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.
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.
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!
Interview with David Pollock
For an insider view on the current state of the property market take a look at this five minute interview with David Pollock, Managing Director of Greene & Co and Urban Spaces, to get his take on the market today. David talks about both Urban Spaces and Greene & Co, market changes, the use of portals and what makes Greene & Co different from other agencies.
