31% Pay 'Unaffordable' Rent or Mortgage Costs

This article by Adam Shaw of BBC News UK on November 11th, 2013 reveals how people think property prices are too high in their area.

Thirty one per cent of people paying a mortgage or rent spend more than a third of their disposable income each month doing so, a survey for BBC Panorama suggests.

Housing charity Shelter said that makes mortgage or rent costs "unaffordable".

It said family budgets are being put under "enormous pressure" because of a "shortage of affordable homes".

The survey of 1,003 people also suggests 46% of people think property prices are too high in their area.

According to Shelter and the Joseph Rowntree Foundation, spending more than a third of your disposable income on rent or a mortgage means you may not be able to afford other basic needs.

'Impossible choices'

Shelter chief executive Campbell Robb said: "The widely accepted test of affordability is that housing costs should take up no more than a third of your income."

"But in reality, many families don't have any option but to pay out much more," he said.

"This sees some faced with impossible choices every day - including between putting enough food on the table or paying for the roof over their head."

Among those affected by rising property prices is Abi Reilly, a 33-year-old special needs school teacher.

She lives in a terraced house in Reading with her husband, Chris, and two children, five-year-old Daniel and four-month-old Elsie.

They spend around 40% of their disposable income on rent.

Having rented 13 different properties over the past 10 years, Mrs Reilly said homeownership does not feel realistic.

"It feels too far away," she said. "How can we save for a deposit when our rents are going up, energy's going up, everything's going up, wages stay the same, house prices go up? Mathematically it doesn't work."

The Ipsos MORI survey commissioned by Panorama questioned a total of 1,003 adults - of whom 697 pay a mortgage or renting a property. Mrs Reilly would belong to the 31% of people in this latter group who pay more than a third of their disposable income on their mortgage or rent.

The survey also suggested that 46% of people think property prices are too high in their area and 39% would like to see property prices fall.

In August, the Office for National Statistics said the average price of a property had reached a record high of £247,000.

ONS figures also show that home ownership peaked at 69% of households 12 years ago. Since then it has been falling and is now at 64%.

'Risk of overheating'

Panorama has also looked at the Help to Buy scheme set up by the government in April to assist people who could afford mortgage repayments but were struggling to raise a deposit.

It allows buyers of new-build homes to put down a 5% deposit and take out a government loan for up to 20% of the value of the property. Help to Buy was extended to existing homes in October, under which the government partially guarantees mortgages.

Since it began, there has been a 6% rise in the number of new homes being built.

Merryn Somerset Webb, editor-in-chief of MoneyWeek magazine, said Help to Buy risks inflating prices and overheating the housing market.

"It's like pouring petrol over the car and setting fire to the whole thing," she said.

"You know you might get a little heat in the short-term but the end result is not actually what you wanted."

But the government has dismissed concerns about a property price bubble.

Housing Minister Kris Hopkins said: "In Yorkshire, the North East and Scotland, house prices have moved very little or in some cases have actually gone backwards."

"And that's reflecting where wages are and what money people have actually got to spend. "

He also told Panorama: "We've seen nothing yet to suggest there is anything, going anywhere near a bubble at this moment in time."

Article Source: http://www.bbc.co.uk/news/uk-24856594

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House Building Growth Continue to Rise

This article of Belfast Telegraph.co.uk on October 2nd, 2013 shows the increasing demand of house building and now at its fastest pace for a decade.

Home building grew at its fastest pace for a decade in September in the latest sign of the housing sector forging ahead amid Government initiatives such as the Help to Buy scheme.

Figures from the closely-watched Markit/CIPS purchasing managers' index (PMI) showed residential construction activity growing at the highest rate recorded since November 2003.

The wider construction industry continued to grow strongly though the reading of 58.9 - where 50 separates growth from contraction - represented a slowing in the pace of expansion compared to 59.1 seen in August.

It was dragged down by an easing of growth in civil engineering from an August high.
However, commercial construction continued to forge ahead, increasing output at its fastest since May 2012 as analysts predicted a surge in occupier demand pushing up rents.

The sector was badly hit by the economic downturn but Tim Moore, senior economist at Markit, which carried out the survey, said: "Construction is no longer the weakest link in the UK economy."

The figures showed the sector had grown for the fifth month running, adding to hopes that overall gross domestic product for the third quarter will have increased by as much as 1%.

Optimism about the outlook for the year ahead is at its strongest since April 2010, while jobs rose for the fourth month in a row, encouraged by increased volumes of new work, the report said.

Anecdotal evidence pointed to greater levels of spending among both public and private sector clients.

David Noble, chief executive of the Chartered Institute of Purchasing and Supply, said: "The construction sector is firing on all cylinders.

"Having been in the doldrums so long, builders are using this renewal as a platform to invest, with employment seeing the most dramatic upturn in close to six years."

Howard Archer, economist at IHS Global Insight, said: "House building activity is seeing particular strength which is welcome news given concerns that a shortage of properties risks contributing to a new housing market bubble."

Kelvin Davidson of Capital Economics said predictions that commercial rents would only edge up modestly over the year were looking likely to be surpassed.

He said the data suggested property developers were increasingly confident about the prospects for occupier demand and hence the rental values they could expect.

House builders have been buoyed in recent months by easing credit conditions as well as Government initiatives such as Help to Buy.

The latest extension of the scheme offering mortgage guarantees to help buyers get onto the housing ladder has just been brought forward - despite fears it could lead to an overheating in property prices.

Article Source: http://www.belfasttelegraph.co.uk/business/news/house-building-growth-continues-29629083.html

 

David Cameron: There is No Housing Bubble

This article and video by The Telegraph on September 29th, 2013 shows David Cameron's explanation why government is launching help-to-buy three months early during his speaking engagement on BBC (Andrew Marr Show).

To watch the video click here.

Prospective homeowners will be able to use the Government’s subsidised mortgage scheme from as early as next week after the Coalition decided to bring the launch date forward by three months.

On the even of the Conservative party conference in Manchester, David Cameron revealed that the state-backed lenders, Royal Bank of Scotland and Lloyds Banking Group, would be offering deals under the Help-to-Buy scheme from next week instead of January.

It will initially be available under the Nat West, RBS and Halifax brands. A Tory spokesman said that other banks are expected to take part over time.

The second phase of the controversial scheme will help people buy a home worth up to £600,000 with just a 5pc deposit. The Government will guarantee the next 15pc of the loan for a fee, reducing the banks’ risk of loss so they can offer cheaper mortgages to higher-risk customers.

The scheme will be available for three years on up to £130bn of mortgage lending.

Critics have warned that the guarantees will inflate a dangerous housing bubble at a time when the property market is already showing signs of recovery. Citing analysis by the Bank of England, the Prime Minister countered on BBC’s Andrew Marr show that the market was only recovering and there was no sign of a bubble.

Mr Cameron added that if he didn't introduce the scheme, then "it will only be people with rich parents who can help then with the deposit who can help them on the housing ladder. That's not fair, it's not right, it's not the sort of country I want to live in and that's why it's important we bring this forward."

Video courtesy BBC One's The Andrew Marr Show

Article Source: http://www.telegraph.co.uk/news/politics/david-cameron/10342400/David-Cameron-there-is-no-housing-bubble.html 

Private Residential Rental Prices Up Across the UK

This article by the Property Wire on September 26th, 2013 shows that according to the new index from the Office of National Statistics private residential rental prices paid by tenants in the UK rose by 1.2% in the 12 months to August 2013.


Excluding London, were rents are higher than the rest of the country, rental prices were up by 0.8% during the same period, the data also shows.

There were also regional variations with rental prices up by 1.3% in Scotland and Wales and by 1.1% in England. But within England rental prices were up 1.9% in London and 1.1% in the South East of England.

The Index of Private Housing Rental Prices (IPHRP) is a new experimental index that measures the change in price of renting residential property from private landlords and calculates changes in the prices paid by tenants for renting private housing instead of calculating changes in the latest agreed rental prices.

The index examines how much tenants in privately rented accommodation pay in a month compared to the same month in the previous year. ‘This is a new official statistic undergoing evaluation and therefore it is recommended that caution is exercised when drawing conclusions from the published data as the index is likely to be further developed,’ said an ONS spokesman.

The index report says that the large weight that London has in the overall data reflects its high average rental prices and its large volume of private rented property.

All the regions in the UK have experienced rises in their private rental prices since 2011 and since January 2011 England rental prices have increased more than those of Scotland and Wales.

Until April 2013, the annual rate of change in the IPHRP had been higher in England than in Scotland or Wales. However, the annual rate of change has been increasing in Wales and Scotland since late 2012 and is, in August 2013, higher in these countries than in England.

The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2006 until November 2009, rental price decreases from December 2009 to November 2010, and increasing rental prices from December 2010 onwards. Of these three periods, 2008 showed the largest rental price increases.

Excluding London, England showed an increase of 0.7% for the same period. From August 2012 to August 2013 private rental prices increased in the nine English regions.
The data also shows that rental price increases have been stronger in London and the South East than the rest of England since January 2011.

The figures highlight the heat building in the London market, according to Jonathan Hopper, managing director of property finders, Garrington. ‘During the Autumn we are expecting to see increasing pressure from those wanting to rent as supply tightens leading to a further firming of rental prices,’ he said.

Article Source: http://www.propertywire.com/news/europe/uk-residential-private-rents-201309268283.html

Adult Children Live with Their Parents at Home as Rents and House Prices Rise

This alarming article by Tanya Powley of Financial Times on September 6th, 2013 reveals grown-up children are still living at home with their parents because getting on to the property ladder is increasingly difficult as rents and house prices rise.

“Empty nest” syndrome has become a problem of the past for millions of parents who have adult children in their twenties and early thirties still living at home.

The trend of young adults returning to live in the parental home – generation boomerang as they have been called – has grown in recent years, as rents and house prices have risen further out of the reach of would-be homeowners.

Three in ten parents have at least one child aged between 21 and 40 living at home, according to a survey published by the National Housing Federation on Friday. Two-thirds of these parents said their child could not afford to move out.

The poll, which surveyed more than 1,100 parents, highlighted the emotional and financial burden parents face and why the returning offspring have been given another nickname: Kippers – kids in parents’ pockets eroding retirement savings.

One in five said having a grown-up child at home had caused them stress, while a further fifth said it had given rise to family arguments.

“Moving out and setting up a family home of your own is a normal rite of passage,” said David Orr, chief executive at the National Housing Federation. “Yet as rents, mortgages and deposits continue to soar out of reach, it is no longer an option for many.”

Official figures show the number of young adults living at home has jumped by 20 per cent since 1997. According to the Office for National Statistics, almost 3m Britons between the age of 20 and 34 now live at home – of which 1.8m are men.

Amanda Lightstone, a 57-year-old dental nurse, has her youngest son, Andrew, 25, living with her in her three-bedroom house in Edgware, northwest London. She has already lent more than £100,000 to her older sons to help them buy their homes and said she will do the same for her youngest.

“How will he save for a deposit if he starts renting? He will live at home for quite a few years – he’ll be more than 30 when he can afford to buy his own place. I will just have to delay my retirement plans, you can’t have everything!” said Ms Lightstone.

Ann Berrington, professor of demography at the University of Southampton, said the percentage of young adults in their twenties living with their parents has increased since the recession.

Her analysis of the 2008 and 2012 UK Labour Force Surveys found the percentage of women aged between 21 and 22 living at the parental home rose from 46.4 per cent to 55.6 in the four years to 2012.

“The lack of affordable housing is clearly a factor as well as having to raise bigger deposits, but there are other factors at play,” said Professor Berrington.

While research published on Friday showed that in July the number of first-time buyers was at its highest since November 2007, according to LSL Property Services, transaction levels are still significantly lower than at the peak of the housing market.

Local government department figures published on Thursday showed that the government’s housing schemes, which aim to make it easier for people to buy a home with just a 5 per cent deposit, have made little headway.

According to the government, 3,749 people have bought a home through its NewBuy scheme launched in March 2012. This equates to less than 5 per cent of its 100,000 target. The second part of the scheme has had a bigger impact, with 3,000 sales and 10,000 reservations since April 2013.

Paula Higgins, chief executive of the HomeOwners Alliance, said: “We haven’t been building enough houses for 30 years and this is a real embedded crisis that’s not going to go away.”

Article Source:  http://www.ft.com/intl/cms/s/0/eb71071c-163e-11e3-a57d-00144feabdc0.html#axzz2e596ach1