Overseas interest in prime central London property market not diminishing

Wednesday, 14 March 2012

Overseas interest in the prime London housing market continues unabated with the new Spring Beauchamp Estates market report showing that Russian and Indian buyers dominate the top end of the market. They are followed by buyers from Europe and the Middle East all looking for homes and investment properties within the capital which is regarded as a safe haven. ‘Whilst a still relatively weak Sterling continues to attract overseas money into London, we do not believe that this is the main driver for investment. With continued uncertainty within the global economy, many are seeing the London property market as a bank, a secure place to park wealth in a tangible and usable asset,’ the report says. ‘As well as the perceived financial security offered by prime London property, the attraction of capital growth continues to bring in new investors, as well as those who are looking to add to an existing London portfolio,’ it adds. The report also shows that over the past year the prime central London has again outperformed both the UK and London benchmarks, with prime postcodes seeing growth of 12.5% in 2011. The most sought after areas were the best performers with Knightsbridge and Mayfair recording growth of 31% and 17% respectively over the course of the year as competition for the best properties intensified.   ‘Buyers within our market are looking to acquire the best properties, preferring turn key newly renovated homes, with few having the time or inclination to renovate or modernise. This is true for both investment and owner occupation,’ the report explains. With overseas money continuing to dominate the market over £10 million, the type of property buyers are looking for has also changed. ‘Many buyers are demanding the facilities, security and levels of specification offered by new developments such as One Hyde Park and The Lancasters. These schemes have broken all price records within their local markets by offering facilities and coveted lateral living spaces which are difficult to find within period homes,’ it adds. UK wide, development of new homes remains challenging, with a significant reduction in new schemes under construction but many developers, facing difficult market conditions outside the capital, have concentrated their efforts on the more buoyant London market.   The results of the latest Crane Survey reported an increase of 40% in homes under construction in London in 2011. However, sites within the prime boroughs remain scarce, with only three schemes over 50 units currently under construction across the whole of Kensington and Chelsea and a further four in the City of Westminster. The report also reveals that whilst overseas money dominates the very top end of the market, domestic purchasers are more prolific in the market below £5 million, many of whom work within London’s financial sector. The South Kensington and Chelsea markets between £2 million and £5 million remain strong with a combination of domestic and overseas buyers.   Traditionally, bonus money has fed its way into the prime London market, with the size of the bonus pot affecting demand and subsequently price growth across prime London. The latest figures from the Centre for Economics and Business Research (CEBR) suggested that bonus money will be 38% lower for the latest financial year 2011/2012, just over a third of the peak in 2007/08. The next financial year is expected to remain flat with peak levels unlikely to return until after 2016.   In parallel to the sales market, there is a shortage in the availability of rental properties in central London. Yet City job losses, lower bonus payouts and continued economic uncertainity have certainly dampened tenants incomes and thus the performance of the sector.   ‘That said, the average rent achieved in prime central London still increased by 3.3% over the course of 2011. This is a simple consequence of the number of tenants looking to rent in prime London neighbourhoods continuing to outpace the amount of new stock coming to the market,’ says the report. This mismatch between demand and supply is more acute for large properties. Average asking rents for properties over 1,000 square feet increased by 4.2% in prime London in 2011, with Belgravia and Knightsbridge recording growth in excess of 20%. ‘Supply of these more spacious properties is being further constrained because many are being sold to investors who are electing to sit on the property purely for capital gains growth, and therefore not making them available to let,’ it adds. This has resulted in scarcity of stock at the very top end of the market with large homes in areas such as Knightsbridge and Mayfair commanding considerable premiums when they do reach the market. The number of properties let which were larger than 3,000 square feet increased by 2% in 2011, with average rents of £5,288 per week.   Chinese buyers, taking advantage of a weaker Sterling, are currently an important source of demand in central London’s new build market. They often purchase apartments at lower price bands than other overseas buyers, especially when buying solely for investment purposes, taking advantage of weak sterling, the report also points out.

Four in ten age…

Four in ten agents say one-third of their homes are over-priced

Monday 2nd April 2012

An astonishing poll of estate agents claims that nearly four in ten believe that property on their books is over-priced.

The claim has emerged in a poll of over 200 agents conducted by review site MeetMyAgent.

The poll was conducted between March 20 and 24 and claims to show that 38% of agents believe that more than 30% of their stock is over-priced.

Almost all the agents quizzed – 93% – say that at least one tenth of the property on their books would benefit from a price reduction, and almost three-quarters (72%) of agents say that the main reason for sellers not lowering their prices is that they are happy to wait for the offer they want.

Three-quarters of agents are seeing more viewings than this time a year ago. However, pricing is a real sticking point, with 43% of agents saying that the gulf between what buyers will pay and what sellers will accept is the main reason for sales not being secured.

Low stock levels are a concern for 85% of agents, with the poll showing that 35% say their stock levels are 30% down on normal levels for this time of year.

Ashley Alexander, director of MeetMyAgent, said: “Although, encouragingly, there are no end of buyers viewing properties, very few are actually committing to a purchase.

“The economic climate is doubtless playing a role in this, but so too is the fact that buyers still feel sellers are asking too much for their properties.

“Because servicing their mortgages remains cheap, sellers can play a long game.”

 

Thanks to Estate Agent Today

House prices to fall despite surprise rise in mortgage approvals

House prices will continue to fall despite a slight pick up in the number of mortgages being approved, economists have warned.

The modest increase ends six consecutive months during which approvals for house purchases had declined.

Just over 48,000 loans were approved for people buying a property in November, up from 47,315 the previous month, according to the Bank of England. Economists had expected a slight fall.

The modest increase ends six consecutive months during which approvals for house purchases had declined. But it is well below the 70,000 to 80,000 approvals regarded as consistent with a stable market.

Despite the improvement in approvals, net mortgage lending for November was just £788m – a decline of almost £300m on October. Net lending is the amount of new credit issued after taking into account repayments and redemptions.

A survey released last month by mortgage lender Nationwide showed an unexpected 0.4pc increase in house prices in December, but over the year as a whole prices have essentially stagnated. Many economists expect modest declines over the course of 2011, but few see a return to the sharp falls of late 2008 and early 2009.

UBS economist Amit Kara said about the approvals: “This is slightly better than expected but these are very low levels suggesting the mortgage market has a long way to go before we can consider it healthy.”

Paul Diggle, an economist at Capital Economics, said: “Mortgage lending remains incredibly low by historical standards. This will continue to weigh on house prices in 2011.

“Given the size of the fiscal contraction and the squeeze on consumer’s incomes, including the increase in VAT, it is difficult to envisage mortgage approvals for house purchase improving noticeably from their current subdued levels in the next year.”

The Bank data came as the number of properties sold at auction in November rose 12pc compared with a year earlier, according to the National Association of Valuers and Auctioneers.

Melfyn Williams, chairman, said: “Now is an excellent time for investors and buy-to-let specialists to invest in property through the auction market, as money is likely to accrue faster than if it was left in the bank.”

Consumer credit fell by £121m in November, compared with a £298m increase in October.

Home Owners Should Prepare For Interest Rate Rises

Homeowners must prepare for a series of interest rate rises to about 5%, a Bank of England official has warned. Paul Fisher, a member of the Bank’s rate-setting Monetary Policy Committee, said officials would like the current 0.5% base rate to rise to a “normalised” level 10 times as big. But, in an interview with The Daily Telegraph, he said “the speed at which that happens is another thing entirely”. Mr Fisher told the paper: “We hope people are aware that interest rates at some point will go up again and that they will head back to a normalised position. “There’s no reason why the pace should be more precipitative. We would only tighten quickly if the strength of the economy did demand it. “So obviously we would not be putting up rates so quickly as to cause that sort of negative reaction. That’s something we can try to anticipate and build in. “So we would put rates up, see what the effect is and then judge how quickly to go.” Asked if the goal was to get interest rates to about 5%, he added: “Yes, but the reaction of people to those changes in rates is part of the process of information that we have to build into our forecasts and policy decision. “It’s not something where we would put rates up and ignore the reaction to it.” Mr Fisher said he did not think a change of either 0.25% or 0.5% was going to trigger a recession. “But what we need to do is to trigger the mindset in people that that’s where rates will eventually go back to,” he added. Minutes of the Bank’s December rates meeting revealed members of the MPC (050540.KQ – news) were split three ways again this month when they left the 0.5% rate unchanged.

UK govt figures show property prices falling

Residential property prices in the UK fell 0.1% in October and have now increased 5.5% over the year, according to the latest house price index from the department of Communities and Local Government.

UK Prices 2010

The average mix-adjusted UK house price was £209,466, not seasonally adjusted, and average house prices were 0.2% lower over the quarter to October, compared to a quarterly increase of 0.5% in July, seasonally adjusted.

The data, based on mortgage completions during the month of October 2010, also shows a widely variable picture on a regional basis. Average prices increased during the year in Wales by 9.1% and in England by 5.9% but were lower in Northern Ireland, down 8.9% and down 0.4% in Scotland.

Prices paid by first time buyers were 3.4% higher on average than a year earlier whilst prices paid by former owner-occupiers increased by 6.3%. The report also shows that prices paid for new properties were 4.4% higher on average than a year earlier whilst prices for pre-owned dwellings increased by 5.6%.

Meanwhile there are no signs that more mortgages are available. The latest figures from the Financial Services Authority (FSA) in its Mortgage Lending Data for the United Kingdom report for the third quarter of the year shows that lending for house purchases accounted for 64% of new advances, the highest percentage in the series and 61% of new commitments.

The total value of outstanding loans though is £1,220 billion, an increase of less than 1% on last quarter. New advances in the quarter totalled £41 billion, 12% higher than in the second quarter but much the same as the amount advanced in the third quarter of 2009.

New commitments totalled £38 billion, 6% down on the previous quarter but again in line with the third quarter of 2009.

There is concern that lack of lending is having a major impact on the UK’s real estate market. According to Charlie Ellingworth, director of Property Vision, the buying agent and subsidiary of HSBC Private Bank the days of automatically selling your house for more than you bought it for are over.

‘November produced some really quite shocking statistics on the mortgage front. Net mortgage lending for September was £112 million. The figure in September 2007 was £10 billion. Even allowing for irrational exuberance and lamentable lending standards in 2007, that is a fall that brings to mind cars and cliffs,’ he said.

‘Gone are the days of 100% loan to value mortgages. Old-fashioned concepts such as deposits are now in vogue again and valuers, even in our market, are subtracting another 10% as an additional cushion, all of which brings to mind stable doors and horses,’ he added.

He also points out that according to the Home Builders’ Federation, the average age of a Briton buying his or her own home without assistance is now 37.

Commuter homes from Waterloo

Ninety million commuters use Waterloo station each year. 

Triggs Lock and cottage on the Wey Navigation, Woking

London Waterloo is the UK’s busiest mainline station: almost 90 million passengers negotiate its congested concourse each year. And for about £500,000, depending on how far they are prepared to travel, commuters can find a smart family home in an affluent commuter town, a pretty village or a market town set among some of the loveliest countryside in England.

Research on the best destinations to be reached from Waterloo, carried out by Savills estate agents, has highlighted Woking, Winchfield and Petersfield as three locations with similar detached property prices but dramatically different lifestyles.

Marcus Dixon, a director of Savills, says Petersfield, at 60 minutes, is “right on the edge of the acceptable commuting distance” to London. But it offers a prime position on the South Downs and quality period homes. “Buyers there are trading proximity to London for views and quality of life. Imminent improvements to the local road network also put the town in line for a price hike next year.”

Waterloo Station

Read more………………  Homes & Property

Article by: Ruth Bloomfield

Properties for sale or rent near Waterloo: 

Estate Agents To Be Licenced ? MMmm Food for Thought

A licence for estate agents has been introduced for the first time in a major push to raise standards in the industry. The licence is launched at the House of Commons today by the National Association of Estate Agents (NAEA).

The NAEA says more must be done to protect consumers from unprofessional agents. A licensed estate agency branch means consumers are guaranteed that at least one agent within that branch is qualified in residential property sales, either through a formal qualification or through length of service in the industry.

Currently there is no barrier to anyone setting up and practicing as an estate agent. There is no legal requirement for estate agents to obtain the new licence, leaving consumers with a clear choice over whether they choose a licensed or unlicensed agent.

 Peter Bolton King, chief executive of the NAEA, said: “Nobody would knowingly get into an unlicensed taxi. However thousands of people are willing to entrust one of most important transactions of their life to people who are not qualified or experienced. We would like all sellers and buyers to ask their prospective agents, ‘Do you have a licence?’. If they don’t, they should ask themselves whether that’s the best place to market their property. From today estate agency in the UK is a two-tiered industry – those agents who are licensed and those who are not. I think the public will welcome the distinction and I believe that this move will raise standards across the industry.”

Housing Minister Grant Shapps said: “For years I’ve been calling for better standards throughout this industry, so I’m delighted the NAEA are taking matters into their own hands and launching a licensing scheme that will ensure their members become known for their professionalism and integrity. I call on all estate agents to sign up and make sure they’re not left behind when consumers vote with their feet. This is exactly the sort of measure the housing market needs – simple and sensible changes that are driven by industry and designed to deliver results. By ensuring they enjoy the trust of people buying and selling homes, estate agents will inject greater confidence and movement in the housing market. In future anyone looking to buy a home or sell theirs should ask the simple question of their estate agents – are you licensed?”

The licence will also guarantee the agency is covered by required amounts of Professional Indemnity Insurance. They will also undertake 12 hours of Continuing Professional Development every year, commit to keeping up to date with industry developments and be bound by the NAEA’s rules of conduct.

* The NAEA represents around one in three estate agents in the UK and it has proposed to get as many members as possible licensed by June 2011.