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Prime London property benefits from two and a half years of stable growth

Some excellent news for property owners came this month with figures released by Savills, the international property firm, showing the longest period of growth in the market in London since the firm began its prime property index in 1979. This growth over the last two and a half years of 10 percent is very encouraging and is matched by a an annual price growth across all prime London properties of 4.7% and a growth of 2.2% in the first three months of 2013 alone. This compares very well with the 0.8% growth recorded in the final quarter of 2012.

There has been sustained interest in prime London properties from both overseas buyers and wealthy London residents – 34% of buyers in the period came from abroad. Stamp duty increases have kept the price growth in check somewhat and there is much less volatility in the London markets than in some otherwise comparable areas abroad, making investment in London property still a very sound choice. In the bracket above £5 million, the prices realised now are over 33% higher than before the downturn in 2008, with over two thirds of sales being to overseas buyers.

Prime locations within London are not just central areas, with St John’s Wood, Islington and Canary Wharf showing increased prices, driven largely by young renters from the higher salary brackets making them particularly good investment prospects. South West London properties at the higher end are doing even better than the central London average, with prime properties in Hammersmith, Fulham, Wandsworth and Richmond now being 17.6% above their former peak. It is estimated that this has been largely driven by an injection of over £3 billion of financial sector bonus payments has found its way into the property market of this part of London over the last ten years, making it one of the best areas for prime property values in the whole of London.

Valuations in the UK Housing Market are at Their Highest in 6 Years

Some more good news has emerged for the housing market in recent times. According to research released by Connells Survey & Valuation, there are now more property valuations taking place across the UK than there have been since 2007, when the financial crisis began.

The last six months have seen an increase in valuations every month, and they are now up virtually a quarter when compared to the same time in 2012. Traditionally there are more valuations taking place as we move into spring than at other times of the year. However the corporate services director of the company that produced this research, John Bagshaw of Connells Survey & Valuation, believes we could see an even better picture this year. He spoke of the possibility of a “sustained take off” compare with the usual situation for spring.

While valuations overall are looking better than ever, the housing market as a whole is looking more promising as well. First time buyers are finding mortgages that are more affordable than they have been in the past, thanks to more competition and the possibility of much lower interest rates for the foreseeable future. The government’s efforts to make it easier for people to buy their own properties have also been assisting in boosting the figures – another spot of good news for the UK housing market.

March has also proved to be an encouraging month for those who are moving home. The figures for valuations in this part of the market are up by an impressive 28% since February this year. This has led to March being deemed the best month for home movers since way back in 2007. This is an encouraging picture and we hope it continues for many months and years to come.

Good news for English and Welsh house prices according to LSL Index

LSL Property Services has just released its latest research into property prices in England and Wales. According to the data released, there has been an average increase of 3% in the last twelve months.

However upon delving further into the information it would appear the average price is being skewed slightly by London house prices, which are part of the overall figure. London prices are healthier than those seen elsewhere. While the overall increase amounts to £6,700 when London prices are included in the figure, this amount drops drastically to £1,117 when they are removed from the data.

Many people are now looking at the new Funding for Lending plan to see how this will affect the housing market in forthcoming weeks and months. Many people are struggling to buy property due to a mix of struggling to find deposits and trying to get mortgages. Hopefully the new scheme will lessen the effect of this in the long term.

David Newnes is LSL Property Services director, and he believes the housing market is now free of the consequences of the financial crisis that occurred a few years ago. It has some distance to go before it becomes truly healthy and housing prices recover significantly. However, the figures issued by the company indicate housing prices are continuing their upward trend.

Some areas – the most predictable ones such as London – have seen higher increases in the average property prices in recent times. However, prices have been increasing cautiously in general as well. Since last August they have been rising on a monthly basis from 0.1% to 0.5% each month. These may be small figures but they are heading in the right direction. This bodes well for the future as the housing market continues to recover.

IMLA Asks Government to Ensure Help to Buy Scheme Won’t Cause Housing Market Confusion

One of the highlights in the recent Budget was the announcement of the Help to Buy scheme. This was designed to help those who are struggling to get onto the housing ladder. This scheme will create a fund worth £12, provided by the government, to help underwrite billions of pounds worth of mortgages over a three year period. However, the IMLA – the Intermediary Mortgage Lenders Association – is worried that the scheme could end up causing confusion. This may be created by complicating the competition and creating a set of double standards in the marketplace.

It is perhaps not surprising to learn there will be a set of rules applicable to the loans provided by the Help to Buy scheme. However, the concern from the IMLA is that the rules could be too constricting. This would result in too few people being able to take advantage of the new scheme. An “accessible scheme” was demanded by the executive director of the association, Peter Williams. The scheme should also be simple to understand and not overburdened by excessive rules, regulations and red tape. He also suggested capital relief was a good idea.

Another concern that came up was focused on the need for an exit strategy. If this was not in place before the scheme came into force, it could lead to problems if the scheme did not pan out in the way it was hoped. Mr Williams pointed out that a similar scheme had been in use in Canada for many decades. The new scheme could turn out to be a long running one in the UK too if it is a success. However, this could not be relied upon, necessitating the need for an exit strategy at an early stage, so something was planned.

RICS Survey Reveals Highest UK Property Sales in Three Years

There was good news with regard to the survey of the housing market undertaken by the Royal Institution of Chartered Surveyors today. The survey, published on 9th April, noted that chartered surveyors were selling more properties during the first three months of the year than they had for the three previous years.

The survey also showed that housing prices across the UK have been relatively stable for the past few months. However, it would appear there is still a lack of houses coming onto the market for those who are looking to buy. Clearly, there is no easy solution to the problems in the housing market, although the results of this survey are optimistic. Nearly one fifth of the surveyors who took part in the survey stated they felt sales would increase in the next three months. The early indications for the next twelve months look quite positive as well.

Of course, these are early days and it is still too soon to talk confidently of a recovery in the housing market. However, it is good news to find encouraging figures in the RICS survey. It is also thought that the government’s efforts to ensure banks start offering better and more accessible mortgages are starting to filter through to the housing market.

There is also a story to be told in relation to the regional housing market situation. For example, the West Midlands have seen the best rise in sales in the first three months of the year. Perhaps surprisingly, this area has even beaten the London housing market, which fell into second place. It will be interesting to see how these results are followed up in the next three months, as the housing market continues to develop in the future.

Property prices in England and Wales increase just 1% in last year

Professionals in the property industry have been left disappointed by recent statistics which show that the average house price in England and Wales only increased by 0.2% in February compared with January, and are only up 1% year-on-year. For the UK overall, the average house price now stands at £162,606.

However, there is a mixed picture when looking at various parts of the UK, with the London property market outperforming the rest of the country as usual. Over the last 12 months in the capital average property prices have increased by 6.3%; the largest rise in the country. The largest monthly increase in the UK was in Wales, where the average went up 3 .6%.

On the downside, average property prices in Yorkshire and The Humber decreased by 0.9% over the last 12 months, whilst prices in the South West saw the most significant drop over the last month, falling by 0.8%.

The total number of house sales has also decreased, based on the most recent figures available. In December 2012, a total of 53,860 properties were sold, a decrease of 15% compared with December 2011, when 63,600 properties were sold.

However, the total number of properties sold for over £1 million in England and Wales rose by 19% in December 2012 compared with December 2011 - 598 and 501 respectively.

These figures clearly show a big difference between the London property market and the rest of the country, but it is hoped that the recently announced government Help to Buy scheme will be able to redress the balance somewhat by encouraging purchases outside of the capital. However, this scheme has plenty of work to do with sales outside of London having dropped by 7% in the last quarter.

Recent research shows UK tenants would need 23 years to save for average mortgage deposit

New research from Scottish Widows shows that based on current average savings, UK tenants would need some 23 years to save up the cost of an average mortgage deposit to buy their own home. The company says that these figures go to show that the property market is becoming completely out of reach for many renters, as they are also 50% more likely to have no savings at all.

The research also discovered that 35% of tenants currently saved no money on a monthly basis and so realistically have absolutely no chance of putting together a mortgage deposit to buy their own home at some point in the future.

This survey was the seventh annual Scottish Widows Savings and Investment Report and contacted more than 5000 adults in the UK. On average, a private tenant in the UK saved £2,180 over the last year and this is where the figure of 23 years comes from - it would take this amount of time to save the average deposit of £50,845 at this rate. Although the average deposit for a first-time buyer is much lower at £27,984, at this rate of saving a tenant would still need 13 years to reach this figure.

Only 29% of tenants said that they are actively saving money for the purpose of buying their own home in the future. This would suggest that more than 7/10 have no immediate plans to buy a property, or indeed save for one at all.

Further emphasising the difficulty tenants are finding in saving for a mortgage whilst also paying their monthly rent, 72% of private tenants said that it is the cost of their rent that prevents them from saving. 21% of respondents said that they are only saving for the short-term, and should they find themselves out of work, their savings would only support them for a short period of time.

Remortgaging and Home approvals fall in the UK

Despite a growth of 0.1% in mortgage lending in February, new approvals for home purchases fell again year on year, as remortgaging increased by 17% compared with January. The remortgage loan to value level was the highest for four years at 62.1%. This increase in remortgaging applications does worry the head of lending at the MAB (Mortgage Advice Bureau) Brian Murphy though because although there 800 more remortgages approved than the previous month, mortgages for purchases fell by almost twice as much. He feels that the incentivised funding being made available for the banks to draw on is only going to be a partial solution, as the banks continue to have very strict lending criteria, effectively excluding a large percentage of potential borrowers and thus keeping the housing market static at best.

The Intermediary Mortgage Lenders Association executive director Peter Williams is no more optimistic, saying that falling numbers of approvals year on year show that there is a real need to apply the Funding for Lending Scheme to the non-banking sector. There had been hopes that there would be an increase in mortgage lending for 2013, but this is far from the case, with a fall in lending of £1.4 billion (representing 7,500 fewer approvals) compared to the same period in 2012. The banks’ strict criteria is again put forward as a partial reason for this fall and Mr Williams believes that opening access to the FLS would help to prevent the situation worsening.

David Newnes of LSL Property Services hopes that the new Help to Buy initiative will help, despite a roll out not planned to begin until 2014. By reducing the need for an unfeasibly large deposit, the scheme should help many more buyers onto the property ladder who had been unable to get a mortgage because they had too little saved up.

UK home prices rising at swiftest rate since March 2010

UK Home Prices increased by 0.3% in March, but for some this figure doesn’t represent the actual picture because in some areas of the country, for example, London, the price rise is over three times as much at 0.7%. The figures released on 25 March 2024 by the property analytics firm Hometrack, show that prices dropped in only one region, the North East, when compared to January and February. Around a fifth of all regions have seen a rise in prices, with East Anglia seeing the next biggest rise after London at 0.2%. These rises are still comparatively small and some areas saw no rise at all, but the trend is at last considered to be upwards.

Not only are UK home prices starting to rise, but demand is also outstripping the supply, although by a smaller margin than in the same period of 2012. The time a home spends on average in London is now a fraction under five weeks, which is the lowest level for five and a half years – in October 2007, a home typically sold in London after 4.4 weeks but in the years between, the time has often been far longer. Across the Midlands and Northern regions, the average time that a house takes to sell is 11.8 weeks.

UK home prices

Not only are waits for buyers getting shorter, the percentage of properties achieving their asking price is also increasing; in London the figure stands at 95.3%, which is the highest percentage since August 2007 and in the South in general 94.3% of houses reach their asking price, the highest since July 2010. Hometrack are hopeful that new government initiatives such as Funding for Lending and the new Help to Buy proposals in this month’s budget will help UK home prices and generally improving market to continue on the upward trend.

Quality of new UK homes to be measured with new quality assurance scheme

All new homes being built in the UK will soon have the option of being surveyed for quality and durability. The Build Offsite Property Assurance Scheme (BOPAS) is to be launched at the Royal Institution of Chartered Surveyors next week and will be a completely new way of looking at new builds and ensuring high quality is paramount.

Rather than targeting or vilifying builders and developers, the scheme will provide a new way for them to prove the quality of the work carried out, which may help them to sell the properties on completion.

The scheme is also intended to show that new builds are suitable to be the subject of mortgages and that high quality materials have been used.

The scheme is a joint venture between the Royal Institution of Chartered Surveyors, Lloyds Register, Build Offsite and Building LifePlans (BLP). Also part of the process was active consultation with many major UK Banks along with the Building Societies Association and the Council of Mortgage Lenders.

Some of these organisations will also play a part in carrying out the scheme, with durability and maintenance assessments being carried out by Building LifePlans and the process of accreditation handled by Lloyds Register. Furthermore, an online database will give surveyors, valuers and lenders information regarding properties in the scheme. Information about accredited manufacturers, designers, building systems and constructors and will also be available.

The timing of the new scheme coincides with the current need for a large increase of new build homes to cater for the population growth of the UK. It is also believed the scheme will have a positive impact on the number of developers building energy efficient homes which will reduce energy costs and benefit the environment.

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