UK ‘Pays Highest Property Taxes’

This article by This is Guernsey on November 7th, 2013 tells us that in the developed world, British people are the one who pays the highest level of property taxes.

British people pay the highest levels of property taxes in the developed world, a think-tank says.

 

British people pay the highest levels of property taxes in the developed world and more than twice the average for the 34 rich countries in the Organisation of Economic Co-operation and Development, according to a think-tank report.

The right-of-centre Policy Exchange said politicians should reject new levies on property – such as the “mansion tax” on residences worth over £2 million favoured by Liberal Democrats and Labour – and instead pledge to bring down housing costs by building 1.5 million new homes by the end of the decade.

The report called for at least one new “garden city” and changes to planning rules to deliver 300,000 new houses a year.

Councils that fail to hit their own housing targets should be forced to release land to local people who want to design and build their own homes, said the thinktank.
The report calculated that property taxes including council tax, stamp duty, inheritance tax and capital gains tax amount to 4.1% of GDP in the UK – the highest in the OECD and well above the average 1.8%.

By comparison, Canada levies 3.5% of national income in property taxes, the USA 3%, Japan 2.8% and Germany 0.9%.

Alex Morton, head of housing and planning at Policy Exchange, said: “No other developed country taxes property more heavily than the UK. Yet rising house prices and falling levels of home ownership have led to many calling for an increase to land and property taxes.

“But these issues will only be solved by genuine reform of the outdated planning system, not a tax raid on peoples’ homes. Politicians cannot try to do everything at once and must focus on the most crucial issues.

“The evidence shows where excess credit and under-supply exist, taxation or subsidy can only have a limited impact. That is why policymakers should ignore calls for a new round of property taxes and instead commit to spreading the benefits of homeownership and stabilising the UK economy by building at least 1.5 million new homes over the course of the next Parliament.

“This means serious reform of the planning system and creating new ways to deliver housing.”

A Government spokesman said: “The UK has the fourth lowest transaction costs for moving house with property taxation making up the smallest component of overall costs.

“The Chancellor has been clear there are no plans for a new house price tax on family homes. This Government has frozen Council Tax for hard-working people and cut business rates for small firms, despite the need to pay off the deficit left by the last administration.

“We have delivered a series of reforms to speed up and simplify the planning system, including a comprehensive package to support self-builders. House builders credit Government action for getting the housing market moving again, and schemes like Help to Buy are giving hard-working people a helping hand to increase home-ownership”
Dan Wilson Craw, spokesman for the PricedOut campaign for people who would like to buy a home but cannot afford to, said: “Every month, private tenants are seeing their dream of home-ownership slipping further from their grasp – and all the while they’re paying off the mortgage of their landlord who gets rich from rising house prices.

“This is a symptom of a society that treats houses as an asset to speculate on rather than somewhere for people to live. Tinkering with the tax system could help make the system fairer, but under-supply is the real problem. If political leaders were bold and built 1.5 million more homes over the next Parliament, they could make a real difference to the cost of living.”

Article Source: http://www.thisisguernsey.com/news/uk-news/2013/11/07/uk-pays-highest-property-taxes/

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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

Mortgage Approvals Rise Ahead of ‘Help to Buy’

This engaging article by Lucy Tesseras of Marketing Week on October 24th, 2013 tells us that Help to Buy scheme could open doors to brands but could damaged consumer trust.

A rivival in the property market thanks to government schemes such as Help to Buy could open new doors for brands, but damaged consumer trust and squeezed disposable incomes requires a fresh marketing approach. 

 

Above: Furniture company BoConcept is tapping into the market where people can’t afford to move and so need to use the space they do have more effectively. It has seen a huge uptake of its free interior design service it launched to raise its brand profile

Signs that the property market is recovering may feel like a boon to businesses related to the sector, but brands must meet this potential mini-boom with new strategies, according to marketers from companies including Santander, retailer Furniture Village and estate agent Savills.

Mortgage lending, house prices and transactions are beginning to bounce back thanks in part to government incentives including the Help to Buy scheme, which means marketers will have to adapt quickly. House building was up 6 per cent in the second quarter of the year, while mortgage debt dropped by £15.4bn, according to the Bank of England. This will greatly affect industries beyond those that deal solely with the buying and selling of houses.

The £12bn Help to Buy scheme continues to be the cause of much debate both inside and outside government. Some parties expect it to fuel recovery and open up the market for first-time buyers, while others are against it, fearing it could create another pricing bubble.

Despite a Bloomberg survey of 31 economists finding that two-thirds believe it is a “bad” move, there is interest from consumers. The Royal Bank of Scotland is offering loans under the scheme and booked 5,000 mortgage appointments within three hours of the scheme being launched on 8 October; appointments doubled to 10,000 after four days – twice the number it typically expects.

Either way, there is movement in the sector so a level of adjustment is necessary in the way brands communicate with consumers.

Santander, which will begin offering mortgages under the scheme in the new year, has embarked on a big marketing push for its existing mortgage products. The ads are fronted by Formula One champion Jenson Button and their tone is very different from previous ones.

“The market has realised that price is not the be-all and end-all,” says Keith Moor, director of brand and communications. “Consumers are much more savvy. It’s a value judgement now. They understand that going with the cheapest doesn’t necessarily mean going with the best.

It’s still a competitive market and you have to be priced in the game to play it but companies are increasingly realising that leading on that one dimension is not wise. Banks have a big job to do to rebuild trust and part of that is not forcing people to make big decisions based solely on price.”

This year, Ikea launched its ’Make small spaces big’ campaign in the UK and Ireland after finding that homes here are 15 per cent smaller than in Europe

Santander’s approach this time is based on insight about how consumers feel about mortgages. As they are a long-term investment, people fear it will be a noose around their neck.

“To answer that concern we have launched a range of mortgages that give people more freedom. People are free to overpay within the mortgage, but people are also free to leave whenever they want. It’s tapping into insight rather than the commoditised approach based on price,” says Moor.

Other banks are taking a similar tack. Lloyds Bank kicked off a £30m marketing campaign following its rebrand from Lloyds TSB in September, which focuses on the ‘moments that matter’. One example is an ad that tells the story of a 31-year-old man who is relieved of the frustrations of having to live with his parents after getting a mortgage through the bank. Barclays has based its proposition around listening to customers’ ideas, while TSB has relaunched with the message: ‘welcome back to local banking’.

Signs of initial recovery in the housing market have sparked renewed interest from investors too, encouraging estate agents Foxtons and Countrywide, as well as housebuilder Crest Nicholson, to float on the stock exchange. There has also been speculation that property website Zoopla is contemplating an IPO after it appointed Credit Suisse to explore “strategic opportunities”, though the Daily Mail and General Trust-owned business has downplayed such talk.

Zoopla estimates that the second phase of Help to Buy could reduce mortgage debt by £22.1bn. Its research finds there are 665,000 eligible homes on the market with an average price of £222,168. Under the mortgage guarantee scheme, the deposit needed to buy a property has dropped by two-thirds to £11,108.

As a result, property searches are going to be at an all-time high over the next year, according to the company, so it will be investing heavily to tap into consumer interest.
“First-time buyers are arguably the most important segment of the property market, as they allow those further up the chain to move, which creates supply and fluidity in the market,” says Charlotte Harper, marketing director of Zoopla Property Group. The company also owns PrimeLocation and has acquired four property portals from Trinity Mirror to compete with market leader Rightmove.

People spend more on their homes in the first 6 months than in the next 5 years so any growth in the property market is good news for us

Although the government schemes will not affect Zoopla’s marketing activity directly, says Harper, it is likely to influence some of the content it produces to ensure consumers have up-to-date information and understand the likely consequences of being involved in such a scheme (see Q&A).

The company became a sponsor of Premier League team West Bromwich Albion last season, which has helped it widen its reach and profile in the UK. It also launched its largest marketing campaign to date at the beginning of September, which incorporates outdoor ads for the first

time in addition to a major TV push. The multi-million pound ‘Smart’ campaign illustrates key features of the website’s property search, such as data about proximity to local schools and transport links.

“With the property market beginning to turn, consumers are looking for guidance and information in order to help them make better property-related decisions,” she says. “Our Smart campaign seeks to own the rational side of home-buying and help people to make confident and informed choices within that process.”

While some analysts have predicted the Help to Buy mortgage guarantee initiative will lead to another property boom, specialists at Savills and Knight Frank believe that idea might be premature.

Yolande Barnes, director of residential research at Savills, said in the firm’s Q3 market analysis: “Despite all the talk of an artificially induced housing boom, resulting from Help to Buy and other government measures, this infant housing market is far from performing like the previous housing cycle did [in 2006/2007]. We are still far from a housing market boom, although the next three years may look like a mini boom in relation to the past five.”

Knight Frank associate John Waters has a similar view but nonetheless is positive about the market.

“I don’t think it is likely to cause a pricing bubble,” he says. “Central London has been quite solid for the past few years in terms of pricing, but outside of London it is a very different story. As the broader economy improves, prices will begin to rise outside of the capital a lot more than they have done for a long time. I think it will help the market to recover and it will certainly help many people outside of London that are in negative equity to get back to where they were.”

Santander will offer mortgages under the Help to Buy scheme from early next year

Lynda Clark, editor of First Time Buyer magazine, which hosts the First Time Buyer Home Show in London, confirms that consumer’s interest is on the increase as both registrations and exhibitor numbers are “markedly up”.

“Help to Buy is making the prospect of owning a home more affordable for people, even in central London where prices are much higher than elsewhere in the country. I know there’s lots of controversy about it, but anything that helps somebody buy their own home, which will be one of the biggest purchases of their life, has got to be a good thing,” she says.

An uplift in the property market will benefit home retailers too. Charlie Harrison, marketing and ecommerce director at Furniture Village, says: “We know that people spend more on their homes in the first six months [after moving in] than in the next 5 years, so any growth in the property market is good news for furniture retailers.”

He expects to see many more first-time buyers entering the market following the launch of the second stage of Help to Buy and has been scaling up accordingly.

“We have been increasing our range of fast delivery items and introduced more lines that are available to take home the same day, such as vacuum packed mattresses that fit into a car. Furniture Village offers an interest-free credit option, which is also popular with customers furnishing their first home, and we will continue to include this as a key promotional message.”

While budgets might be tight, Capital Economics property economist Matthew Pointon does expect the fortunes of home retailers to bounce back if the housing market improves.

“When the number of transactions rise you tend to get an increase in spending on things such as white goods and home improvements as people do up their homes. I’m not sure we’ve seen much evidence of that occurring just yet but it is certainly what I would expect to happen if transactions really take off,” he says.

However, he is doubtful the mortgage guarantee aspect of Help to Buy will help to fuel the industry as much as the government believes, since the monthly payments on a 95 per cent mortgage could make it more expensive than renting.

“We’re not convinced it’s going to lead to a huge increase in buyers. Even though you can get a mortgage with a 5 per cent deposit, you still need to pass strict affordability checks in order to obtain them. Concerns that there is going to be a stampede of demand are exaggerated,” he adds.

Retailers may have another crack at the whip though, because over the past year while transactions have been down, people have turned their attention to renovating existing homes by building extensions, redecorating and generally improving their home environment.

Furniture Village, Ikea and BoConcept have all tapped into the idea of making better use of space in the realisation that not everyone has been in a position to move up the property ladder.

Harrison says: “As a result of the ‘don’t move, improve’ trend, Furniture Village has expanded its range of items that help homeowners make the most of their existing space. Products with hidden storage, such as ottoman beds, are proving popular and we have also seen an increase in sales of compact kitchen dining.”

Likewise, Ikea launched its ‘Make Small Spaces Big’ campaign in the UK and Ireland this summer after learning that homes in Britain are 15 per cent smaller than in Europe. Its global sales jumped 3.1 per cent to €27.9bn in the year to the end of August, although it does not separate UK figures.

BoConcept has seen a “huge increase” in the uptake of its free interior design service in the UK, according to country manager Zoe Shields.

“A trained member of the BoConcept sales team visits the customer’s home, measures the space and works with them to find the best possible solutions,” she says. They are then invited back to the store where they are presented with “mood boards, 3D design drawings and a set-up to reflect the products they have selected”.

As the market picks up, BoConcept will be looking to partner with local estate agents to offer the service to their clients and will also promote options such as deferred payment.
In June, B&Q launched a campaign urging homeowners to turn their attention to ‘unloved’ rooms. The retailer struggled in the early part of the year, blaming bad weather for the poor sales. But B&Q owner Kingfisher was more positive at the half-way point with a 4.3 per cent rise in group sales.

”With the property market beginning to turn, consumers are looking for guidance and information in order to help make better decisions.” - Charlotte Harper, managing director, Zoopla Property Group

Group chief executive Ian Cheshire says: “We remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick-up in the UK housing market.”

However, Sainsbury’s chief executive Justin King is not so positive. He believes UK consumers are likely to have less disposable income this time next year as inflation will be around 3 per cent, while average wages will increase by 1 per cent. Despite the bleak outlook, the retailer has posted a 4.4 per cent lift in total sales for the first half of 2013.

“Although we are starting to see encouraging signs in key economic indicators, our customers’ approach to savvy shopping, which started at the beginning of the downturn, has persisted and continues,” he said in a statement.

The economic downturn has made consumers more cautious, which means companies need to be smarter in their communication.

“Whether there is a boom or not, I don’t think we will see organisations promoting in the same way,” says Santander’s Moor. “It is incumbent on us all to be responsible in the way that we lend and the conversations that we have with customers. Everyone is much more responsible than they used to be and that’s partly because consumers are more cautious but also because organisations need to address some of the concerns, fears and trust issues that people have, particularly with banks.”

Article Source: http://www.marketingweek.co.uk/trends/propertys-path-of-potential/4008241.article

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

Future of London: The New York Times on the Foreign Rich Buying Up Property

This article by Michael Goldfarb of theguardian on October 20th 2013, tells us that property in the capital has become a global reserve currency for the elite.

Aerial view of Tower Bridge and the River Thames at night. Photograph: Jason Hawkes/theguardian.com

 

Our neighbours Lauren and Matt and their kids moved out of London to Cambridge the other week. Bibi, Andy and their two left for Bristol in June. Another of my eight-year-old's classmates and her family are heading out after Christmas. In my book this is a trend.

The moves are not examples of the lifecycle of the striving middle classes. Nor are they examples of middle-class folks being thrown on hard times by the sluggish British economy.

The families moving out had good incomes. Matt, who had been looking for a house for more than three years, summed up the reason for leaving best: "I don't want to be a slave to a mortgage for the next 25 years." Given the astronomical rise in house prices here, he wasn't speaking metaphorically.

This is what happens when property in your city becomes a global reserve currency. For that is what property in London has become, first and foremost. The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world's richest people to park their money at an annualised rate of return of around 10%. It has made my adopted hometown a no-go area for increasing numbers of the middle class.

According to Britain's Office for National Statistics, London house prices rose by 9.7% between July 2012 and July 2013. In the surrounding suburbs they rose by a mere 2.6%. The farther away from London you go, the lower the numbers get. When you finally cross the border into Scotland, house prices actually decline by 2%.

The gap between London prices and those of the rest of the country is now at a historic high and there is only one way to explain it.

London houses and apartments are a form of money.

The reasons are simple to understand. In 2011, at the height of the eurozone crisis, citizens of the two countries at the epicentre of the cataclysm – Greece and Italy – bought £400m of London bricks and mortar. The Italian and Greek rich, fearing the single currency would collapse, got their money out of euros and parked it some place where government was relatively stable and the tax regime was gentle – very, very gentle. Considering that tax evasion in Italy and Greece was a significant contributory factor to their debt problems, it just seems grotesquely cynical to encourage this kind of behaviour.

But that's what Britain in general, and London in particular, does. The city is essentially a tax haven with great theatre, free museums and formidable dining. If you can demonstrate that you have a residence in another country, you are taxed only on your British earnings.

And the savings on property taxes are phenomenal. The property taxes on New York mayor Michael R. Bloomberg's $20m London home come to £2,143.30 a year. That's $3,430.

Clearly, the mayor bought in at the right time. The Google executive chairman, Eric Schmidt, is reported to be house-hunting here – he's looking in the £30m (about $48m) price range. Yet he will pay a similar amount in property tax as Bloomberg does.

There are other facets of London real estate as a medium of exchange. British gross domestic product has yet to return to pre-crash levels, but the financial services industry has roared back. Banks are paying out big bonuses again, and anyone looking for a safe investment is getting into London property.

From the top of Parliament Hill, on Hampstead Heath, look eastward. Out around the Olympic Park and beyond you see clumps of highrise apartment buildings sprouting like toadstools in a meadow after heavy rain. These aren't being built to meet the calamitous shortage of affordable family housing in the city; they are studio and one- or two-bedroom apartments.

The developments are financed by "off plan" buying. Bonus babies look at the blueprints and put their money down with no intention of living in what they've bought – just collecting decades of rent. And it's not just those who work in London's financial district, the City, who buy in. Hot money from China, Singapore, India and other countries with fast-growing economies and short traditions of good governance is pouring into London.

When I say property is money I mean it. An astonishing £83bn of properties were purchased in 2012 with no financing – all cash purchases. That's around $133bn.

I suppose the development that houses equals medium of exchange isn't all bad. I have friends who were very successful "creatives" (architects, cinematographers, commercial and television directors, etc) in their 30s and 40s. They bought houses when houses were places to live in. Once they turned 50, they passed through a mirror that turned them invisible. Work dried up. They have survived in London via the magic of remortgaging. They accept that their children will never be able to afford to stay on in the city.

The ripple effect of this frankly demented situation is felt all over town. The foreign rich and the City rich (there is some overlap) have made most of the centre of London unaffordable to any but their own kind. Those who were once considered rich – in the top 10% of earners – now can barely afford to move to my neighbourhood, where a typical row (terraced) house, with three bedrooms (the third bedroom wouldn't qualify as a closet in Manhattan) and a total living space of around 950 square feet tops a million dollars, three times what it cost in 2000.

The overall economy of Britain certainly doesn't justify these prices. Bank lending for businesses is flat, but mortgage lending? Hoo-ha, it's soaring up and up and the bulk of it is concentrated in London. It's as if the whole British economy is based on housing speculation in the capital.

David Cameron's government seems to think that is the case. Cameron may be pursuing austerity policies elsewhere in the economy, doing virtually nothing to help subsidise employment or industry, but his government has just started a "help to buy" scheme. The government will guarantee up to 15% of the purchase price of a house up to £600,000 ($960,000), if you have a 5% down payment.

The ordinary uses of the city have been changed beyond recognition. London was never a cheap place to live, but now more expensive property means more expensive everything else: restaurants, cinemas, bars and theatre tickets.As for services, the minimal tax paid by those who have made property into money means that a city whose population has increased by 14% in the last decade can't afford to build new schools. There will be a capacity shortfall of an estimated 90,000 places by 2015. Children won't be turned away from school, but class sizes will grow to untenable proportions.

So younger people, like my former neighbours, feel compelled to leave – even though they were making a very decent living. The delicate social ecology that made London's transformation into a great world city over the last two decades is past the tipping point, I fear.

For the quarter of a century I have lived here, a sense of community has defined my life. A very organic sense of London pride has allowed this city to withstand substantial shocks – some welcome, like its transformation into a true cosmopolis; some unwelcome, like jihadist terrorism.

Now it is beginning to feel that the next phase of London's history will be one of transience, with no allegiance to the city. I wonder whether those just parking their money here by buying real estate will ever be able to provide the communal sensibility to help the city survive the inevitable shocks it will experience in years to come.

How this story will end doesn't bear thinking about. It seems a very reasonable bet, though, that those who use London property as just another form of money aren't thinking about it at all.

Michael Goldfarb is a writer whose most recent book is Emancipation: How Liberating Europe's Jews From the Ghetto Led to Revolution and Renaissance
© 2013 The New York Times Syndicate

WHY MY STORY HAD SUCH AN IMPACT

When I wrote this piece in September, shortly after the ONS published its report showing a 9.7% increase in London house prices, I never thought to send it to a British paper. Everybody here knows the score – no one will publish it, I thought. Wrong. It went viral. Clearly, it spoke to people's fears.

They fear that property prices make no sense. It feels like 2005-07 all over again. People shake their heads and say it can't go on like this. Since nothing has changed in oversight of the City and the rest of the global financial system, people fear what the next property- driven crash will do to their lives.

People fear for their jobs. The time frame of productive economic life for the middle classes is growing shorter. People don't get into good full-time work now until their late 20s. By the time they are 50, they are living on borrowed time (it's more like 40 if they work at Silicon Roundabout). And anyway wages are not rising in line with house prices, so they have to take out massive mortgages.

Finally, they fear what I write about at the end of the essay. The balance in London's complex social ecology has been lost. The balance point in any society should be between stability and stasis. Stability is good; stasis is bad. What's happening in London has shifted the ground so dramatically that stability isn't something most people can contemplate. How do you raise your children knowing that the place they were born and raised is – on current trends – not a place they will be able to afford to live when they grow up?

Article Source: http://www.theguardian.com/uk-news/2013/oct/20/london-new-york-times-foreign-rich-property

Top Forecaster Says Housing Bubble Risk 'extremely slim'

This interesting article by BBC News Business on October 13th, 2013 tells us that there will be a lesser chance of housing bubble in the UK because according to ET Item Club investment in housing is forecast to rise 7.5% next year.

The risk of a housing bubble in the UK is "extremely slim", according to one of the country's leading economic forecasters, the EY Item Club.

In its quarterly report on the economy, the Item Club said government schemes such as Help to Buy will help boost house prices by 3.5% this year.

It also forecast that house prices will rise 6.6% next year.

Business Secretary Vince Cable is one of those concerned about the effects of the Help to Buy scheme.

Last month he said there were already signs of "serious housing inflationary pressures" in parts of the country.

And in an interview with the Financial Times on Monday, the chief executive of Lloyds Banking Group, Antonio Horta-Osorio expressed his concerns.

He said that new home building needed to be encouraged by easing planning restrictions, to avoid a "substantial" increase in house prices.
'Well-timed' But Peter Spencer, the Item Club's chief economic adviser, said government efforts to revive the mortgage market had been "well-timed and targeted".

"Despite the recent criticism of these initiatives, the chances of seeing another housing market bubble are extremely slim," he said.

"House prices and transactions are only just recovering from the credit crunch and will be paltry in comparison to those of a decade ago.

"Household finances are also in much better shape, with debt to income ratios now at sustainable levels."

Under the second phase of the Help to Buy scheme, now in place, borrowers across the UK can put down a deposit of as little as 5% of the property price.

The government provides a seven-year taxpayer guarantee to the lender covering 15% of the loan value. It is available for properties sold for up to £600,000 in the UK.

The Item Club forecasts investment in new housing will rise by 7.5% next year and an additional 10% in 2015.

It has also raised its forecast for economic growth this year to 1.4%, up from 1.1%. And next year it expects growth of 2.4%, up from its previous forecast of 2.2%.

Article Source: http://www.bbc.co.uk/news/business-24515285

Help to Buy Scheme: How it Works?

This engaging article by The Week on October 7th, 2013 reveals the purpose and objective of the government in launching the help to buy scheme.

The Help to Buy scheme - a government initiative designed to help struggling home-buyers get onto or move up the property ladder - has two phases. The first, a £3.5bn scheme aimed at buyers of newly-built properties worth up to £600,000, was introduced in April and has already been taken up by about 7,000 people. The second phase, which applies to new or second-hand properties up to the same value, starts accepting applications today. David Cameron believes the initiative is essential because "the mortgage market today isn't working". Critics argue that it may trigger a housing bubble, particularly in the over-heated London market. But what is the Help to Buy scheme and who will be eligible?

How does phase one of Help to Buy work? 

The first phase of Help to Buy applies only to new homes and first-time buyers. Borrowers need to raise a 5 per cent deposit on the property and can then borrow a further 20 per cent from the government, initially interest free, up to a maximum of £120,000. After five years, what remains of the loan will attract interest at 1.75 per cent per year. The rate will increasing each year by 1 per cent above inflation. The £3.5bn scheme, which will be administered by home builders will support about 74,000 home purchases.

What happens if you can't pay your mortgage?

If you take out an equity loan and find you can't pay your mortgage, you'll probably have to sell the property or the bank will repossess it and sell it for you. Citywire points out that the 20 per cent equity loan will still need to be paid back to the government.

And phase two?

Phase two of Help to Buy applies to home movers as well as first-time buyers and second-hand houses as well as new ones. In this phase, the government does not loan money to the homebuyer but provides a guarantee to the lender for up to 15 per cent of the loan. That will allow borrowers with only a 5 per cent deposits a much wider choice of mortgage deals. As in phase one, there is a limit of £600,000 on the value of the property.

Why do lenders need loan guarantees?

The government guarantee reduces the bank's losses if a borrower defaults on his or her payments. "That allows them to offer cheaper mortgages to would-be home-buyers with small deposits, who are currently locked out of the market," explains the Daily Telegraph.

Why has the second phase been brought forward?

The second phase was due to start in January. Asked why the government had brought the start date forward three months, David Cameron said: "I am impatient to help young people get on the housing ladder.

Does that mean I can buy a new home this week?

No. Lenders won't be able to get loan guarantees from the government until 1 January, 2014. That means you won't be able to use the second phase of Help to Buy for home purchases that complete before 2014.

Which banks will offer the 95 per cent mortgages?

The scheme will initially be available from the Nat West, RBS and Halifax, but the government says other banks and building societies are expected to sign up over time.

Are there an unlimited number of 95 per cent loans on offer?

No. The government is making £12bn available in loan guarantees, enough to fund mortgages worth a total of £130bn. The scheme will remain open for three years. Mortgage brokers fear "a stampede of new applications" for loans when the scheme opens, reports The Guardian.

What interest rates will borrowers have to pay?

Citywire says there "could be a catch" in the mortgage rates lenders offer borrowers in the scheme. In the mortgage market those with a large deposit are often able to negotiate a lower interest rate. "It could be that a 5 per cent deposit mortgage incurs a high interest rate particularly if banks are told to hold more capital to cover the risky loan," says Citywire. Banks will also have to pay a fee of 0.9 per cent of the loan value to take part in the scheme. They are likely to recoup that from customers in the form of higher interest rates.

Who is excluded from Help to Buy?

The new loans aren't means tested, but they won't be available to people wanting to buy second homes or buy-to-let properties. Prospective borrowers will be required to sign documents confirming they are first home buyers or, if they already own a home, that they are in the process of selling it.

What do supporters of the scheme say?

The incoming chief executive of the state-backed RBS, Ross McEwan, told The Guardian that his bank was backing the scheme because: "We are committed to helping as many people as possible across Britain to get on with their lives, to buy their first home, to move to a bigger house as their family grows."

What do critics say? 

Business Secretary Vince Cable says the scheme may trigger an unsustainable boom in house prices, particularly in the south-east of England. "I am worried of the danger of getting into another housing bubble," Cable told the BBC. · 

Article Source: http://www.theweek.co.uk/uk-news/55455/help-buy-scheme-how-it-works

UK Property Prices Up 0.5% in September

This article by Property Wire on September 30th, 2013 reveals the latest index from Hometrack showing the increase in UK's house prices by 0.5% in the previous month.

House prices in the UK grew by 0.5% in September, the highest monthly increase since May 2007 and 41% of markets registered price rises compared to 6% a year ago.
 
Improving market sentiment, rising demand, low mortgage rates and falling supply are combining to put continued upward pressure on house prices, according to the latest index report from Hometrack.
 
The firm said that house price growth is accelerating on the back of a growing coverage of markets registering price rises. But there are regional variations. Over 70% of markets in London and the South East are registering increases while in all other regions price rises are limited to less than a third of regional markets.

However, in many markets outside London this is the first time that prices have started to register positive growth for over five years. Hometrack says that prices are rising off a low base and talk of a housing bubble is overstated.

These latest figures mean that demand has increased for the eighth month in a row growing by 1.4% in September. Also, the supply of homes for sale fell by 0.3%, the first contraction in seven months.

The data shows that there has been a steady contraction in the supply of homes for sale in London and the South East over the last three months. Across other regions improving market conditions has bought increased supply.

The strongest price rises are in regions where supply is most constrained and the report says that expanding supply is keeping price rises in check in the regions outside London and the South East.

The proportion of the asking price being achieved marginally increased to 94.7%. When this indicator plateaus and starts to decline the level of price growth will start to moderate, it explains.

‘A recovery in buyer confidence against a background of low volumes and scarcity of supply is supporting higher prices. It is important not to understate the impact of low mortgage rates and the buying power this provides to households that are looking to move,’ said Richard Donnell, director of research at Hometrack.

‘In the near term we expect prices to continue to rise but the market remains very sensitive to changes in demand and especially changing expectations over the outlook for mortgage rates,’ he added.

Article Source: http://www.propertywire.com/news/europe/uk-property-prices-index-201309308292.html

Bank of England Watches for Possible Property Bubble

This article by Huw Jones and William Schomberg of Independent.ie on September 26th, 2013 shows how Bank of England will keep a watchful eye for possible dangers of another property bubble.

The Bank of England said on today there was no immediate danger of a property bubble in Britain but that it was keeping a watchful eye out.

It also said it wanted more study on how vulnerable hedge funds that rely on borrowing would be to future interest rate rises.

The central bank's Financial Policy Committee (FPC) said Britain's housing recovery "appeared to have gained momentum and to be broadening" but was under control, based on gauges such as level of activity, debt costs and prices compared with incomes.

"In view of that, the Committee judged that it should closely monitor developments in the housing market and banks' underwriting standards," it said in a statement after its September 18 meeting. "The Committee would be vigilant to potential emerging vulnerabilities."

If any action was needed, it would be "proportionate to the risks and consistent with a graduated response."

House prices in Britain as a whole rose 3.3pc in the 12 months to July but jumped nearly 10pc in London, official data showed last week.

This has triggered some concern that BoE and government lending incentives are creating a housing bubble.

Stephen Lewis, chief economist at Monument Securities said the FPC - which is tasked with spotting risks to the economy from the financial system - was right to hold off for now. "It's probably the right thing at the moment. There is a lot of uncertainty at present about the housing market."

The housing recovery has been helped by government and Bank measures to free up mortgage lending. A new phase of the government's Help to Buy programme is to be launched in January.

Governor Mark Carney and finance minister George Osborne have shown no concern about the prospect of a housing price bubble, pointing to levels of activity in the property market that are below their pre-crisis peak.

But earlier this month, a group representing British property surveyors called on the Bank to take measures to slow mortgage lending if national house price growth exceeds 5pc a year.
Ed Miliband, leader of Britain's Labour opposition party, said this week that if he wins election in 2015 he would more than double the number of new homes built annually to 200,000 by 2020 to ease a shortage that has helped to push up prices.

FOCUS ON HEDGE FUNDS

In June, the BoE ordered an investigation into the vulnerability of Britain's financial institutions and borrowers to higher interest rates when central banks around the world start to wean their economies off massive stimulus.

The FPC said in its statement on Wednesday that a moderate rise in long-term interest rates did not pose an immediate threat to major banks and insurance companies and so far "had not led to dislocations in market functioning or significant impact on financial institutions."

However, levels of leverage within hedge funds, which could make them vulnerable to a sharp rise in borrowing costs, "needed to be looked at more closely," the statement said.

The Financial Conduct Authority, which is represented on FPC, said it asked a number of hedge funds during the summer about their preparedness for changes in interest rates following the June FPC meeting and as part of routine supervisory work.

The FPC's wider review of rate hikes would continue by looking at what impact "more significant stresses" would have and how any impact would ripple through the financial system.

The FPC said it will publish on October 1 a discussion paper on the design of a new framework for stress testing banks.

Article Source: http://www.independent.ie/business/bank-of-england-is-watching-for-signs-of-uk-property-bubble-29609879.html

Housing Market Boosts Confidence

This article of the Express on September 23th, 2013 reveals that the economy is now on its strongest levels because of the rise of market housing and jobs.

Consumer confidence in the economy has improved to its strongest levels in at least two-and-a-half years as optimism about the housing market and jobs rises, a report has found.

Sentiment towards the housing market is at its strongest since Lloyds Bank's Spending Power report began in November 2010, while worries about employment were also found to have eased.

Almost one fifth (18%) of people felt positive about the economy in August, showing a sharp increase from just over one in 10 (11%) in January. The proportion of people feeling negative about the economy fell to 31%, showing the lowest levels since research began.

These findings helped Lloyds' overall consumer sentiment index to rise to an all-time high of 115 points in August, marking a 10 point increase since the start of the year.

Patrick Foley, chief economist at Lloyds Bank, said the findings were "very encouraging". He continued: "Increasing consumer sentiment may in time embolden consumers to spend, so helping to underpin the wider economic recovery. In turn, such spending would further help improve the outlook for growth and jobs."

A new high of 39% of consumers were feeling positive about the housing market, which has recently seen a surge in activity following Government schemes such as Funding for Lending which have improved mortgage availability and led to some lenders offering their lowest ever rates.

House prices have also been back on an upward march in recent months, helping some home owners who have seen falls in the value of their property in recent years and who may have previously been stuck in negative equity.

People living in Northern Ireland, which has seen some particularly sharp drops in house prices before more recent signs that prices are stabilising, were the most likely to be downbeat about the housing market. Nearly three quarters (74%) of those surveyed in Northern Ireland said the housing market is "not good" or "not good at all", as did 72% of those in the North of England.

Meanwhile, negative feelings towards the employment market continued on a downward trend. Some 81% of consumers said the jobs market is "not good" or "not good at all", marking a decrease from 82% in July and 87% in May. Young people were the most likely to be upbeat about the employment market. More than one fifth (22%) described it as "somewhat good", compared with 16% of consumers generally.

People are also feeling less negative about how much money they will have in the coming months. The overall balance between those who feel they will have more money in the future minus those who predict they will have less was minus 3% in August, improving from minus 5% in July.

Article Source: http://www.express.co.uk/news/uk/431441/Housing-market-boosts-confidence

Tips to Increase the Value of Your Home

On this article by Express on September 20th, 2013 shows the different effective ways to increase the value of your property.

According to national estate agent Strutt & Parker the top five ways to increase the value of your home are as follows:

1. Room to Improve

Adding an extension is the most costly outlay but could increase the value of your home by up to 20 per cent.
2. Tap into Healthy Returns

The kitchen is the hub of the home. Creating a real asset by modernizing it can help you achieve your target asking price.
3. No Reason to Blow Hot and Cold

The prospect of upgrading a bathroom may deter some buyers but a new bathroom can be a prized asset.

4. Splash out on this Upgrade

Installing an en suite or wet room will increase the property’s appeal.
5. Appealing Aspects
An attractive garden has been proven to add value to a property. 

Article Source: http://www.express.co.uk/news/property/430774/Five-tips-to-increase-the-value-of-your-home

Average Property Price Sits at All-Time High of £257,000

This article by Lauren Everitt of EADT 24 on September 18th, 2013 shows that the property market is on its way to recovery with house prices on rise according to experts.

Property in the East of England now costs an average of £257,000 compared to £210,000 in July 2009 when the region felt the knock-on effects of the economic downturn.

Statistics from the Office for National Statistics (ONS) said a 1.4% rise in property prices from July 2012 to this July have helped increase the value of homes, surpassing the previous peak of £235,000 before the recession.

James Girling, director of Colin Girling & Company Ltd and PR representative for the Suffolk branch of the National Association of Estate Agents, said: “Since May the market has improved although it is still a buyer market.

“The Government talk about this ‘bubble’ but there isn’t one. Here in the east of the region we haven’t noticed this boom or bust scenario coming our way.

“It’s been a gradual increase of business and the first time buyers are coming through.
“The market is improving and we are optimistic but everything is two or three steps down from where it needs to be.

“The volume of activity is not where it was in 2006 and 2007 before it all went wrong.”
Michael Bedford, a partner at Bedfords in Aldeburgh, said the market has seen more activity.

“There has been more constant activity as well whereas there were peaks and troughs during the past few years,” he added.

“To many people’s surprise we had a record year in 2010 and this year has been as good but it’s too early to tell if it’s going to be better.”

However concerns have been raised that Government initiatives to kick-start the housing market such as Funding for Lending and Help to Buy are in danger of creating a property bubble, with borrowers over-stretching themselves as access to low-deposit deals returns.

Richard Sexton, director of e.surv chartered surveyors, warned that rising house prices threaten to price some people trying to get on the property ladder out of the market at a time when households are still under pressure from high inflation and stagnant wages.

He said: “If the Government wants to make housing more affordable - and avoid inflating another property bubble - then it needs to encourage more house building.”

Article Source: http://www.eadt.co.uk/news/east_of_england_average_property_price_sits_at_all_time_high_of_257_000_1_2643933

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

U.K. House Prices Increase to Record on London Property Surge

This article by Fergal O’Brien of BloombergBusinessweek on September 12th, 2013 reveals the increase of house prices in the UK and property market in London continued to soar.

U.K. house prices rose to a record last month as government measures boosted demand and London’s property market continued to surge, Acadametrics said. 

Values increased 0.4 percent from July to an average 233,776 pounds ($370,000), the London-based real-estate researcher and LSL Property Services Plc said in a report today. In London, prices have risen 40 percent from their peak in April 2009, compared with 16 percent nationally.

The Bank of England-run Funding for Lending Scheme has helped to cut mortgage costs, while Chancellor of the Exchequer George Osborne’s Help to Buy program allows people to purchase a home with a deposit of as little as 5 percent of the value of the property. The BOE has downplayed speculation that a bubble may be brewing, saying activity is still at a low level relative to its pre-crisis peak.

“The property market has turned over a new leaf after years of restrained activity,” said Richard Sexton, director LSL unit e.surv. “The government has been pivotal in providing the aid that the market has been craving for many years.”

Eight of the 10 regions tracked by LSL recorded price gains in the latest three months compared with a year earlier. In the southwest and Wales, where values fell, the declines eased, according to the report.

Acadametrics estimates that completed housing transactions exceeded 70,000 in August for a second month. That would mark the first time that sales over two consecutive months have been above that level since November-December 2007, when transactions were 104,486 and 84,524.

BOE Governor Mark Carney said yesterday that while the market is improving, activity levels, mortgage applications and valuations are still low. He also said prices will continue to increase and the Financial Policy Committee of the central bank will be “vigilant.”

“It is still too early to predict what impact the economy will have on prices, especially as the FPC may apply downward pressure through controls over mortgage supply and pricing,” Sexton said. “Thus nothing can be set in stone yet.”

To contact the reporter on this story: Fergal O’Brien in London at fobrien@bloomberg.net

Article Source: http://www.businessweek.com/news/2013-09-12/u-dot-k-dot-house-prices-increase-to-record-on-london-property-surge

England Needs More New Homes Than Previously Estimated

According to the new analysis England needs news homes a year are needed because of its increasing demand as shown on this article by the Property Wire on September 11th, 2013.

An analysis of Census information for England shows that over 240,000 new homes a year are needed as demand continues to significantly outstrip supply.
 
The analysis by housing academic Dr Alan Holmans published by housing and planning charity, the Town and Country Planning Association (TCPA), shows that the scale of housing need is greater than currently estimated.

Holmans, from the Cambridge Centre for Housing and Planning Research, says in the report that housing requirements are on average around 240,000 to 245,000 per year, with around 60% of all demand and need in the four southern regions of England.

This is up to 10,000 more homes per year than the generally used 235,000 figure. The report also shows that house building levels are slowing rising from their lowest levels since the 1920s, at around 100,000 per year.

‘This research, the first of its kind to analyse the Census 2011 data, is a crucial reminder of the desperate need for more and better housing in the right places. We have a hopelessly inadequate supply of housing and a serious backlog, as well as chronic affordability problems,’ said Kate Henderson, TCPA chief executive.

‘While house building levels remain at about 100,000 per year, the Census reveals a staggering need for over 240,000 homes per year. The research also shows that nearly one third of newly arising housing need requires some subsidy; without this investment affordability, overcrowding and ultimately homelessness will worsen,’ she added.

‘We urgently need a new vision for housing and the development of new communities. That new vision has to ensure a substantial increase in the supply of new homes and address affordability. At the same time, we must focus on building successful new communities, whether as part of urban regeneration or through new Garden Cities. This is essential not just to our economic future but also the social and environmental wellbeing of our country,’ she added.

The figures make projections for 2021 and extend them to 2031 to enable longer term decisions for land use management, planning and local government. The projections in the report, together with adjustments for gains, losses and vacancies in stock, suggest that over 240,000 additional homes will be required to meet newly arising demand and need.

The report says that even if the economy remains depressed and household formation rates remain low, there will still be almost a 20% increase in the number of households over the 20 year period to 2031. This is mainly because of the expected continued growth in population.

It also shows that there was an abrupt break with longer term trends in household formation in England between 2001 and 2011. To take the most obvious example, the number of one person households in 2011 according to the Census was nearly one million lower than the 2008 based projections published by the Department of Communities and Local Government in 2011.

Other large scale shifts in the mix of household types include far more couple plus other adult households than expected. In part this is about younger people staying at home or sharing accommodation for longer. But that is not the whole story as changes are observed in all age groups.

Applying past trends based mainly on household composition would suggest that some 68% of new households would be in the market sector of owner occupation or private market renting without benefits, but that housing to meet nearly one third of newly arising need would require some subsidy.

At the regional level, not far short of a quarter of all housing demand and need is likely to be concentrated in London, with over 60% in the four southern regions. But all regions require significant additional housing investment.

‘It is enormously important that we plan for recovery and deliver much higher output levels. Otherwise if recovery happens increasing house prices will worsen affordability. Planning based on the past few years of recession will simply build in the next crisis,’ said Professor Christine Whitehead, who was involved in the research that lies behind the report.

Chris Tinker, board director at home builders Crest Nicholson, which supported the research, said that the study re affirms the on going need for over 240,000 new homes per annum, 60% of which is required in London and the four main Southern regions.

‘With developer's consented land banks amounting to less than two year's housing demand there is therefore an urgent need for Local Authorities and developers to work together, especially in key demand areas, to identify and plan for a significant increase in new communities within which well designed homes can be delivered. A failure to meet housing demand will continue to undermine affordability and put the future prosperity and success of our communities at risk,’ he added.

Article Source: http://www.propertywire.com/news/europe/england-house-building-analysis-201309118222.html

A Quarter of All Homes Sold to First Time Buyers

According to this latest article by Alex Johnson of The Independent on September 10th, 2013 NAEA figures show around 26% home sales were sold to first-time buyers.

Around 26% of home sales in August were by first time buyers, according to figures from the National Association of Estate Agents (NAEA), the highest proportion since July 2010 and up from 22% in July.

NAEA members also reported an increase of 29% in the average number of house hunters per branch, up from 250 in July to 322 in August, as well as a slight increase in the average sales agreed per branch in August (nine) compared with July (eight). However, supply levels dropped slightly over the month – the number of available properties per branch decreased from 53 in July to 52 in August.

Around 40% of home buyers last month were aged between 41 and 55 years old, followed by 31 to 40 year olds at 36 per cent. Nearly eight out of ten properties were sold to couples.

Five thousand Lanarkshire homes set to receive green energy

Muirhall Energy has secured a £9million finance package from Santander to expand the Muirhall Windfarm in South Lanarkshire. It is adding two new turbines to the site, the tallest in the UK, to increase production to 60,800 MWh per year, enough to power over 14,300 homes each year. This will prevent 26,144 tonnes of carbon dioxide emissions each year.

Chris Walker, Managing Director of Muirhall Energy, said: “As demand for power increases and fossil fuel reserves deplete it is important we continue make the most of alternative sources of energy and wind power continues to be one of the most cost effective and green solutions.”

Lack of rental homes for families on the market

Figures from Countrywide show that two and three bedroom rental properties saw an increase in average monthly rents in August, up 0.6% and 0.9% respectively. One and four-plus bedroom properties saw a drop of 0.1% and 1.6% respectively. Nick Dunning, Group Commercial Director at Countrywide, said: “August is traditionally a busy period for the rental market with tenants, particularly families, wanting to move into their new rented accommodation before the start of the school term in September. However, demand is not being met by supply and currently there is a particular lack of family-sized properties available to rent, especially in the South of England. Improved conditions in the sales market are attracting reluctant landlords to sell these types of properties specifically in the catchment areas for good schools.”

Property prices in Surrey

According to Zoopla the property prices in Surrey are up 7.35% from five years ago and 4.12% from a year ago. James Wyatt, Partner of Barton Wyatt and Chairman of NAEA Surrey, said: “These figures point to the change in attitude of the money lenders in the last there months. Yet again financial institutions are driving the market and the recent decisions which enables UK buyers to borrow money more easily again has positively turned the market. This has aided sales in the small to medium sized end of the market as most of these properties are purchased with mortgages and in turn we have seen a 33% increase in domestic buyers over the past year in north Surrey.”

Article Source:  http://blogs.independent.co.uk/2013/09/10/a-quarter-of-all-homes-sold-to-first-time-buyers/

Who is the Typical First Time Buyer?

This article by Alex Johnson of The Independent on September 9th, 2013 basically identifies the percentage of the typical first time buyer according to age, salary, house type, property value, etc.

According to the latest figures from LSL Property Services, the average first-time buyer in
July was aged 30, with an annual salary of £36,299, 4 per cent higher than in July 2012.

The average purchase price for a first-time buyer rose by 8 per cent year-on-year in July, and is now £146,726.

The number of first-time buyers who were able to self-fund their purchase fell to 41 per cent in July, from 51 per cent in April. Around 36 per cent of all first-time buyers in the UK received financial help with their deposit from parents or relatives, while 9 per cent benefited from an inheritance - 2% received family help with mortgage repayments. Another 4 per cent received financial help from a government scheme such as Help to Buy, up from 1 per cent in April.

A total of 44 per cent of all first-timers were looking for houses with three or more bedrooms.

The second most popular property type was two bedroom houses (31 per cent). Flats continued to attract far fewer first-time buyers with just a quarter of buyers looking for flats rather than houses.

Four in ten first-time buyers said they were choosing to buy now as they had only recently been in  a position financially stable enough to purchase a property, while a quarter chose to buy to own a house with their partner, and another quarter feel it is time for them to settle down. Only 8 per cent bought for investment purposes,  expecting house prices to rise, down from 11 per cent in April.

First-time buyers are also confident that the value of property is set to rise. Almost half  of UK first-time buyers think that house prices will rise by up to 5 per cent in the next year, while a further two in ten believe prices will rise between 5 per cent and 10 per cent.

Connells also reported that the number of first-time buyers in August 2013 outpaced those recorded in August 2007. There were 40% more first-time buyers last month than in August 2012 and 1% more than August 2007.

John Bagshaw, Corporate Services Director of Connells Survey & Valuation, comments:

"Numbers of first-time buyers are flowing again, but it isn’t like the floodgates have been thrown open for everyone.  There are still thousands of households whose earnings have little chance of matching inflation – let alone being sufficient to support loans based on current house prices.  The other side of the story to first-time buyers are those still renting, and buy-to-let activity is still growing at an astounding pace to keep up with demand for renting."

In the LSL survey, tenants currently unable to become first-time buyers named the inability to save for a deposit as the biggest stumbling block to homeownership. More than half are unable to buy as they can’t save for a deposit, and a growing number of potential first-time buyers (19according to chartered surveyors Connells Survey & Valuation) are concerned that rising costs like stamp duty will get in the way, up by a third from 13according to chartered surveyors Connells Survey & Valuation in December 2012.

David Newnes continues: “It remains a huge challenge for first-time buyers to purchase property in the capital. House prices are more expensive, and the size of deposit required dwarfs that in the rest of the country. It’s the reason why six out of tenants in London can’t afford to buy. And there are further concerns for the London market. Higher legal fees and stamp duty costs are turning further first-timers off buying."

Article Source: http://www.independent.co.uk/property/who-is-the-typical-first-time-buyer-8804580.html