89% 'Expect House Prices to Rise'

This article by the Express on October 15th, 2013 reveals that 9 in 10 homeowners confident that house prices to rise to highest level in four years.

Nine in 10 home owners expect house prices to rise in the coming months as market confidence surges to its highest level in at least four years, research has found.

Confidence in the housing market has surged to its highest level in four years, research suggests [PA]
 

Some 89% of more than 9,000 home owners surveyed by property search website Zoopla predict further house price hikes in the next six months, marking the highest proportion seen since its records began in 2009.

Just 4% of home owners across Britain believe prices will drop, down from 17% this time a year ago. People typically expect prices to rise by 5.7% between now and next spring, with London home owners predicting particularly strong growth at 8.3%.

Some 97% of Londoners surveyed expect to see values increase. Separate research by another website, Rightmove, published earlier this week showed that house sellers' asking prices in London have jumped by 10% in the space of just one month to reach a new high of over £544,000.

Two-thirds (66%) of those across the survey who think property prices are on the up said the level of property sales they have already seen in their local area is their main reason for believing this.

Despite home owner confidence remaining higher in the South than the rest of Britain, every region recorded an increase in the proportion of people who think prices in their area are rising. Even in areas of the North and Wales, where confidence was at its lowest, 84% of home owners believe prices are rising.

The West Midlands and Yorkshire and the Humber recorded the biggest jumps in home owner confidence over the last quarter. The proportion of owners predicting price rises has risen from 78% to 90% in the West Midlands, while Yorkshire and the Humber has seen a jump from 72% to 84%.

The low point for home owner confidence recorded by the study was in winter 2010, when just over half (54%) of home owners were expecting price increases.

The Zoopla research was conducted between the end of September and the start of October - just after Prime Minister David Cameron announced that the launch of new phase of the Government's flagship Help to Buy scheme offering state-backed low-deposit mortgages was being brought forward by three months.

Mr Cameron has rejected fears that the UK is heading for a house price bubble, with borrowers being encouraged to over-stretch themselves in a market where the number of houses for sale is in relatively short supply, which is putting an upward pressure on house prices. He has said the market is generally still recovering from a low base.

State-backed lenders Royal Bank of Scotland (RBS), NatWest, Halifax and Bank of Scotland all started offering loans to first-time buyers and home-movers with 5% deposits under the new phase of the Help to Buy scheme from this month. Other major lenders including Santander, HSBC and Barclays have confirmed plans to join the scheme at a later date.

Lawrence Hall, spokesman for Zoopla, said the new phase of the Help to Buy should boost confidence further "across the country" and not just in London, which has continued to attract wealthy overseas buyers looking for a safe haven to place their cash.

Office for National Statistics recently showed that even before the new phase of Help to Buy was launched, UK house prices reached a record high of £247,000 in August and the British Bankers' Association (BBA) reported this week that mortgage approvals to home buyers are at a four-year high.

The Government's Funding for Lending scheme, which was launched in 2012 and has given lenders access to cheap finance to help borrowers, has already had a major impact on the housing market, with the choice of mortgages rapidly increasing and lenders dropping their rates to ultra-low levels.

Here is the proportion of home owners predicting house prices will rise over the next six months by region, according to Zoopla:

:: Yorkshire and the Humber, 84%

:: West Midlands, 90%

:: Wales, 84%

:: South-west England, 90%

:: South-east England, 95%

:: Scotland, 85%

:: North-west England, 84%

:: North-east England, 84%

:: London, 97%

:: East of England, 92%

:: East Midlands, 88%

Article Source: http://www.express.co.uk/news/uk/439012/89-expect-house-prices-to-rise

Buy-to-let Mortgage Market is Prospering

According to a report by Landlord Today a large number of buy-to-let market is booming as shown in this article by propertysecrets on September 16th, 2013.

The latest figures from the Council of Mortgage Lenders show strong growth in the buy-to-let market report Landlord Today.

15,200 BTL loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.

Lending for BTL house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.

There was strong growth in BTL remortgage lending which increased by 24% in July compared to June, a value of £1.1bn. This equated to 7,200 loans in July for BTL remortgage in total, an increase by 13.4% on June 2013.

The figures come just a week after a survey by the Royal Institution of Chartered Surveyors (RICS) showed that house prices are rising at their fastest pace for almost seven years. Many pundits are predicting that the introduction of Help to Buy could lead to another house price bubble.

Stephen Johnson, managing director of commercial mortgages at Shawbrook Bank, said: "The announcement of the rise in buy-to-let lending is great news for the industry and Shawbrook is keen to support professional investors looking to take advantage of these market conditions.

"However, as an industry we must be careful to not create another bubble. At the moment lending conditions are very good but these are unusual times and the UK needs to create a sustainable market, not one lurching from peak to trough. Those looking to buy property need to ensure they look at the long term - investors need a portfolio that can still work in a more normalised interest rate environment. Sensible gearing will maximize returns, over-gearing now could potentially put at risk investors' hard-earned equity."

Article Source: http://www.propertysecrets.net/article/buytolet_mortgage_market_booming/3115.html

George Osborne's Homes Scheme Could Sideline First-Time Buyers

Help to buy homes scheme could cause property prices to new highs says lenders as shown on this article by Hilary Osborne and Phillip Inman of TheGuardian on August 28, 2013.

Help to Buy scheme may 'give with one hand and take with the other' by pushing costs up by 11% by the end of 2016.

George Osborne's policy of kickstarting the housing market with subsidised mortgages could inflate prices to pre-crash peaks and sideline the first-time buyers it is designed to help, according to a group representing some of the UK's biggest banks and building societies

In the latest warning about the impact of the Help to Buy programme, lenders said property prices could rise by 11% by the end of 2016, with artificially inflated valuations the biggest threat to its success. Without a housebuilding programme to address the extra demand, property prices could spiral to new highs, said the Intermediary Mortgage Lenders Association.

"If house prices continue to rise for the duration of the scheme, then in essence we will be giving with one hand and taking away with the other," said Peter Williams, executive director of the IMLA and director of the University of Cambridge Centre for Housing and Planning Research.

House prices in London are above their 2007 peak, according to the Nationwide building society, but taken across the entire country they remain 9% lower, as IMLA warned that under the scheme the average UK home would cost £180,256 by the end of 2016. That would take average prices close to 2007 peak of £181,975.

The Help to Buy scheme, announced by the chancellor in March, aims to grant mortgages to homebuyers with a deposit of as little of 5% of a property's price.

The first part of the programme, which allows buyers to subsidise purchases of newbuild homes with an interest-free loan from the government, launched in April. It has been credited with reversing a fall in housebuilding and boosting consumer confidence. However, the second part, which will be introduced at the start of 2014 and will offer a taxpayer-backed guarantee to lenders who offer mortgages worth up to 95% of the property's value, has attracted criticism from economists, politicians and other commentators, who have warned it could fuel a house price bubble. Albert Edwards, who heads the global strategy team at Société Générale, described it as a "moronic policy".

IMLA, whose members include subsidiaries of Santander, Barclays and Nationwide that offer mortgages through brokers, said 60% of its members believed the scheme could be undermined by a house price bubble.

While all respondents agreed first-time buyers had the most to gain from the second part of the scheme, they are likely to be the hardest hit by a rise in prices to 2007 levels. This would push the cost of a 5% deposit from £8,321 at the end of this year to £9,013 by the end of 2016.

A recovery in the housing market has accompanied a turnaround in the economy since the beginning of the year. GDP has risen by 1% in the first six months, with most sectors of the economy showing they expanded compared to last year.

However, the TUC is warning that a rise in UK population, by 2.3 million to 63.7 million over the last five years, means the benefits of GDP growth have been spread over a greater number of people. According to a TUC analysis, GDP per head is still 0.7% lower than when the coalition took office and 7.5% lower than the UK's peak level in late 2007.

The TUC's general secretary, Frances O'Grady, warned that the recent burst of borrowing by consumers to fund everything from house purchases to the weekly shop was based on extra debt and not on a rise in incomes.

She said: "Too many people are having to run down their savings or turn to credit cards to spend in the shops, rather than see their incomes grow. And behind improving employment figures are millions of workers whose incomes are falling and who can't get enough hours to make ends meet.

"We all want to see the UK economy back on track but any talk of recovery is meaningless unless we get the right kind of growth."

The current level of GDP per head at £23,728, is mere 0.7% higher than at the lowest point of the recession in September 2009, the TUC said.

Article Source: http://www.theguardian.com/money/2013/aug/28/george-osborne-housing-policies-damage

Warning of London Housing Bubble as Mortages Soar by 29%

This article was published on London Evening Standard on August 20, 2013, written by Jonathan Prynn stating the increased in mortgage may result in dangerous housing price bubble in London.

A dramatic surge in mortgage lending today sparked fresh fears about a dangerous house price bubble in London.

Banks and building societies advanced home loans worth £16.6 billion last month, up 29 per cent on last year and the biggest rise for seven years.

Property experts said low mortgage rates, the Government’s Help to Buy scheme and growing confidence about the economy contributed to the increase in lending.

But MPs warned that the lending boom could simply “pour petrol” on a market already showing signs of overheating and price more Londoners out of home ownership.

Mark Field, Conservative MP for the Cities of London and Westminster, said: “The London market has never really been in the doldrums. The danger here is that affordability of property prices becomes ever more a fantasy for more and more people.”

Government figures last week showed prices rising at eight per cent to a record average £425,000 in June compared with one per cent outside London and the South-East.

The Council of Mortgage Lenders figures today reveal lending is bouncing rapidly from the depressed levels of around £10 billion to £13 billion a month seen since the  banking crisis five years ago, Last month’s total was the highest since October 2008.

The Treasury’s Funding for Lending scheme, aimed at encouraging bank funding for home buyers and small businesses, and the Help to Buy programme, which has already been taken up by 10,000 new home owners, have contributed to the return of confidence.

Borrowers were further encouraged by Bank of England Governor Mark Carney suggesting that its 0.5 per cent lending rate is unlikely to be increased before 2016.

Fixed-rate mortgage deals are at historic lows, with some lenders offering fixed-rate deals below two per cent, levels described as “quite staggering” by Ed Mead of London estate agents Douglas & Gordon.

There have even been the first signs of the return of interest-only mortgages with lenders such as Clydesdale and Yorskshire offering nought per cent for the first three years on some deals.

But leading property experts called on George Osborne to scrap the second phase of its Help to Buy mortgage scheme in London, due to come into force in January.

Doug Shephard, director at property search website Home.co.uk, warned: “The London property market clearly needs no further stimulus; it’s running too hot already.” Stuart Law of buy-to-let investment firm Assetz said lending conditions are so favourable that he expected “double digit” rises in property prices next year.

Shadow housing minister Jack Dromey warned: “Unless the Government invests in building the homes our capital city badly needs, rapidly rising property prices will put the dream of home ownership beyond the grasp of millions of Londoners.”

The Council of Mortgage Lenders’s market and data analyst Caroline Purdey said: “An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy.

“Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets.” The CML’s members account for 95 per cent of residential home loans in the UK. There are 11.3 million mortgages in the UK, with loans outstanding worth more than £1.2 trillion. However, with many borrowers still effectively locked out of the market — such as those with impaired credit ratings or negative equity — there is still a long was to go until  lending recovers to the peaks of £30 billion in 2006 and 2007.

Nevertheless leading property figures welcomed the return to more “normal” conditions after so many barren years. Richard Sexton, director of chartered surveyors e.surv, said: “The mortgage market has been the pillar of the economic recovery. The freeze on high loan to value mortgages has thawed, and first-time buyer lending is at its highest since the banking crisis.”

Housing minister Mark Prisk said: “Today’s figures show our Funding for Lending Scheme, and record low interest rates, have led to the highest level of mortgage lending since 2008. But alongside this, we’re also pulling out all the stops to get Britain building, and the increased availability of mortgage finance is boosting confidence in the housing market, and encouraging house builders.

“We’ve also been working with the Mayor to invest billions of pounds to deliver the fastest rate of affordable housebuilding for two decades.”

‘High prices have forced us to look outside capital’

MEG Jorsh and boyfriend Jason Rowbottom have become so demoralised by London prices they have taken their property search away from the capital.

The couple bring home a combined income of about £65,000 and are saving £500 each a month for a deposit — despite the £900 monthly rent for their two-bed flat in Beckenham.
They would like to stay in London but have decided to buy in Manchester.

Journalist Ms Jorsh, 29, whose 30-year-old boyfriend is a manager at the Health and Care Professions Council, said London’s property prices were so high that the help-to-buy schemes would have no impact. “We would love to get on the ladder for the security that it gives you, but we know we are in for a long slog,” said Ms Jorsh.

“We are planning to move to the North so what we can buy will actually be decent.
“Even with a £25,000 deposit here, which seems like so much money, we’d probably only end up with a one-bed flat. It would be wonderful to be able to stay in London, but we just can’t have the kind of lifestyle that we would like.

“The whole thing is really depressing and deeply demoralising.”
The couple expect it will take two to three years to raise a deposit.

Article Source: http://www.standard.co.uk/news/london/warning-of-london-housing-bubble-as-mortages-soar-by-29-8776256.html