House Prices Rising £200 a Day

This article by Sarah Westcott of the Express on October 28th, 2013 reveals how house prices have gone up by an average of 0.5% this month.

 
House prices have risen for the ninth month in a row [GETTY]
 

Homes across England and Wales are worth 3.1 per cent more than a year ago, says property analyst Hometrack.

In the past four weeks alone, the value of the average property has soared by £6,923, more than £200 a day.

A typical three-bedroom semi is now worth £252,418.

There is still such a shortage of supply – with buyers flooding the market thanks to the Government’s Help To Buy scheme – that sellers are almost always getting their asking price.

The proportion of the asking price achieved was 95.2 per cent in October, up from 94.7 per cent in September.

This is just half a percentage point off the record 95.7 per cent at the height of the property boom in 2007.

As the resurgence continues, Halifax has also revealed that a record seven out of 10 Britons think house prices will continue to go up over the next year.

The biggest increases are in London, up 0.8 per cent month-on-month with sellers typically achieving 97.2 per cent of their asking price.

 
The value of an average propery in the past four weeks has risen by £6,923 [GETTY]

Across the country, prices were up everywhere except the North-east.

The increases were 0.1 per cent in the East Midlands and the North-west, 0.2 per cent in Wales, Yorkshire and Humberside, 0.3 per cent in East Anglia and the West Midlands, 0.4 per cent in the South-west and 0.7 per cent in the South-east.

Help To Buy, which allows buyers to secure a mortgage with a five per cent deposit, is partly driving the boom.

The other factor is the shortage of properties for sale. This month new sales listings have dropped by 1.6 per cent, while buyers registering with estate agents were up by 2.0 per cent.

Richard Donnell, director of research at Hometrack, said there is a “chronic lack of supply”.

He added: “Growth in new sales being agreed is running at four to five per cent per month and this is continually eroding the stock of homes for sale. In contrast, levels of demand have grown. Improving confidence amongst buyers has been fuelled by low mortgage rates and positive news on a recovering housing market.”

The Halifax survey reveals that fewer than half (41 per cent) think it will be good to sell their property in the coming year, compared to 57 per cent who think it will be a good time to buy.

This indicates a continuing shortage of properties, forcing prices up.

 
The recent Help To Buy scheme is partially to blame for the increase in prices [GETTY]

Meanwhile, another report reveals parents are paying tens – and sometimes hundreds of thousands of pounds – over the odds to live near the country’s top state schools.

The average price of a home in the postal districts of England’s top 30 state secondary schools is £295,972, £31,500 more than those in neighbouring areas, Lloyds Bank found.

In London, parents desperate to get their children enrolled at Henrietta Barnett school in Barnet, north London, pay £400,000 more for homes up to £863,340 inside the catchment area, compared to £460,740 outside.

In Kingston upon Thames, south-west London, parents pay more than £600,000 – double the cost of average local homes – for children to be eligible for a place at Tiffin School for boys and Tiffin Girls’ School.

Nitesh Patel, of Lloyds, said demand had led prices to rocket “out of reach for many buyers on average earnings”.

Article Source: http://www.express.co.uk/news/property/439603/House-prices-rising-200-a-day

London Wealthy Leave for Country Life as Prices Rise

This article by Patrick Gower of Bloomberg on October 14th, 2013 reveals how wealthy left London to be living in a country life when house prices rise.

It took more than a year for Mark Hudson to find his six-bedroom home in the English countryside. Within weeks of moving in, he got a bid that topped the 1.75 million pounds ($2.8 million) the property cost.

“Somebody called offering a significantly higher sum,” said Hudson, a 55-year-old manager at a publishing company, who in August swapped his home in Clapham, a London district favored by young bankers and lawyers, for Dorset, the farm-dotted county 125 miles (202 kilometers) southwest of London that was the setting for Thomas Hardy’s Tess of the D’Urbervilles. “It looks like we caught it just at the right time,” he said.

Country homes are coming back into fashion, after lagging behind urban locations such as London’s West End since the 2007 financial crisis when banks cut off mortgages. Prices for manor houses, farmhouses and cottages valued at more than 750,000 pounds climbed at the fastest rate in more than three years in the third quarter, Knight Frank LLP said in a report today, as Prime Minister David Cameron makes reviving the housing market central to his efforts to pull the economy out of recession.

“It’s U.K. economic growth and broader housing-market confidence,” said Liam Bailey, global head of residential research at the London-based property broker.

The government last week introduced the second phase of its Help to Buy program, which offers mortgage guarantees that allow purchases with down payments as low as 5 percent. The first phase, which began in April, provided interest-free loans for buyers of newly built homes. The program has contributed to the strongest housing market since the financial crisis, even as two thirds of 31 economists surveyed by Bloomberg described it as “bad” policy.

Bigger Appetite 

“Help to Buy has obviously been a catalyst that has encouraged people,” Bailey said by phone. “It’s stimulated appetite to get into the market and that’s not only the lower-end first-time buyers -- it’s right through into the prime sector.”

In July, homebuyers took out 3,900 loans of 500,000 pounds or more, the most since September 2007, according to the Council of Mortgage Lenders. There’s also more willingness to lend at higher loan-to-value ratios, according to Henry Knight, managing director at mortgage broker Springtide Capital Ltd.
 
Two years ago, Barclays Plc (BARC)’s Woolwich unit, Nationwide Building Society and Lloyds Banking Group Plc (LLOY)’s Halifax “stopped agreeing mortgages for more than about 1 million pounds, but now they’ve moved up to 2 million pounds and some have gone to 3 million,” Knight said by phone. “There are just more lenders playing in that market now.”

Prime Country 

Knight Frank’s prime country-house index, based on data from the firm’s U.K. branches, shows that prices rose 0.8 percent in the third quarter from the previous three months. Gains were led by Virginia Water, Berkhamsted and Cobham, just outside London. Prices climbed 0.4 percent on an annual basis.

The measure includes manor houses, defined by Knight Frank as a large property standing in extensive grounds; farmhouses, which typically have six bedrooms and several acres of land including garden, paddock and barns; and cottages, which normally have four bedrooms and about an acre of land.

While demand for properties within commuting distance of London was strongest, prime country homes in every region of England climbed for the first time in two-and-a-half years during the quarter, according to a reported published by Savills Plc (SVS) last week.

“This is your last chance to buy before stock goes down and prices really start to rise,” Yolande Barnes, director of residential research at the London-based broker, said by phone.

Queen’s Castle 

Current offerings of theirs include Park Place, an eight-bedroom period house on the edge of Windsor Great Park with cottages and stables on about 15 acres. The property, about an hour’s walk from Queen Elizabeth II’s Windsor Castle and close to English private school Eton College, is priced at 20 million pounds.

Savills, along with Hamptons International, is also selling Bayfields Farm, a country house in Hampshire, about 30 miles from Highclere Castle, where TV show “Downton Abbey” is filmed, for 2 million pounds.

The value of U.K. luxury homes had plunged in the wake of the 2008 collapse of Lehman Brothers Holdings Inc. and the ensuing credit freeze and recession. Average prices of homes in London’s most expensive neighborhoods fell 25 percent in 2008, while those in the countryside fell 20 percent, Knight Frank’s Bailey said.

Mortgages of more than 500,000 pounds to home buyers dropped by almost 50 percent between 2007 and 2008, according to the Council of Mortgage Lenders.

Affluent Foreigners 

London’s property market began to recover in 2009, in part because of affluent foreigners seeking a haven from turmoil in the Middle East and the wider European debt crisis.

These buyers, attracted by mansions a short walk from Harrods and Buckingham Palace, helped push the price of luxury homes in central London up 23 percent since their last peak in Autumn 2007. Prices of prime country homes remain down 20 percent, according to Knight Frank.

Now the recovery is spreading beyond London. The number of homes sold in the U.K. reached the most in nearly four years in July, according to the Royal Institute of Chartered Surveyors. That helped push the value of prime country homes up for the third consecutive quarter, Knight Frank said. House prices in affluent areas about an hour from London climbed 1.6 percent during the three months, while those in the remainder of the south of England climbed 1.2 percent, according to Savills.

Homebuilders Rise 

U.K.’s homebuilders have been among the biggest beneficiaries of revived housing demand, with an index of the companies gaining 47 percent this year, compared with the 10 percent advance for the FTSE 100 Index. Persimmon Plc (PSN), the largest U.K. builder by market value, rose the most in almost two months on Oct. 9 after Goldman Sachs Group Inc. (GS) said the stock may increase by 70 percent within six months.

Homebuilders are increasing productivity to satisfy new demand, which may be a mixed blessing for country estates.

“Prices are moving up against a background of four years of low supply in the country-house market,” Bailey said. “If this positive sentiment pulls in more supply, that will hang a question mark over the sustainability of this growth.”

For Hudson, waiting to sell his London home proved fortunate as prices rose in the capital, while he said they fell last year where he was looking.

“You’d see a house listed and a few months later it would still be on the market and the price had dropped,” Hudson said. “When we finally bought it was more of a lifestyle choice, we were never sure it was going to be a good investment.”

After selling the home in Clapham for 1.3 million pounds, with an extra 475,000 pounds he could afford the six-bedroom country house with a cottage, swimming pool and eight acres of land.

“I had a feeling the time was right and London’s housing market was coming to a peak,” he said. “Maybe I was wrong on that point, because in fact that peak seems to go on getting higher and higher.”

Article Source: http://www.bloomberg.com/news/2013-10-13/london-wealthy-leave-for-country-life-as-prices-rise.html

UK's RBS Denies Residential Property Sale Report

This article by 4-traders on October 9th, 2013 reveals a newspaper report that Britain's Royal Bank of Scotland denied in selling property portfolio.

(Reuters) - Britain's Royal Bank of Scotland on Wednesday denied a newspaper report it was planning to sell a portfolio of more than 1,300 UK residential properties owned by its property arm, and was considering floating them on the stock exchange. 

The Guardian newspaper said the properties were worth around 200 million pounds and owned by RBS through a subsidiary called West Register, which held assets valued at more than 3 billion pounds, mostly in the UK and Germany. 

"There are no plans to sell off a portfolio of properties or to float it on the stock exchange," a spokesman for state-backed RBS told Reuters.

The Guardian said the move would be seen as the creation of a mini "bad bank" and the offshoot would almost certainly form part of the potential bad bank that Chancellor George Osborne was considering hiving off from the rest of RBS.

Reuters reported in September that RBS could create an internal bad bank to house its problem loans, even if the government decided not to enforce its breakup.

(Reporting by Tasim Zahid in Bangalore; editing by David Evans)

Article Source: http://www.4-traders.com/news/UKs-RBS-denies-residential-property-sale-report--17338062/

Help to Buy: Let the Property Scramble Begin

This article by Rupert Jones of theguardian on October 5th, 2013 tells us the criticism from experts regarding the second part of the government's help to buy scheme.

A range of government-backed 95% mortgages are set to go on sale next week after ministers fired the starting gun on a new property scramble.

Two partially state-owned banks, Royal Bank of Scotland and the Lloyds Banking Group, will offer the loans initially, and millions of people will potentially be eligible to sign up.

Under the controversial Help to Buy scheme, homebuyers will only need to put down a 5% deposit – and it is open to existing owners as well as first-time buyers. What is more, there are no limits on how much you can earn and it applies to both old and new-build properties costing up to a generous £600,000.

RBS and its NatWest arm seem to think this second part of the Help to Buy scheme, which is being launched three months earlier than planned, has the potential to be the financial equivalent of the Harrods sale. They say customers will be able to visit any of their 2,000 branches or ring up, and add that opening hours will be extended at peak times "to help with customer demand".

Homebuyers were this week awaiting details of the deals – in particular, how attractive the pricing will be – amid speculation that the scheme could push down rates on 95% mortgages from their current levels of between 5% and 6% to perhaps as low as 4.5%, as well as increasing the choice of products available. That could lop almost £100 a month off the typical payments of someone taking out a £160,000 mortgage.

RBS and NatWest say they will offer "a range of competitive 95% mortgages" to first- and next-time buyers. These will initially be available in branches and over the telephone, and later via mortgage brokers. Halifax, part of the Lloyds group, will also be offering deals from launch; these will be available via branches and brokers. Lloyds Bank will participate from January, while other lenders such as Santander and Nationwide have yet to confirm whether they will take part.

While the scheme won't become fully operational until January, people will be able to start applying from next week, and once their mortgage is approved the funds will be available straightaway – they won't have to wait until the new year to complete on their home purchase.

There has been fierce debate about whether the scheme will hand a vital lifeline to homebuyers or simply drive house prices even higher, but what is undeniable is that this is a huge and potentially risky venture for the government. It is partially guaranteeing £130bn of low-deposit mortgages, which ministers have claimed could translate into assistance for well in excess of 500,000 homebuyers over three years.

That is a lot of people potentially being helped but, even so, there are fears demand could massively exceed supply. Santander issued research yesterday claiming 10% of Britons – equivalent to 5.1 million people – believe they are likely to buy a property in the next 12 months. A third of these, 1.7 million, said they planned to use Help to Buy.

In reality, some of these people would be locked out of the scheme because, for example, they are buying a property to rent out, or a second home, both of which are excluded from Help to Buy, or they don't meet the requirements on income and past credit history – but this still suggests that fears of a stampede of applicants may not be misplaced.

Phase two of Help to Buy is about encouraging banks and building societies to offer more mortgages that only require a small deposit (at least 5%) by giving them the opportunity to buy a guarantee on the "top slice" of the home loan – the bit between 80% and 95%. If a borrower gets into financial difficulty and their property is repossessed, the government will cover a chunk of the lender's losses.

Ministers are making available £12bn of guarantees to lenders, but the latter will have to pay a fee for each mortgage underwritten.

The scheme has come in for harsh criticism from some commentators. On Thursday, Howard Archer, chief UK economist at IHS Global Insight, warned: "There is a mounting danger that house prices could really take off over the coming months." He was speaking after figures from Halifax revealed that house prices are rising at their fastest annual pace for more than three years.

• A free Help to Buy show is taking place today (5 October) at the Glow events venue at the Bluewater shopping centre, Kent, between 10am and 4pm. The event is aimed at people in Essex, Kent, Sussex and south London. Go to glowbluewater.co.uk for more.

Article Source: http://www.theguardian.com/money/2013/oct/05/help-to-buy-property-scramble

How A House Price Cap Could Work

This article by Hilary Osborne of TheGuardian on September 13th, 2013 basically explores how a cap would work. The Royal Institution of Chartered Surveyors has called for the Bank of England to cap house-price rises at 5% a year.

Why does Rics want a cap?

The organisation says limiting house prices would prevent a dangerous new property bubble, reckless lending and a build-up in consumer debt. By letting people know that they can only expect prices to rise by up to 5%, the Bank of England would stop homebuyers and lenders gambling on rising prices. During the last property boom lenders such as Northern Rock offered 125% mortgages, based on an expectation that prices would rise and borrowers would not end up in negative equity for long – but when prices crashed some people were left stuck with huge loans. Rics argues that everyone would be more cautious if there was a price cap.

Why set it at 5%?

Rics says it is "not wedded" to the figure, which it based on the average annual growth in UK earnings, plus an allowance for price pressure caused by a lack of supply of homes for sale. Growth is currently exceeding that level, according to Halifax's latest house price index.

Is that the index that would be used?

Not necessarily. Rics has said it is "agnostic" about which measure of prices is used. The Bank has previously considered all of the major house price reports when making interest rate decisions, but there is now an "official" ONS index published monthly. Its last report showed prices rose by 3.1% in the 12 months to June.

If prices were capped, would that mean I would have to reduce the price of my house?

No. The cap wouldn't restrict individual buyers' and sellers' transactions, so if you were selling a property at a profit equivalent to more than 5% a year that would be fine. What the cap would do is force the Bank of England's new Financial Policy Committee to use powers it has to restrict mortgage lending.

What are those powers?

If it believes the housing market is overheating, it can direct the banking regulator, the new Prudential Regulatory Authority (PRA – also, confusingly, an arm of the Bank), to tighten the screw on mortgage lenders.

The PRA would use so-called sectoral capital requirements to give banks pause for thought before they make risky loans. They could force lenders to set aside more capital against all residential property lending, for example, if they thought the entire market was frothy – or pick on particular areas, such as high loan-to-value ratio mortgages. In practice, whichever types of loan the PRA singled out would become scarcer and more expensive.
  
What are the problems with a cap?

The main problem is that the headline rate of growth disguises massive regional variations. In the London market (itself a multiple of the entire New Zealand market) house price rises are already up 10.2% over the past year, according to the latest figures from the property portal Rightmove.co.uk. Yet in the north, north-west, Yorkshire and Humberside and south-west regions, house prices are up less than 1% over the past year.

Also, it does not address the real problem with the UK housing market – the lack of supply of properties.
  
So price rises in London could trigger a cap and stop me getting a mortgage in Newcastle?

Spot on. Houses in Newcastle could represent good value and be affordable to first-time buyers, but lenders would be constrained from granting loans if a London boom pushed up UK prices.

Article Source: http://www.theguardian.com/money/2013/sep/13/how-house-price-cap-work

UK Property Asking Prices Up 5.5% Year/Year in Aug

According to Rightmove on Monday Britain's asking home prices are 5.5% up compared to last year as revealed on this article by Reuters on August 18, 2013.

Aug 19 (Reuters) - Asking prices for homes in Britain are 5.5 percent higher than a year ago, property website Rightmove said on Monday as it urged the government to boost the supply of new homes to avoid a house price bubble.

Rightmove figures, which are not seasonally adjusted, show the price of property coming on to the market has risen 8.8 percent in the first eight months of the year.

Record low mortgage rates, government lending incentives and rising optimism in Britain's economic recovery have fuelled a marked pick up in house price inflation in recent months.

Mortgage lender Halifax reported prices rose an annual 4.6 percent in July and a survey last week from the Royal Institution of Chartered Surveyors suggested house prices were rising at their fastest pace since 2006.

The rally has been most marked in London where prices are up 10.2 percent on the year, according to Rightmove.

With house prices already rising faster than inflation, the government is under pressure from some quarters to abandon plans to offer state-backed guarantees to riskier homebuyers.

The scheme, part of the "Help to Buy" initiative announced by the government in their March Budget, is due to take effect in January.

"Demand is already on the up, and that's before the roll-out of phase two of the Help to Buy stimulus," said Rightmove director Miles Shipside. "It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices."

The first phase of the government's "Help to Buy" scheme took effect in April and offers subsidies to buyers of new-build properties.

Article Source: http://www.reuters.com/article/2013/08/18/britain-property-rightmove-idUSL6N0GH1KA20130818

How Slashing Stamp Duty will Help Young Homebuyers

This article was published on August 8, 2013 on Home & Property. According to Naomi Heaton slashing stamp duty is the best way to get young Londoners into their first home.

As Scottish ministers finally do away with stamp duty and a consultation begins in Wales to do the same thing, it is high time the Tories also kept to their election promise and made changes to Britain's most-hated tax.

A crisis looms as the average price of property in England and Wales rapidly approaches the £250,000 mark — the point when stamp duty triples from one per cent to three per cent of the purchase price. This increase could see 80,000 people a year falling into this higher tax bracket, facing a huge £7,500 tax bill, rather than a somewhat more affordable £2,500.

It is ironic that it was a Scotsman who first introduced the crippling £250,000 stamp duty tax threshold. Before Gordon Brown took the job as chancellor, stamp duty was set at a flat rate of one per cent for all properties sold over £60,000. In 1997, however, Brown introduced the notion of stepped stamp duty tax bands, bringing in a new threshold of 1.5 per cent at £250,001. He then raised the charge by half of one per cent every year until 2000, when it reached three per cent. It has stuck at that level ever since.

In the apparent interest of "fair taxation" — but more as a desperate attempt to plug the public finance deficit — recent years have brought additional thresholds at £500,000, £1 million and £2 million. No move, though, has been made to raise the level at which the three per cent tax hit kicks in, despite average house prices rising over threefold from £72,900 to £239,296 since 1997.

Stamp duty was a tax introduced to generate revenue from the wealthiest of buyers. According to Nationwide, a house worth £250,000 in 1997 would be equivalent to £716,000 today. One could say it was the "mansion tax" of the Nineties but what equated to riches then is no longer the case in 2013.

Having dragged more and more ordinary buyers into its grips, stamp duty will soon be an "everyman" tax: just another way for the Treasury to dip into our pockets.

Now first-time buyers are being frozen out
Across the country, 26 per cent of buyers now pay more than £250,000 for their property and in London it is 62 per cent. For people who have already paid income tax, stumping up another £5,000 of stamp duty for their family home is not only a double whammy but equivalent to another 10 per cent on top of their deposit.

Transactions have dropped 32 per cent since 1997 and the fall-out, should the band not be reassessed, could be even more devastating. Not surprisingly, potential buyers are reluctant to pay three per cent stamp duty on properties above £250,000. Not only is this a barrier to trading up but owners of properties above £250,000 are then unable to sell, or only at a reduced price, which means they cannot trade up either. This freezes the market and prevents first-time buyers from getting a look-in.
 
As "stamp duty Doomsday" beckons, and with average prices within a hair's breadth of £250,000, the present Chancellor must move quickly to reassess the tax banding. While the Government's much-trumpeted Help to Buy stimulus package has begun to unlock the market, this can only be good news if the one per cent stamp duty trigger is also raised.

Re-evaluating the threshold will give buyers a much-needed boost, allowing home owners to trade up and first-time buyers to begin climbing the ladder. Even the Treasury can make some money. For every purchase that does not happen because of the £250,000 barrier, the Government earns three per cent of nothing. For every property sale that would go through, due to a kinder stamp duty regime, the Government would earn one per cent of something: a win-win situation which would make a real difference.

A government keen to trumpet "fair taxation" should question how this tax can possibly bring fairness to a nation of aspiring homeowners, and take heed of the TaxPayers' Alliance Stamp Out Stamp Duty campaign.

Naomi Heaton is chief executive of London Central Portfolio, residential experts and fund managers (londoncentralportfolio.com).

Article Source: http://www.homesandproperty.co.uk/property_news/news/stampdutycrisishigherrates.html