Property News Round-up 9/3/16

Property News Round-up 9/3/16

 

Hi guys and welcome to another fortnightly edition of our property news round-up. As usual we will be looking at the latest goings-on in the domestic property market from looking at various house prices around the country to the sobering prospect of Brits having to face on average a three year wait before they can afford a property. If you missed our last property round-up, feel free to catch up here.

Average London Home Is Worth Nearly Triple Those Across England & Wales

 

London Property

New figures reveal the change in house prices over the past year and highlight the regions with the fastest growth in Britain. (Homes and Property, February 2016).

It was revealed that house prices in the capital have risen by nearly 14% with the average house worth three times that of houses in the rest of the country.

In other parts of England and wales, an average property price is around £192,000, in contrast, in London, the average cost will set you back over £530,000.

According to the Land registry, London and the South East have performed strongly with capital figures at 13.9 per cent and 10.7 per cent for the South East respectively.

In addition, the South West prices rose 6.2 per cent this year, cities such as Bristol saw house prices rise to over £220,000.

Moving onto the north, the North East showed the smallest price increase of just 0.2 per cent, cities such as Sunderland fell by 3.2 per cent.

However, on Tyneside, Newcastle had the highest monthly price rise in the north east, with an increase in January of 2.1 per cent to just over £123,000.

In the North West prices grew by 2.1 per cent, Manchester once again showing signs of buoyant growth at 5.6 per cent.

 

Study Shows Third Of £1m-Plus Homes Paid For In Cash Since 2011

Expensive Homes UK

According to research, about a third of homes sold for £1m or more in the UK have been paid for in just cash in the last five years.

Cash buyers have spent more than £63bn in total on £1m-plus homes in England and Wales since 2011, spending on average £1.75m for a property. (Guardian, March 2016).

The research comes after a report from a high street lender predicted that the number of properties in the UK worth £1m or more would more than triple by 2030. Currently, less than 500,000 homes across the country are valued at £1m plus.

The house price analysis which was conducted by Bower Private Clients (BPC) also found out that almost two-thirds of cash buyers bought in London where the average spend per property hit £1.89m, but southern and eastern England also saw high numbers of cash buyers for £1m-plus homes.

Moreover, the Essex based company revealed that their research showed that in London, 22,852 properties costing £1m-plus have been bought for cash since 2011, and 7,864 elsewhere in the South-East. Heading north, there were 641 properties that were priced at £1m-plus and 239 in Yorkshire and Humberside respectively.

Property Investment Is Growing At A Greater Rate In The North East Than Anywhere Else In The UK

North East Investment

Investment in property is growing at a greater rate in the North East than anywhere else in the UK, with investors snapping up more than £1bn worth of commercial property in the last year. (Chronicle Live, February, 2016).

Commercial property experts CoStar revealed that investment volumes within the North East grew by 32% – the largest percentage increase of any UK region.

Gavin Black, chairman of the G9 Group of chartered surveyors told Chronicle Live the North East 2015 total of £1.06bn was almost double the £524m annual average over the last eight years.

He went onto to say that by any judgement this is impressive and that investors are increasingly searching beyond the capital for value and within the North East there is good value as well as asset management opportunities. Investors are always keeping a close eye out on lucrative deals in the region.

 

Property Sales In Scotland Up 4% In 2015

East Renfrewshire Property

We now leave the North East and travel to the north of the border to look at the Scottish property market.

A new analysis report points out that residential sales in Scotland increased by 4% in 2015, which were well below the 11% recorded in the previous year.

The report which was conducted by Savills indicates that tougher mortgage lending conditions during the first half of 2015 impacted the recovery of Scotland’s housing market, but the property market adjusted during the second half of the year due to a recovery in mortgage lending for house purchases across Scotland, which increased by 9% from 59,500 in 2014 to 64,800 in 2015. (Property Wire, March 2015)

East Renfrewshire (pictured) witnessed the strongest annual growth in the number of transactions during 2015 at 13% due to the good schools effect. Glasgow, West Dunbartonshire and West Lothian also performed well and experienced high transactional growth during 2015.

The number of transactions at £1 million and above reached its highest level since 2008. Savills report showed that Prime markets in suburban and commuter areas across the country’s Central Belt performed strongly last year, with growth spreading out from core urban hotspots.

Faisal Choudhry, director of Savills Scottish Research mentioned in Property Wire that the upturn in demand is driving an improving development land market. Sentiment for development land in Scotland’s cities remains a positive one.

Are you interested in Scottish property investment? If so why not visit our property investment in Scotland page.

 

Brits Face Waiting An Average Of THREE YEARS Before Buying First Home

House Buyers UK

A sobering thought… BRITS have to wait an average of three years before they can afford their first home, according to new research. (Express, March, 2016)

The biggest barriers involved include high prices, saving for a deposit and other costs associated with buying or moving house.

Recent research shows that one in two people want to buy their first home or move up the property ladder.

Moreover, six in 10 say they will have to wait 12 months, while 21 per cent worry they may never afford to buy or move home.

Price comparison site GoCompare found out that those who were thinking of buying or moving home have been doing so for an average of 3.2 years.

The sheer lack of availability in the area they want to live, job insecurity and the costs such as mortgage payments, as well as bills have been the main barriers for people. Also, saving for a deposit has been a huge hurdle for many.

GoCompare’s product development manager Matt Sanders told The Express : “Affordability is a big concern for both first-time buyers and those wishing to move-up the property ladder. House prices are increasing due to rising demand and lack of supply. (Express, March 2016)

He also mentioned that with house price inflation exceeding wage growth it’s even tougher to save enough money for a deposit – as a result has potentially put homeownership out of reach for many people.

Are you looking for an alternative and an accessible way into the property market and are thinking about getting involved in property crowdfunding? If so, why not take a look at our Property crowd funding- how it works page for more info.

 

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House Prices Set To Rise by 350%!

House Prices Set To Rise by 350% – So Say The Lib Dems! 

Lewis, our Head Of Finance, has been busy this week comparing property prices with the FTSE 100.House Prices Set To Rise by 350%!

His research clearly shows that property has made for a far more lucrative investment in recent years.  Over the last 16 years (since 2000) the stock market has actually fallen by 5% (Source: Yahoo Finance – FTSE end of day) and average property prices have increased by 45%  (Source: Nationwide House Price Index)

But as we know, past performance does not predict future growth, so what can we expect property values to be like in another 16 years’ time?

Capture

Well, new research by the Liberal Democrats published this week predicts that the cost of the average family home will rise to over £1M by 2032 – that’s an increase of 350%:

http://www.telegraph.co.uk/finance/property/12147282/Average-home-in-Britain-to-cost-over-1million-by-2032.html

To be fair we think that the research is politically motivated and that is a somewhat sensationalist figure but, having said that, there are to our mind still many economic factors at work that will result in pushing property prices much higher over the next 16 years. If we are correct then  it would seem to us that investing your money in buy to let still makes excellent sense – especially when you are able to remove many of the hassles involved in it by investing via crowdfunding.

And what if you could also potentially reduce some of the risks by letting to a blue chip tenant on a long lease with an assured rental being paid every month so that, unless they renege on the contract, the property will be let for 5 years with no void periods.  If you can do so, you can simply collect a decent return with no hassle whilst your property rises in value.

 

 

 

Affordable UK property investment despite rising house prices?

House prices are racing ahead once more, and not just in London as recent – figures show increases are now spreading across the country.

The latest reports from Halifax and Nationwide put annual house price inflation at 8.7% and 9.5%, RICS has said as shortage in supply of quality homes for sale is pushing prices up making it even harder to access UK property investment.

RICs forecasts the average UK house price will rise by 6% a year for the next 5 years, increasing by a total of 35% by 2020.

If you are looking for to get your foot on the housing ladder and take advantage of the market, prior to the further rise in houses prices but haven’t got the money for a large deposit then don’t miss out.

With the power of crowd funding, you can invest through The House Crowd with just £1000, click here to find out how.

Happy 18th birthday Buy to Let mortgages…

…and thank you for our present – a predicted 11% profit for the next decade according to a recent report.

The findings from the report published in an article by The Guardian identified that with average annual returns of 16.3% (£13,000 profit) on each investment of £1,000 since buy-to-let mortgages were launched in1996, landlords have earned more than they would have done with every other type of investment. These are clearly superb returns.

The report has been timed to coincide with the new affordability rules requiring lenders to carry out detailed checks on potential mortgagee spending and ability to pay if interest rates go up, but buy-to-let investors will be exempt from these rules.

Landlords take one in seven mortgages, and since 1996, lenders have granted 1.5m mortgages worth £174bn to buy-to-let investors. You can read the full article here: http://www.theguardian.com/business/2014/apr/26/returns-for-buy-to-let-landlords-dwarf-other-investments

Who Moved My Cheese? …Different Strategies For Changing Market Conditions

I have been reading quite a few forecasts of the property market of late. As usual, I regard these reports with a healthy degree of scepticism as nobody really knows what the future holds, however much of an expert they like to portray themselves.  And clearly some of them have their own agenda to promote.

Money Week, for example, has always been extremely pessimistic about property investment as a vehicle to build wealth – as anyone who has read their panic inducing ads will know.

Could this possibly be because a) they don’t understand it or b) they want to sell you their “Special Reports” on Gold, Oil, Timbuktu Stocks (or whatever) so you can learn about the imminent disaster about to afflict the whole world… apart from, of course, those with the inside scoop.

I used to subscribe to Money Week – it has much worth reading – but the continual drip drip of articles designed largely to create a sense of fear and panic (and sell Special Reports) was, in the end, just too much. I had to stop before I slashed my wrists. One thing I do remember though before cancelling my subscription 3 or 4 years ago was its editor, Merryn Somerset-Webb, writing about how financially stupid it was for us English to own our own homes. Apparently she had just sold her house in Battersea and was going to rent from then on. Hummm… Wonder how she feels about that now.  Not so smug, I wager.

Probably the two most reliable property forecasts I have read are Savills where you can see likely growth region by region:

Savills five year forecast

and The Centre For Business and Economics Research which reports: ”a typical house in the UK is expected to cost £227,000 in 2014, surpassing the 2007 pre-crisis peak for the first time… By 2018, we expect a typical UK home will cost £267,000, as house prices rise by 4.6% over that year. In 2018, we predict UK house prices will be 20.4% higher than this year.”

In short both forecast that growth in areas outside London and its environs is expected to be steady and moderate (between 2-5% a year on average) over the next 5 years. That, to me, seems about right.

As those of you who have attended our investor evenings know from my talks house prices are set to rise faster than rents and, as prices rise, yields will fall. At The House Crowd we have had a good run at buying properties at rock bottom prices but it is becoming tougher to find the deals. Rather than sitting round moaning about ‘Who Moved My Cheese” (Google it if you don’t know what I’m on about) we have to adapt to changing market conditions. We have been discussing this and have several potential strategies to accommodate changes in the market.  We will be developing these in 2014 and will, of course, keep you informed.

Cash investors fuel property price boom

New records have been set in UK house prices, Rightmove reported today.

 The average asking price of a property new on the market has tipped £250,000 for the first time.

According to Rightmove, new sellers have bumped up their asking prices by 2.1% over the last month, The highest asking price previously was last June when it hit £246,235, and before that in May 2008 when it reached £242,500.

The fifth consecutive monthly rise means that overall, national average asking prices are now 5.1% higher than at the start of the year.

 Rightmove said this was the “strongest price start” to a year since 2004.

The site itself has also seen record traffic, with 1.25 billion pages viewed in April, a 20% rise on last year. However, buyers have less stock to look at, with new instructions this year down 3%.

The turn-around appears to be almost totally south-based and fuelled by cash property investors who are buying buy to let property. They have plenty of cash and little need of mortgages.

“Despite a new national record, it’s not ‘green shoots of recovery’ across the board, especially for the deposit-strapped mass-market. They must wait patiently until January when the Help to Buy scheme extends to the resale market.”

 According to Rightmove, only two regions have asking prices which have slipped back on last year – Yorkshire & Humberside, and the East Midlands, where they are down 1.1% and 0.6% respectively.

In some regions, the South-West and North-West, asking prices are more or less static, having gone up by 0.1% and 0.6% respectively.

The average asking price on Rightmove at £249,841 compares with the far lower ‘sold’ prices being quoted by Halifax and Nationwide, currently £166,094 and £165,586 respectively.

The Kitchen Deal Breaker

Many people dream of installing a new kitchen, complete with granite worktops, an island unit and an AGA cooker, but how many people know the true value of making sure your kitchen is up to scratch?

Those in the know often say that a kitchen is the deal breaker room when selling a house, it can literally make or break a sale. It is therefore worth carefully planning any kitchen upgrades you undertake. Here are The House Crowd’s top tips to help you get it right:

-          People are too quick to gut their entire kitchen, often they’ll end up refitting units in exactly the same place. This is because the initial design of the kitchen is likely to be the most practical design. Take time to consider what your new layout would be, will it work?  What do you not like about the practical design of your current kitchen, and how can you solve those problems with your new kitchen?

-          Instead of spending a lot of money replacing everything, why not consider quick-fixes? Modernising unit doors and relaying the floor can save a lot of time and money. Large DIY stores have a good range of upgrade solutions and materials.

-          A common complaint people have is a lack of worktop space. Think about how you can make what you have go further, as unless you’re extending a kitchen, a re-design won’t necessarily give you more space. Solutions like microwave brackets, floating shelves, and flat-folding hinged tables can provide more workable space; there are also amazing new space saving idea available with new kitchens, including pull out work tops that can be put away when not in use.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit www.http://thehousecrowd.com/thehousecrowd//how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their investments (for more information about us, visit www.http://thehousecrowd.com/thehousecrowd//about/our-manifesto/). If you’ve read enough and want to invest now, visit www.http://thehousecrowd.com/thehousecrowd//invest-in-property/).

Property Investment Predictions For 2013

The Royal Institute Of Chartered Surveyors (RICS) have made positive property investment predictions,  forecasting that UK house prices will rise 2% during 2013 and rents will increase by 4% on average.

It also forecasts a rise in the number of property sales. It estimates that there will have been 930,000 property transactions in 2012, and this will increase to 960,000 in 2013.

RICS is also predicting that the number of repossessions should fall to under 35,000 – the lowest figure in 6 years. Simon Rubinsohn, RICS’s chief economist, said: “The average house price in the UK looks set to rise by a further 2% next year, despite the uncertain outlook for the economy.

“More positively, the amount of property sales going through should also see an increase across the country, climbing to its best level since 2007, as the Funding for Lending scheme helps boost the availability of mortgage finance.

“But these tentative signs of recovery in the sales market should not blind us to the very real problems that still exist. Even with the Funding for Lending scheme and some other government policies beginning to be felt in the mortgage market, many first-time buyers will continue to find it difficult to secure a sufficiently large loan to take an initial step on to the housing market.

“Meanwhile, the alternative of renting is becoming more and more costly, with a further increase in rents likely in 2013. Critically, the Government needs to ensure that the conditions are in place that will enable the stock of new housing, whether for purchase or rent, to rise more rapidly.”

The House Crowd view: if these property investment predictions are correct, it should make it easier to sell our refurb/sell projects, though we still believe it will be fairly tough for first time buyers to get a mortgage and it will continue to take a while to find buyers.

It bodes well for our long term buy and hold strategy that the shortage in housing will continue, pushing up rental demand and to some extent rents.

Although we recognise there are limits to what people can afford to pay and we know from the Council Landlord Forums we attend, that LHA rates in Salford /Manchester will only rise by about 1% next year, but as you know we typically achieve 11% yields and have plenty of margin to pay the 6% guaranteed yield.

There is now such stiff competition in the market for investment properties in the £45-£55k price bracket, that we operate in, that we cannot see how prices could fall further. If anything they will probably rise slightly in 2013.

The draw of the crowds

We came across an intriguing read amongst the pile of predictions and analysis of the Premier League kick off last weekend.

A study by Halifax has discovered that property prices near Premier League football clubs have increased much faster than average over the past decade. Whilst this statistic may at first suggest devoted fandom, it is worth noting that four of the five Premier League postal districts with the biggest house price increases are home to stadiums built in the last 15 years.

Property prices close to current Premier League champions Manchester City’s home, the former 2002 Commonwealth Games arena, soared by an average of 271 per cent – far beyond that of any other stadium. For those familiar with the Commonwealth Games Sportcity complex in the Medlock Valley, Manchester, this steep rise in house prices won’t come as a huge surprise. A long-term plan for environmental improvements, community programmes and easy links from city to stadium has evidently now come to fruition.

Whilst the recent success of the blue side of Manchester will have no doubt driven more crowds and trade to the Sportcity complex, a housing expert will tell you it is the well-planned development of local services that are the prevailing reason for such a significant jump in house prices.

At the House Crowd, we take great care when investing in a property to evaluate all we can about the local area – from earmarked developments to local schools, transport infrastructure and historical trends. By taking an all encompassing approach, we hope to gauge the rise in value a property may experience and maximise the return for our investors.

The House Crowd is a brand new concept in property investment which allows people to invest small amounts via crowdfunding (for more information on the process, visit http://thehousecrowd.com/thehousecrowd/how-it-works/). We are committed to breathing life into empty, rundown properties whilst giving investors great returns on their property investments (for more information about us, visit http://thehousecrowd.com/thehousecrowd/about/our-manifesto/). If you’ve read enough and want to invest now, visit http://thehousecrowd.com/thehousecrowd/invest-in-property/).