28/05/2008 by Damian.

April figures for Mortgage approvals show a 40% decline in approvals on this time last year, further highlighting the effect that the credit crunch is having on the UK housing market.

The Council of Mortgage Lenders has indicated that house prices in the UK could drop by 7% and the number of property transactions could fall to below 1 million possibly reaching levels not seen since the 1970’s.

The main driver being a damaging combination of  previously stretched affordability and a tighter restraint on lender criteria resulting in a low housing market activity.

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23/11/2007 by Damian.

The latest NAEA survey has been published and Less2sell have summarised the key points from the September report below:-

The number of house buyers on estate agents’ books was at its lowest for the past four years, with agents reporting an average of 282 buyers registered in comparison to the 326 recorded in October 2007.

The figures reflect the current housing market cool down, as banks, building societies and borrowers tighten their belts following continued uncertainty in the current economic environment. Prospective purchasers are putting their existing buying and selling ambitions on hold as the present cautionary cloud exists.

CAUTION IN THE MARKET

The number of sales agreed per agent was down in October with on average 10 sales reported, compared with 11 in September 2007. This is a significant drop from the same time last year when a figure of 14 sales was reported for October 2006, but reflects the current caution in the housing market.

Meanwhile, the percentage difference between asking price and sales price widened in October to 4.2%, which is an increase on September’s figure of 3.9%, and October 2006’s figure of 3.1%. This widening gap reflects that it is fast becoming a “buyers market” again.

GOOD NEWS FOR FIRST TIME BUYERS

First time buyers increased their share of the market from 8.8% in September to 9.2% in October in a positive step forward. Prices have calmed down in selected areas giving some first timers a renewed enthusiasm. However, this figure is down on the same time last year when first time buyers had 16.4% share of the market.

Less2sell Online Estate Agents feel that in order to restore confidence in the market several interest rate cuts are needed in 2008.

Related Topics

Some Long Awaited Good News For First Time Buyers

Agents Report A Boyount MArket for First Time Buyers

UK Interest Rate Rises by 0.25%

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14/10/2007 by Damian.

What is good news for one person can be bad news for another. When it comes to property ownership in this country over the past decade, first-time buyers have repeatedly drawn the short straw (bad news). The housing boom that has had millions of older homeowners (good news) jumping all the way to the bank, has been nothing but bad news for first-time buyers.

Latest report received by Less2sell Estate Agent indicates that first-time buyers now need to save £25,600 (up £12,351 from 2001) to cover the costs of buying a home (deposit). And to consolidate the problem, some are borrowing more than six times their income in a desperate bid to get a foot onto the property ladder.

The good news is that the ramifications of five interest rate hikes, the US sub-prime mortgage crisis and the much-lamented global credit crunch start to hit home, there are signs that the housing market is cooling down.

What does this mean for first-time buyers? Well for a change the recent news from the housing market is potentially good news for first-time buyers.

Here are five reasons why first-time buyers should be celebrating:

• 1) Lower interest rates. Before all the banks got their greedy fingers burnt by bad debt the future looked bleak for first-time buyers. The base rate was widely expected to rise 0.25% by the end of the year. Now, the base rate is believed to have hit the peak of its current cycle and some predict it may even fall to 5.5% or lower in the next six months. This means fixed rates are coming down, and is great news for first-time buyers on tight budgets, who need the security that the set monthly payments of a fixed rate mortgage provide.
• 2) Greater supply of property. Buy to let investors have been profiting from the plight of first-time buyers, purchasing what was typically a ‘first-time buyers’ property at prices first-time buyers cannot afford, only to turn around and rent them out to first-time buyers. A recent report received by shows that sales of buy to let properties have risen by 44% this year to their highest level for two years, which means there should be more ‘first homes’ available to buy.
• 3) Less competition. Some mortgage lenders are tightening their buy to let mortgage criteria, reducing the amount investors can borrow from 90% of the property value to just 80%. That means landlords have to put down a bigger deposit, and cannot ‘gear up’ (borrow to buy another property) as easily. Speculative buyers are also most likely to be put off by the fear of a housing market crash.
• 4) Lower prices (possibly!). If and it is a big IF, house prices start to fall, I’m pretty sure that many buy-to-let investors may be keener than usual to sell up, and quick. Whether this leads to a fall in current prices or simply means that the pace of price rises will slow down, will depend to a large extent on the strength of demand and supply in your local area. However, as a general rule, I’d say first-time buyers have a greater potential to wield their power as chainless buyers this year.
• 5) More bargains. The increase in interest rates has already led to a record rise in repossessions by mortgage lenders, with RICS predicting there will be 124 repossessions a day in 2008. So you may be able to snap up a property at a cheap price, particularly if you buy at auction, where mortgage lenders tend to try to offload their repossessed homes.

First-time buyers should not get carried away though! Remember lenders are tightening their requirements and Less2sell advice that you have a healthy deposit to get the best deals (at least 10%).

If you would like free independent mortgage advice please click here.

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24/08/2007 by damianbellusci.

The online estate agency firm Brightsale has called on the Office of Fair Trading (OFT) to investigate the issue of competition within the UK estate agent industry. The move comes soon after the website reported that several of its customers had been hit by punitive and arbitrary fee increases from a leading high-street agent.

In addition to agents increasing their rates of commission for no apparent reason, Brightsale also claimed that one of the UK’s best-known firms urged traditional estate agents to work together to force their online competitors out of the market.

Emily Bellusci, Less2sell’s owner backs Brightsale’s and she states “We would urge all home sellers to insist that they are free to use an online agency, alongside a traditional one, without a threat of punitive commission hikes.

“We believe that competition crushing contracts are not in the best interests of consumers or the industry as a whole.  We at Less2sell Online Estate Agent set our business up in the hope of restoring faith in Estate Agents.  These traditional agents are keen on destroying that faith”

Earlier this month, Paul Smith, the chief executive of SpicerHaart used his column in Estate Agency News to call on traditional agents to stick together and consider “reverting to sole selling rights and include a clause which prevents the seller from using an internet property retailer at the same time.”

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16/08/2007 by Damian.

       Good news for homeowners with mortgages as this dramatic reduction in inflation has probably removed any potential further increases in interest rates for 2007.

After last months figures, specialists where 80-90% certain of another 0.25% in interest rates, however the chances of such an increase is now less than 50%.

CPI annual inflation – the Government’s target measure – was 1.9 per cent in July, down from 2.4 per cent in June, the largest single drop in inflation for 5 years.

The largest downward contribution came from food prices, as supermarkets led price cuts across a range of products including bread and cereals, meat, fish, fruit and vegetables. In addition, price increases last July on beef and shop bought milk were not repeated this year.

Another large downward contribution came from furniture and furnishings, with average prices falling over the month by more than 10 per cent, a record for July, following record increases for June last month. Widespread sale prices were available on a range of items in July including kitchen, bedroom and lounge furniture.

Other large contributions came from:

• Transport
• Housing and household services
• Recreation and culture

Related links

Beginners Guide to Predicting the Outlook for the Housing Market

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10/08/2007 by Damian.

     Many of you will have seen today that the National Housing Federation (NHF) expects house prices to rise 40% by 2012, with the average House price then breaching £300,000. With compounding, this means an average increase of roughly 8% per year. This is in line with the long-term average, which Halifax says is 8% since 1983.

Is the Market Going Up or will it Crash!’

All predictions should be taken on face value and you should always take head of who has commissioned and written the article.  The NHF has a vested interest and this could be why we have an upbeat report.

Most experts seem to think price rises will slow with the Council of Mortgage Lenders (CML) estimating that house prices will go up by just 7% in 2007 and only 2-3% in 2008.
Halifax recently revised up its prediction for this year from 4% to 6%. However, this is still lower than the average needed to hit NHF’s prediction.

Is the Market Going to Crash!

The truth is no-one knows take for example Hometrack.    Hometrack made no predictions this year after guessing a 1% rise for 2006. It was more like 10%.

As for the NHF’s prediction of a 40% increase over the next 5 years.  Take into consideration the track record of all other forecasters being so poor, it seems unlikely that its own prediction will come true either.

Like we reported in our earlier blog Beginners Guide to Predicting the Outlook for the Housing Market, predict the housing market at your peril!

Related Links

Beginners Guide to Predicting the Outlook for the Housing Market

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14/07/2007 by Damian.

Affordability issues have and still do contribute to the strong home rental conditions that we are seeing are the moment.

According to the latest figures released by the National Association of Estate Agents, demand for rental property continues.  The increase in Eastern European immigration, good employement conditions and the demand from those who cannot afford to buy ther first home has contributed to a thrivingrental market during Quarter 1 of 2007.

Despite the increase in in the number of buy-to-let investors and properties available, landlords have been very succesful in achieving the desired rental yields.

With affordability still a major issue for first time home buyers looking to get onto the property market, many professionals are being forced to stay in rented accomodation for longer and are now starting to pay higher premiums in order to enjoy better standards of living.

Chargeable rents rose in the first quarter of 2007, up an average 1.77%.  However, the interest rates rises in November 06 and January 07 are likely to have had an effect on the rental value as landlords increase their rent to cover additional outgoings.

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05/07/2007 by Damian.

The Bank of England has raised the interest rate by 0.25% to 5.75% today.

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04/07/2007 by Damian.

Everyone who is involved with property knows that it is extremely difficult to predict its future.  So why am I bothering writing a post about it!  I would like to impart a bit of knowledge on the 5 key drivers that affect the market.  Even with these key drivers, it is still difficult to estimate what the future hold for property but it will arm you with important information in order to make a sensible and informative decision.

Although my attempts at predicting the outcome of the housing market have rarely been correct, I still keep an eye on a number of demographic, financial and socio-economic factors which are believed to influence demand for housing. In alphabetic order, here are five of the various indicators which I monitor in an attempt to get a feel for the UK property market:

1. House price indices

Although I take house-price predictions with a huge pinch of salt, I do study historical changes to house prices in order to take the temperature of the UK housing market as a whole. However, several different organisations produce house-price indices (you’ll find seven listed here), so it’s hard to know which index to track!

2. Inflation

The Consumer Prices Index (CPI) is the government’s target measure of inflation (which is the tendency of consumer prices to rise over time). Although the CPI doesn’t include housing costs, it’s still worth keeping an eye on. That’s because the Monetary Policy Committee (MPC) of the Bank of England has a target to keep CPI around the 2% mark. When inflation markedly under- or over-shoots this target, the MPC votes to lower or raise the Bank’s base rate in order to return CPI to its goal over the medium term.

You can follow the CPI here:  ONS inflation statistics

3. Interest rates

As the CPI measure of inflation has been above its 2% target for quite a while, the Monetary Policy Committee has started raising interest rates. Since last August, the MPC has raised the base rate four times, each time by a quarter-point, increasing the base rate from 4.50% a year to 5.50%.

The next MPC meeting is this week, and as CPI is currently at 2.5%, it’s a done deal that the base rate will be hiked to 5.75% on Thursday, in my opinion. Of course, a rising base rate is bad news for homeowners and homebuyers, because it translates into higher mortgage interest rates, which mean higher monthly repayments for borrowers who don’t have fixed-rate home loans.

You can follow the Bank of England base rate here: Bank of England MPC decisions

4. Savings ratio

I like to keep an eye on the savings ratio, which measures the proportion of our take-home pay which we save. Generally speaking, when house prices are rising fast and consumer optimism is high, the savings ratio is low. Conversely, when the future looks tough, we tend to save more as a hedge against upcoming financial difficulty.

The savings ratio has collapsed to a 47-year low of 2.1%, which is just a quarter of its long-term average.

You can follow the savings ratio here: ONS savings statistics

5. Unemployment

Of course, when people are out of work and struggling to make ends meet, buying property is one of the last things on their minds. On the other hand, when unemployment is low and demand for workers is high, this puts upward pressure on wages, which usually translates into house-price stability or inflation. The unemployment rate has been on the rise since 2004, and presently stands at 5.5% of the ‘economically active’ workforce, but this is almost half what it was in the recession of the early Nineties.

You can follow the unemployment rate here: ONS employment statistics

Of course, the factors which impact the housing market don’t stop there: I also have consumer confidence, housing transactions, immigration, mortgage lending, wage increases, etc. on my watchlist.

Finally, I’ve no solid rules on how to weight each of these factors based on its impact on demand for housing. Indeed, I suspect that this task is all but impossible, given the massive scale of the UK housing market and the complex interplay between these variables. Anyway, when all’s said and done, demand for housing usually depends more on local factors than national trends.

Related Links

Guide to Choosing an Estate Agent

Seven Simple Tips to Increase Your Chances of Selling Your Home

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23/06/2007 by damianbellusci.

Less2sell are proud to launch our new dedicated blog that will be keeping our readers updated on news, views and relevant topics related to the UK property market.

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