Pre-election ‘political posturing’ holds back new housing, says Redrow chairman
Steve Morgan, chairman of Redrow, has hit out at the time it takes to grant planning permission for new developments and blames ‘political posturing’ for “imposing a significant constraint on new outlet openings and growth”. He felt that local councillors were politically motivated in dragging their feet over approving new housing developments, so that it takes between nine and 18 months, generally the latter, to progress from agreement to build in principle to actual construction. The UK market has returned to ‘more normal’ activity levels following Help to Buy last year, but Labour’s and the Lib Dem’s mansion tax proposals for homes worth over £2 million have hit London’s prime property market. To read more, go to FT.com
Kate’s thoughts
We know that the economy and property markets are very much linked together. However politics can play a positive or negative role on property too. What we can’t have in the run up to the election is politics holding back desperately needed new homes. If local councillors or damaging political policies cause property problems, then economically this will hold back national and local recoveries.
Read - Analysing your property market
Is the market slowdown due to caps or just normal seasonal changes?
An additional fall in property valuations to the tune of 20% in October, compared to September, has been recorded by Connells Survey and Valuation. John Bagshaw, Corporate Services Director of Connells Survey and Valuation suggests that “the slowdown is broadly in line with seasonal expectations” and a 16% average drop from September to October every year has been the norm. Outside seasonal causes, more stringent policies to restrict uncontrolled growth, including October’s loan to income cap, have influenced the market, with further sluggishness anticipated on the run-up to Christmas and, further ahead, the General Election next May. Buy-to-let came out best, with only a 7% annual decrease, possibly because they are not subject to the stricter lending regulations. First-time buyer valuations accounted for 30% of October’s activity, due in part to Help to Buy, although still 18% lower than September. Owner occupier activity fell by 21% month on month and gave a 16% annual decline compared to last October. MMR and loan to income caps appear to have reduced demand for remortgaging recently although longer-term prospects are stable. For more information, see Property Reporter.
Kate’s thoughts:
We are heading into unknown territory with the property market now. Up until September property prices were acting in a similar way to the end of the last recession (1990s). Now we are into a growth spurt but with mortgage restrictions rather than all ‘restrictions’ taken off as they were in 2000. We won’t know the real impact of this on the market until February/March 2015.
Read - Making money from property
Encouraging decrease in repossessions and arrears
Both owner-occupier and buy-to-let sectors have seen declines in arrears and repossessions in 2014’s third quarter. CML Director General Paul Smee commented, “Low interest rates, supported by intelligent communication and forbearance, mean that mortgage arrears and repossessions continue to decline.” Of 5,000 repossessions in total, 1,100 were on buy-to-let mortgages, i.e. 0.07%, compared to an owner-occupier rate of 0.04%. Mortgages in arrears fell to 125,100 mortgages, a drop from 131,400 in the second quarter and 149,400 in the third quarter of 2013. Paul Smee added that many households appear to be gearing themselves up for higher interest rates, suggesting that future payment problems when rates rise may be low-key, and that meanwhile lenders should look to offering advice to borrowers in planning ahead. To read more, go to Property Reporter.
Read - How to rent a property checklist
The ups and downs of buy to let in London
“Where’s the best place in London to invest?” is the main question I get asked when attending shows in the Capital. To help answer this question I’ve written about the ‘ups and down’s of property investment’. The ‘ups’ are that with capital, anyone should be able to turn a profit if you have enough cash; the ‘downs’ are that new investors find it tough to make money as you need around 50% LTV to secure any income. Also, rapidly-changing prices in London’s 32 boroughs make accurate advice difficult as price changes shift on a regular basis. Hackney, Kensington and Chelsea have led the field since 2000, outperforming London’s average 7% annual growth, with a further dozen or so following close behind, and even relatively poorly-performing boroughs still doing better than England and Wales’ average growth. However, fast growth is not spread evenly across the boroughs, with some enjoying spectacular recent price increases of 50%. Individual housing types can influence growth too, so that Hackney flats are increasing steadily but houses, in short supply, are going through the roof.
For the full article visit: Issuu.com
Read - Buy to Let Quick Guide
Scotland – referendum fears abated, prices rise
According to the latest BBC report based on a release from Website S1 Homes, “The reality gap is the difference between what sellers hope to sell their properties for and the price they actually achieve.”
S1's showed terraced homes selling for £20k more this quarter, while semi’s were fetching an extra £9,000 and flats were doing exceptionally well, up by £27,000. Apparently thought, detached homes are still tough to shift, selling at less than asking price.
Locally, areas such as Argyll, Bute and South Lanarkshire were doing well, while homes in East Lothian, Glasgow/Dunbartonshire and North Lanarkshire were struggling to achieve the desired price.
For the full article, visit BBC - Scottish Business
Kate’s thoughts:-
Buyers and sellers are easily spooked and the market around the referendum was particularly tough. Now the future has been finalised with regards to whether Scotland stays in the UK or not, it means people can plan properly into the future, helping to allow the market to function more ‘normally’.
Read - Selling a Home
