposes as there is currently a huge demand for rental properties in many areas of London, which means there are people out there looking right now! But this is not something you should enter into lightly. A huge amount of research is required to find the right investment property however there are many avenues which can help you along the way. Getting your finances in shape is also one of the keys to getting started with property investments, as depending on how long you keep the property expenses will vary.
To read more about the topics above click on the link below
http://www.findaproperty.com/displaystory.aspx?edid=00&salerent=0&storyid=23504
Stamp Duty – good news for first home buyers
Good news for people who are looking to buy their first home this week, with the government announcing that first home buyers who purchase property under £250,000 will be exempt from paying stamp duty. This is a great benefit for first home buyers and it will be a great saving which they could possibly now add to their deposit or it will simply allow more people who may not have previously been able to enter the market to purchase a home of their own.
David Smith from the Times commented that “Alistair Darling’s Robin Hood coup in last week’s budget was the two-year stamp-duty holiday for first-time buyers of homes up to £250,000, paid for by a permanent increase in the duty to 5% on £1m-plus properties. Clearly, there will be mixed feelings about this.
Despite the skepticism, stamp-duty holidays work, as previous experience has shown. Provided the bureaucracy can identify who is a genuine first-time buyer — a divorced wife or husband who was previously a joint owner will not count — this should give the market a boost, which is why the housing industry has welcomed it.”
Stephen Brown, Director of our Crouch End shop has said that “if we start seeing banks lend more then this will be a nice saving. Hopefully the stamp duty saving should be good for first home buyers as this will give more money to their deposit.”
Either way you look at it this will help more people purchase their first home which is a good thing!
Findaproperty.com Rental Index
“Rental market strengthens further as stock levels plummet by 10%”
Some interesting news from Findaproperty.com again this month on the state of the rental market. Being found in sought after areas such as West Hampstead and Maida Vale, Greene and Co’s rental threshhold has held itself steady, but with properties flooding to the market more and more Landlords have had to accept lower rental offers. So, although the rental market remained fairly stable, prices dropped substantially just to secure a good tenant.
Director of Findaproperty.com Michael O Flynn comments: “The national rental market is looking much more healthy than it did six months ago. The clear out of stock is continuing in fairly dramatic fashion as the sales market improves and a seasonal surge in demand helps mop up excess supply, particularly at the lower end of the market.
“Consequently, rents are on a clear upward trend and long term buy-to-let landlords in London and the South East in particular have reason to feel optimistic that the market is making a sustained recovery.”
The stock of rental properties on the market dropped sharply in October (-10.2%) - the most significant monthly fall in the history of the index - bringing supply back to the level last seen almost a year ago.
Rents rose marginally (+0.1%) to £830 pcm in October - the sixth consecutive month of stable or rising prices - remaining 3.8% lower than a year ago.
Gross yields dip from 4.56% in October as rising house prices put pressure on rental returns
London and the South East lead the rental market recovery while the majority of regions suffer falling rental values
Could this be the start of some better news for landlords trying to rent their properties?
The FindaProperty.com house prices and affordability index
Some interesting news from FindaProperty.com’s October affordability index - house prices are rising, but affordability for first time buyers is deteriorating…
“It’s never easy to get on the housing ladder but until the summer we had been seeing a gradual narrowing of the affordability gap. This has led to a definite pick-up in first time buyer activity as people have taken advantage of improved affordability and the stamp duty exemption on properties priced under £175,000. With prices now rising and affordability tightening again it becomes even more important that the Government retain this beyond its end date of December 31st.” Michael Flynn, Director of FindaProperty.com offers his opinion on the findings.
