London House Prices 'Frenzy' Propels UK Property Market Back to Growth

According to Rightmove, a property website, home prices in UK increased by 2.8% in October as revealed on this article by Jerin Mathew of IB Times on October 21st, 2013.

UK home prices up 2.8% in October, according to Rightmove. (Reuters)

UK house prices rebounded from two previous monthly falls in October as they rose by more than £50,000 in the capital city.

According to property website Rightmove, the average asking price for homes increased by 2.8% to £252,418 (€156,274, $252,418) in October, returning to a growth trend that started in January 2013.

London witnessed an "unsustainable" 10.2% rise in asking prices in October, following falls of 2.8% and 1.5% in August and September, respectively.

Many of October's best performers are boroughs in inner London, the website said. Among London boroughs, City of Westminster saw the highest 11.9% increase in house prices, followed by an 11.8% increase each in Kensington and Chelsea and Hammersmith and Fulham.

Home prices are now up 5.6% on July's all-time high of £515,379, pushing the year-on-year increase in London to 13.8%, according to Rightmove.

"Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3% over August and September. However, this month's rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2% a month," Rightmove director Mills Shipside said in a statement.

"Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare."

Demand-Supply Mismatch in London

Analysts have warned that the continued rise in home prices in the country is primarily due to higher housing demand exceeding supply.

Rightmove noted that "London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market" in order to satisfy at least some of the rising demand.

It added that though the number of sellers in the capital increased 15% on month in October, the recovery is from a low base.

Overseas investors are considering London properties as safe havens for investments. Rising overseas demand is swallowing up much of the new-build supply, adding to shortages and price increase.

"At a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one and two bedroom flats to meet that demand," said Shipside.
"While they can achieve volume sales at premium prices, this eats up a much needed source of fresh supply and drags up existing property prices at an even faster rate".

Income-House Price Mismatch

In addition, taking a mortgage will be a "greater challenge" for many Londoners that are planning to buy a house, says the website.

Rightmove research indicates that 80% of those who intend to buy in the next 12 months will put down a deposit of 10% or more, a substantially high amount given the current prices of houses.

It added that that the current range of 5% deposit Help to Buy products is of no benefit to many Londoners as the income to service a mortgage will be a greater challenge for them.

"In London, the buying power required to get onto or move up the housing ladder means you have to tap into the Bank of Mum and Dad rather than buy courtesy of a helping hand from Uncle George. Indeed, nearly two in five would be first-time buyers in the capital state that they expect to receive parental assistance," said Shipside.

Article Source: http://www.ibtimes.co.uk/articles/515552/20131021/rightmove-house-prices-london-safe-haven-demand.htm

Buying a Holiday Home is a Huge Waste of Money

This engaging article was posted in Yahoo Finance UK and Ireland on August 30th, 2013 suggests reasons not to consider buying a holiday home because it is the biggest waste of money ever.

As millions of us come back from holiday, many will dream of owning a home in the sun - crazy property-struck fools that we are.

Right now, 5.4 million Britons are considering buying abroad, according to HSBC, even more than before the financial crisis. Have we learned nothing?

Spain and the Balearic Islands are the top dream destination, attracting 30% of buyers, followed by France at 16%. Italy, Portugal, Greece, Cyprus, the Caribbean, Florida and Turkey are also dream home hotspots.

If you've been seduced by dreams of a place in the sun, here's a measured word of warning. You've lost your mind, because buying a holiday home is the biggest waste of money ever.

Twice yearly, really

Before you protest, you happy holiday homeowners, here's the proof. The average owner visits their holiday or second home just twice a year, according to new research from household insurer Schofields.

They didn't plan it that way. Two-thirds expected to visit their bolthole far more when they originally bought it, but never get round to it.

Work, family commitments and lack of cash were the main reason people leave their holiday homes empty and forlorn, although an entrepreneurial 17% said they did so to maximise guest bookings.

Sun-baked and half-baked
 

A holiday home is an alluring dream. I regularly find myself browsing Spanish property websites to see how far prices have fallen, and whether they have fallen enough for my budget.

Prices are lower, skies are bluer. What's not to like?

But like most dreams, it eventually bangs its head against hard reality. The truth is, you've got too many other things to do.

Curse those jobs and families.

Bills, not thrills

You won't get to that holiday property as often as you like, but you will keep paying for it. 

First, there's the purchase price. Yes, Spanish holiday home prices have fallen more than 30% in the last five years, but you're paying in sterling, which is also down 20% against the euro.

Then there are local property taxes, legal fees, mortgage administration charges, and that's only the beginning. Your expenses don't stop when you exchange contracts, they're just getting started

You have to furnish your exotic new financial liability. Do it up. Pay for insurance. Carry out maintenance and repairs. Cover utility bills. Pay local taxes. You may have to hire a cleaner or stump up a monthly service charge.

And that's before you factor in the cost of actually getting to your property (although that won't be so expensive, as you're only going to visit twice a year).

X-rated expat tales

Plus there's always the chance you will end up buying the holiday home from hell, and lose everything. I recently spoke to British expats whose Andalusian retirement dreams were destroyed in an instant when the local police called to explain, not very politely, that they were the proud owners of an illegal home.

Nobody told them, not even their lawyer, that the developer hadn't got planning permission. 

Some lost hundreds of thousands of pounds. Several in the Valencia region saw their home torn down before their very eyes, without compensation. Others are stranded in the deserts of Murcia, with no running water or electricity.

Expat pain isn't restricted to Spain. Thousands of British homeowners in Cyprus risk losing both their holiday home and their UK property, in a vicious legal dispute over mis-sold mortgages.

I asked one couple, who were waiting to hear if their home in Almeria would be torn down, what advice they would give to the current generation of Spanish property buyers.

Their answer was succinct: "Forget it. Stay at home or go elsewhere."

Oh, I give up

Well, I've tried. I've done my best to make you see sense. It won't work. You still dream of a place in the sun, and in my dafter moments, so do I. So how do we make it match up to reality?

Before you go any further, ask yourself these questions:

1. Do you really want to go to the same place on holiday, year after year? Can you afford the flights? Do you have the time? Don't you want to see the rest of the world?
2. Even if you do want to go to the same place, wouldn't it be easier and cheaper to rent a holiday home instead, or stay in a hotel?
3. Can you afford all the costs of running a holiday home, including mortgage, insurance, maintenance, repairs, service charges and taxes, not to mention those twice-a-year flights?
4. Have you done your research? Do you know what similar properties are selling for? Is the local council planning to build a municipal waste incinerator in your backyard?
5. Is that bargain property really a bargain? Cheap isn't always cheerful, especially if you're stranded in a half-built complex a mile from the nearest communal water pump, or squeezed between the autoroute and municipal tip. Location, location, location are key words in any language.
6. Have you taken the right advice? You must appoint an experienced English-speaking lawyer, with no connections to your seller, estate agent or property developer, to avoid conflicts of interest.
7. Is your property legal? Your lawyer must confirm you have got all the necessary planning permission, licenses and consent. You must also pay for an independent valuation, even if buying in cash.
8. Is your mortgage in the right currency? If you earn your income in pounds, but your mortgage is in euros, you are at the mercy of currency swings, as many expats discovered when the pound collapsed after the financial crisis.
9. Are prices still in freefall? Spanish house prices could still plunge another 25%, according to newsletter Spanish Property Insight.
10. Do you plan to retire there? Visiting your property twice a year makes a lot more sense if you plan to stay for six months each time.

So what do you think? Do you still want a place in the sun?

Article Source: http://uk.finance.yahoo.com/news/buying-holiday-home-huge-waste-082409006.html

Prime Property Prices in Central London Still Rising

This article of the Property Wire on August 26, 2013 shows that prime property prices in central London continued to rise in August but there are indications that buyers are becoming more resistant to continued price rises, especially at the top of the market.
 
The latest central London sales index from Knight Frank shows that property prices in London’s best postcodes increased by 0.6% this month and so far this year prices have risen by 4.8%.

Marylebone and Notting Hill recorded the largest rises over the course of the month, up by 1.5% and 1% respectively. Islington, City Fringe and Hyde Park all reported price growth of 0.9% in August.

In spite of record prices, enquiry levels are still robust and interest among prospective buyers remains high across central London. The number of new applicants is up by 33.9% over the year to date compared to the same period in 2012 and the number of property viewings conducted over this period is up by 18.5%.

At the same time annual price growth for properties in Greater London is now outstripping prime central London, boosted by the city’s continued economic recovery and government policy.

Figures from the Office of National Statistics show that property prices in Greater London have risen by 8.1% over the past 12 months. In comparison the Knight Frank Prime Central London Sales Index is up by 7% on an annual basis.

Price rises in prime central London are primarily being driven by homes in the sub £1 million and £1 million to £2.5 million price bracket.

Homes in these price brackets increased by around 1% in August and are up by 8.7% and 7% respectively over the year to date. Comparatively, homes in the £5 million to £10 million and the £10 million plus price brackets increased in value by 0% and 0.2% month on month and are up by 2.6% and 1.6% respectively so far in 2013.

Knight Frank says that key factors driving price growth and interest include the city’s reputation as a safe haven for investment, and the value of the pound. However the firm’s global head of residential research Liam Bailey pointed out that performance has outperformed forecasts.

‘Last year, we forecast that prices would remain unchanged in 2013, marking an end to the strong run the market has seen since early 2009. Our rationale was that the increase in Stamp Duty would have an impact on the top end of the market and there would be resistance to price growth from domestic and international purchasers,’ he explained.

‘In the event we overstated the negative impact of the 5% to 7% Stamp Duty rise for £2 million plus properties. The further weakening in sterling in the first half of the year helped to boost overseas interest and domestic demand has been aided by London’s continued economic recovery and, arguably, from the government’s Help to Buy scheme, which was launched at the end of the first quarter this year and has boosted sentiment across the market,’ he added.

He also said that while Help to Buy, with its £600,000 valuation cap is a more significant factor in the wider mainstream market, rising housing market sentiment, as reported in the firm’s latest House Price Sentiment Index, is infectious across markets and price brackets and is likely to act as a positive influence in terms of future pricing, even in London’s prime
market segments.

‘We have therefore raised our forecast for prime central London price growth for 2013 to 6%,’ he added.

Article Source: http://www.propertywire.com/news/europe/prime-london-property-prices-201308268161.html