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Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

UK property price optimism among private rental sector landlords and residential property owners has dropped to the lowest recorded level for 18 months after buy to let mortgage lending in January was reported to be decidedly sluggish.

Traditionally, the UK property market generally experiences a slow start that incrementally builds to a summer buying frenzy before reaching another plateau and then a further period of increase followed by a gradual easing at the end of the year.

The latest Halifax House Price Index (HPI) found that UK property prices increased by just 2% in January 2015, reaching a new UK average property price of £193,130 (GBP).

Combined with figures released by the Department of Communities and Local Government, showing a slowdown in the number of new homes being built, and it is clear why landlord and residential property owners optimism has fallen.

60% of landlords and property owners, surveyed for the lender’s latest housing market confidence tracker report, expected the average property price to be significantly higher in 12 month’s time.

This means that house price optimism has fallen by 10 points from 62 to +52, the lowest level of consumer confidence since June 2013, when 52% of private rental sector landlords and residential property owners expected a large rise in property prices.

So what’s different?

  • In June 2013 UK inflation was at 2.9% compared to the current 0.3%
  • Employment was just over 30 Million compared to today’s figure of 30.9 Million
  • Mortgage lending levels were at £15 Billion (GBP) compared to the current £17 Billion (GBP).

Despite the fact that the UK’s Gross Domestic Product (GDP) for 2014 increased by 2.6% and all members of the Bank of England’s (BoE) Monetary Policy Committee (MPC) voted to hold interest rates at 0.5%, the dip in confidence levels over UK property prices reflects public concern over the UK economy in general.

Craig McKinlay, mortgages director at the Halifax said that “More than half of consumers still believe UK property prices will be higher than they are now in a year’s time; however optimism has continued to weaken. Despite this we’re now seeing a return to the seasonal trend for house price activity”.

But he pointed out that of more concern are the figures from the Department of Communities and Local Government showing a slowdown in the number of new homes being built. ‘It’s widely acknowledged that the UK needs an increase in the amount of new housing being built,’ said McKinlay.

‘The Lloyds Banking Group Commission on Housing targeted 2 to 2.5 million new homes built by 2025 new homes to be built before 2025. If we are to address demand the increase in new homes coming onto the market needs to be sustainable,’ he explained.

Council of Mortgage Lenders Give Reasons For Optimism In 2013

CML Give Reasons To Stay Positive About UK Property Market In 2013

CML Give Reasons To Stay Positive About UK Property Market In 2013

The UK Council of Mortgage Lenders (CML) are more positive about the UK housing market and the wider economy than they were a year ago, despite economic headwinds and downside risks.

A key reason is that mortgage lenders currently face few funding pressures, in part reflecting the governments funding for lending scheme.

Property purchasing activity was more robust than expected in the last quarter of 2012, on the back of better mortgage availability and more realistic property pricing, and the CML expect this to continue over the coming months.

2013 started on a more positive note than a year ago, even though the UK economy has barely grown.

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The forces that brought about the financial turmoil and economic mess around the world are still present and the majority of developed nations are not going to be able to figure out a quick solution…and sometimes the proposed plans for economic recovery don’t look all that promising.

The media keep spreading doom and gloom with daily news reports and depressing financial statistics, but is it the real, true, honest picture?

The honest answer is…..NO!

Property investors have been forced to use creative strategies, since the property crash in 2007/8, in order to profit from property as banks stopped lending, investment mortgages were withdrawn and access to alternative finance dried up.

Investor attitudes were labelled as falsely positive by many sceptics but the determination remained and only those with a firm belief, sound finances and solid investment strategies continued to prosper.

However, a renewed optimism has swept the nation following an uplifting and inspirational summer of achievement, with Queen Elizabeth II’s Diamond Jubilee, the European football championships, the 2012 London Olympics and Paralympics taking place and the effort and determination to succeed demonstrated by Team GB and athletes from around the world.

There is renewed hope emerging from the shadow of the last 4 years and a sense of purpose has returned to the UK Buy-To-Let market.

In recent weeks there has been a dramatic change in attitude towards UK property investment, despite the Bank of England’s quantitive easing policy and the raft of Government welfare reforms, banks are beginning to lend again, (although they are being quite selective at present). There has been an increase in the number of Buy-To-Let mortgage products hitting the market and property investment in the UK is up!

Even speculative investors are attempting to get in on the action, without any real idea of what they are doing. They realise that there is profit in property and their intention is to replicate the strategies of successful investors as property bargains abound.

Why?

Because life goes on! 

If you want to stay ahead of the game be concerned about YOUR own economy:

  • How will you cover future wants and needs? You know; University education for the children, your own retirement and life in general!
  • Can you hedge your own greatest financial asset – your job – and be assured it will always be there?
  • Will your salary grow substantially over time?
  • Can owning property replace your current income?
  • Is financial freedom really your goal?

These are questions millions of ordinary people, not investing in property, are asking, but the institutional answers are not really that clear or reassuring. 

Savvy property investors have already planned their investment strategies and have allowed for contingencies and have an exit strategy in place BEFORE spending a single penny.

If the current economic state is going to become the new normal, it doesn’t matter for property investors who have invested in themselves and have learned to earn!

Successful property investors realise that the only economy to be concerned about is their own and they are the ones that will always come out on top. 

Investors are finding ways of protecting and even growing their incomes, assets and plans for the future despite the fragility of global economies, including developing properties into HMO’s (Houses of Multiple Occupation), aquiring expert knowledge on Government proposals for welfare reforms including how to get LHA and Housing beneft payments for tenants direct from local authorities and seeking educational courses or investment forums with successful property investors who run workshops to help property investors.

Optimism among residential property owners is increasing with more than one third expecting residential property prices to be higher by this time next year, despite the uncertainty surrounding the UK housing market, according to the latest survey by Rightmove.

46% of homeowners regard current residential property values to be fair and reasonable according to the consumer confidence survey, showing that the British public now have a more optimistic outlook for the UK property market, than in recent years

Concerns stated by the public in the survey include

  • Mortgage-related issues
  • Mortgage availability
  • High deposits
  • Being able to find a suitable property

The survey of 40,000+ home movers showed that some 6% worried about being able to meet mortgage payments and the same proportion were also concerned about property values changing.

Despite the slump in the UK property market over the last three years, public home ownership ambitions remain undaunted by the UK’s double dip recession.

Rent arrears fall again in 2012

More UK Landlords Using Rent Guarantee Products

Private Rented Sector (PRS) rent arrears dropped in February with 9.3% of all rent late or unpaid at the end of the month, down from 10.7% in January.

With household bills increasing, UK unemployment still rising and the whole country still struggling to avoid a double dip recession as a result of the Eurozone crisis, together with the government’s welfare reforms and public sector belt tightening, there hasn’t been a great deal of optimism around, especially from landlords.

However, figures released by LSL property services show that UK landlords have a little less to worry about, with the amount of rent arrears and late payments falling again.

Either private sector landlords are having an excellent run of good fortune, having tenants who are able, paying the rent in full and on time, or they have become smarter and are now utilising the range of Rent Guarantee products that are currently on the market, to ensure they get paid and their monthly cashflow doesn’t suffer.

Being a landlord and letting a property in the UK means there will always the risk of the tenant not paying the rent, (rent default).

Even the best tenant referencing service cannot predict if a tenant will lose their job and fall on hard times and not be able to pay their rent.

How do landlords cover their expenditure if this happens?

In today’s struggling economic climate, many UK landlords are finding their tenants struggling with rising unemployment and increased bills. Often leading to the rent not being paid and the tenant facing eviction when the amount of rent arrears exceeds 8 weeks.

Recovering arrears can be difficult and costly for landlords, without any guarantee of success.

At Legal 4 Landlords, our Rent Guarantee Insurance will cover landlords against their tenant defaulting or failing to pay the rent.

There Will Never Be A Better Time To Invest In Property

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