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UK Residential Property Prices Only Increased By 0.5% Last Month

UK Residential Property Prices Only Increased By 0.5% Last Month

Residential Property Prices Only Increased By 0.5% Last Month 

New data released by Hometrack shows that residential property prices only increased by 0.5% during May 2014, less than previous price rises recorded in the three previous months, suggesting a slowdown in property sales and price growth.

The data shows that the proportion of UK regions recording property price increases during May had fallen to just 42%, down from the 50% recorded in March and April 2014.

While property prices may have continued to rise in London, there has been an overall slowing in the rate of growth, with property prices only increasing by 0.6% in May, compared to the 0.8% average increase over each of the previous six months.

The main growth in London is in lower priced areas of the capital that are perceived as offering better value for money, however, central London prices only increased by 0.2% in May. 

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UK PRS Landlords Expect Tenant Demand To Increase

UK PRS Landlords Expect Tenant Demand To Increase

42% Of UK PRS Landlords Plan 2014 Rent Increases

According to the latest survey by specialist house share website, Spareroom.co.uk, 42% of UK private rented sector landlords expect to increase rental prices over the next 12 months and of those some 26% are planning to increase rents by more than 3%, which is significantly higher than inflation.

In their latest Rental Index, Spareroom revealed the average cost of a double bedroom in a shared house increased by 4.5% in the final quarter of 2013, reaching a new average of £507 (GBP) per calendar month.

Room rents in London also saw a rise in prices, with an increase of 2% over the same time frame, meaning the average cost of a double room in a shared house in the nation’s capital is now at an average cost of £676 (GBP) per calendar month.

Whilst some landlords plan to increase rental prices, 58% of Spareroom’s Rental Index respondents stated that they will not be raising rents and 5% of UK PRS landlords claimed that they intend to reduce rents during 2014. 

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Rightmove Think London Property Prices Are Unsustainable

Rightmove Think London Property Prices Are Unsustainable

London Property Prices Increase
More Than 10% In October

Average UK property prices increased by 2.8% across the country in October, however property price rises in London are going through the roof and are unsustainable, according to property portal Rightmove

London property prices increased by £50,484 (GBP) equivalent to a 10.2% increase in October, after two consecutive monthly falls in the price of properties marketed.

Property prices in the Capital had fallen by -2.8% and -1.5% in August and September respectively, and the double digit price increases reported in October has analysts worried about the volatility and sustainability of the London property market.

The huge rise in London property prices has been attributed to corresponding factors;

  • Lack of supply of residential properties coming to market
  • Overseas investment in new build properties by foreign property investors

October’s strong recovery means London property prices are now 5.6% or £28,852(GBP) up on July’s all-time high of £515,379 (GBP), pushing the year-on-year increase in London to +13.8% or £66,161(GBP).

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UK Property Prices Rise Most in Six Years

UK Property Prices Rise Most in Six Years

Residential Property Prices Continue To Increase

UK residential property prices have increased by 0.4% in May 2013, the biggest monthly increase since May 2007, as, according to Hometrack Ltd, a shortage of available residential properties boosted average property values in London.

Average residential property prices in England and Wales have seen a gradual increase in value during the last six months with property prices increasing gradually, while London property prices have jumped 0.9% over the same timeframe.

Demand for residential property in the capital has surged 15% in the past six months alone, while supply of available properties has fallen 0.6%.

Richard Donnell, Director of Research at Hometrack said, “The impetus for rising house prices is originating almost exclusively from London and the South East. Elsewhere housing market conditions are improving gradually, with prices trending slowly upwards.”

The Government initiative to ease the strict lending conditions set by lenders has improved the overall health of the UK property market but the Funding for Lending scheme needs to be backed by more solid initiatives.

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Interest Only Mortgages Are A Ticking Time Bomb

Interest Only Mortgages Are A Ticking Time Bomb

Over 1 million landlords and homeowners with interest only mortgages could face financial difficulties when reach the end of their tenure and they have to pay them off, according to the Financial Conduct Authority (FCA).

The FCA estimates that around half of the 2.6 million or so UK property owners with interest only mortgages, which represents about a third of all UK mortgage holders, will not have savings or other funds to cover the final bill.

With these mortgage holders only paying enough to cover the monthly mortgage interest on the amount borrowed, the average shortfall is £71,000 (GBP) per person, according to FCA research.

The FCA, the successor of the Financial Services Authority (FSA) as the sector’s watchdog, commissioned research to give a clear indication of what borrowers face when mortgages mature between now and the year 2041.

Market research firm GfK NOP questioned 1,103 interest only mortgage borrowers to consider how prepared they were to repay their loans.

The study found that 37% of borrowers with an interest only mortgage faced a shortfall in their plans to pay back the lump sum of the home loan, based on their own calculations.

But the FCA believes that many people have seriously underestimated the severity of the financial problem and believe the true percentage to be around 48% of all residential property owners with interest only mortgages will face a shortfall.

The vast majority of interest only mortgages were taken out by property investors and residential homebuyers before the financial crash, according to Martin Wheatley, Chief Executive of the FCA, who stated: “It’s just that people were optimistic about the future. My advice to borrowers is not to bury their head in the sand. This report is a call to action.”

The interest-only mortgage time bomb is a serious problem for property investors without an exit strategy and potentially terrifying for homeowners who have no means in place to repay the capital of the original loan.

The media have already stirred up a fervour of anguish with overemphasised coverage on the negative aspects of taking out an interest only mortgage, almost as if they are acting in the interests of the mainstream mortgage lenders attempting to get property owners to switch to repayment mortgages immediately.

The media coverage suggests that interest-only mortgages are a disaster waiting to happen for property investors and residential homeowners with at least 60,000 borrowers facing capital repayments by 2020 without any means of being able to pay back the loan and another 260,000 facing the same financial crunch over the next 30 years.

Graham Lock of House Network said that the FCA is guilty of scaremongering, stating: “People use interest-only mortgages to get on the ladder and they can choose to switch to a repayment option at any time once it becomes affordable. Wage inflation will take care of most of this added with the fact that most of us will work until we’re 70 means there is plenty of time to switch to repayment in the future.”

Executive Director of the Intermediary Mortgage Lenders Association (IMLA), Peter Williams, added: “By confirming that nine in every ten interest-only (IO) mortgage borrowers have a repayment strategy in place, the FCA’s research should put an end to misguided reports of a mis-selling scandal when the market boomed between 2002 and 2007. Having said that, as both the Experian report for the FCA and the GfK report shows, there are issues for the industry to deal with.”

Weak Economy Gives 

International Property Investors Green Light

Weak Economy Gives International Property Investors Green LightThe surge in Central London property values has failed to deter overseas property buyers who are still actively purchasing available residential accommodation.

Ironically it is the weakness of Sterling (GBP) that has made residential property in the UK capital attractive to international property investors, helping to fuel strong demand for residential property in London from foreign investors, according to one residential estate agent.

As we previously reported in February international property investors are already targeting high rental yields from rental properties in the UK (read full story here)

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A new study by UK mortgage lender Halifax reckons that optimism is picking up among property investors, with more investors predicting a boost in the fortunes of UK residential property market than those predicting a dramatic fall in UK property values.

Just under 30% of those surveyed by the Halifax feel that UK property prices will increase in the next 12 months, up from nearly 28% from October 2011.

22% say UK property prices will decline, a fall of 8% on October 2011’s figures.

However, most people are predicting a year of stability in the UK housing market rather than any major changes, with 66% not expecting to see a rise or fall in property prices of more than 5%.

With the real possibility of an influx of overseas investors as the Olympics draw closer, optimism is high with many hoping that the hosting of the games in the nation’s capital will give the UK property market a much needed boost. Meanwhile, people in the North East are the least hopeful of price rises.

Halifax Chief Housing Economist, Martin Ellis, said: “The modest improvement in consumer confidence in the outlook for house prices reflects the resilience of the UK housing market over recent months in the face of a weak economic recovery and the deterioration in the outlook for both the UK and global economies.”

The UK residential property market currently puts house buyers firmly in the driving seat, according to almost 60% of those moving home.

Figures from property website Rightmove, show that 6 in 10 of those planning to move home feel that property buyers are in a far more commanding position over property vendors.

Rightmove’s survey suggests that 30% of the country feels that UK property prices will decline in the coming 12 months and just 25% believe property prices will be higher by February 2013.

With the Olympic Games set to be hosted in London this summer, UK capital residents appear to be less negative about the housing market’s future prospects, with 1 in 3 London residents predicting that property prices in the nation’s capital will be higher than they currently are this time next year.

Director of Rightmove Miles Shipside, said: “Our survey shows that sellers in the South should have more reason to be confident than those in the North, though even within regions there is evidence of variations in confidence in local micro-markets.”

UK Private Rented Sector Survey by MyPropertyPowerTeam.co.uk

UK Buy To Let Landlords Want More Properties But Are Unable To Get Mortgage Finance

A new survey of Landlords in the Private Rented Sector (PRS) has discovered that only 20.2% ( 1 in 5 landlords) in the UK, were able to add fresh residential properties to their existing residential portfolio stock during 2011.

Property value growth expectations and the prospect of a regular income were the key drivers behind the property investment trend and only the lack of available mortgage finance, and/or financial know how, held back even more landlords from adding to their property portfolios.

Out of all the landlord insurance customers interviewed, 85% predicted that residential property values in the UK would remain the same for at least the next 12 months and private sector residential rents were expected to be considerably higher in 2013.

London led the way, after 87% of respondents said they believed that rents in the UK capital would continue to rise throughout 2012.

The data is from the PRS Landlord Survey carried out among subscribers by MyPropertyPowerTeam.co.uk during the last quarter (Q4) of 2011.

The data also showed that 59% of landlords have been investing for more than 5 years would hold onto their property until around the year 2025, however, the average holding period for UK PRS properties was around 15 years.

The appetite from property investors in the UK PRS for additional property assets is still extremely strong and the UK rental market is seeing demand outstrip supply as private tenants seek quality PRS accommodation. The current rental trend shows little sign of abating at present, despite all the UK Governments welfare reforms.

The UK Private Rented Sector is currently buoyed up by a growing population that is spending longer periods than ever living in rented homes, similar to the continental norm.

Landlords are making use of insurance products to protect their property assets and even Rent Guarantee insurance to ensure regular monthly rental income.

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Will Britain’s decision to stay out of the EU pact mean to the struggling UK property market?

The UK property market has been kept afloat by property investors seeking to put their money in a safe place as the Euro crisis worsened.

Last month, the number of properties ‘under offer’ rose by 21% compared to November last year. As a result, the overall total value of properties under offer also rose, by 19%, compared to the previous November. The number of properties under offer in November also rose on the previous month, by 9%. Other Estate agents have also been seeing frenetic activity that goes well beyond a normal boom.

There is always the last-minute dash to conclude sales before Christmas, however agents have noticed an increased level of inquiries from overseas buyers who are coming to the UK and London in particular, over the Christmas period to source properties.

The international interest in London property continues to boom and is anticipated to continue to grow in 2012. However, history shows that the property market can turn on a sixpence – or in this case, a euro.

No one knows what to make of it, although if Europe turned to dust, the London housing market would simply carry on booming.

What happened in Brussels last Friday could impact on the London property market, or Mr Cameron’s comments could have a wider impact on the UK property market.

It is possible that international buyers won’t like our attitude and will focus their attentions elsewhere, but the UK property market is still the safest place to invest, especially with the current Buy To Let Boom and strong rental yields.

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