Property Essentials

There’s an article in the Independent :: here :: which states that the beleagured Northern Rock is still offering mortgages at 6 times annual salary with a good credit rating - 4 times with a bad credit rating!

They’re offering 96% mortgages, with an additional £30,000 loan available, which could put some first time buyers into a serious negative equity situation.

Madness, or what?

The Bank of England have kept interest rates static at 5.75% - not only that, but they issued a statement :: here ::

As discussed here a while ago, the Spanish property boom has ended. Having gained 190% in value since 1998, high lending rates and oversupply of a million homes in the past 4 years have resulted in property which is overvalued by up to 30%.

The news item is :: here ::

A survey for the Nationwide Building Society states that the annual increase in house prices has eased to a five-month low. House prices in August rose by 0.5%, an improvement on the 0.1% in July. The annual rate of increase is now 9.6%, easing back from July’s 9.9%.

The big question is: have interest rates risen enough to curb the inflationary pressures on house prices? As usual, the opinions of ‘experts’ varies, but the consensus is that rate rises have peaked for the moment. The current average house price is £183, 898.

More information :: here ::

Recent interest rate rises (four since last August, and another confidently expected in July) have made the buy-to-let market less attractive for investors. For the first time in a number of years, returns from investment in banks and building societies are higher than that from BTL.

In addition to this, the introduction of HIPS has meant that houses that were up for sale have now become available for rent, flooding the rental market.

That doesn’t include properties in SW19, of course, where for just two weeks every year, a large family house can cost between £3,000 and £6,000 per week to rent for the period of the Winbledon Tennis Championships. However, prices are up in the millions in Wimbledon village, which makes a very poor return for investors. Contact Tennis London to find that must-have property.

The recent increases in the Bank of England Base Rate (as set by the Monetary Policy Committee) looks like they’re having an effect on many areas of the UK, especially the North, the South-West, and the Midlands.

However …

Prices in London are still increasing, and this area seems a world apart from the rest of the country.

More details in the Observer :: here ::

At the 11th hour (okay, maybe the 10th), the government has delayed the introduction of the Home Information Packs until August 1st - a delay of 2 months.

In addition, they will only apply to sellers of homes with 4 or more bedrooms.

The full-ish story :: here ::

As expected, the Monetary Policy Committee of the Bank of England raised the base rate from 5.25% to 5.50%. This was no surprise, and there are strong hints that a further rise is on the way.

There are 11.7 million mortgage borrowers in the UK, of whom just over half have variable rate mortgages, and who are now facing higher monthly payments as a result.

Those on fixed term, fixed rate mortagages are exempt for a while at least, but they are only deferring the bad news until it’s remortgage time. It’s unclear how much affect this will have on the inflation rate, but what is clear is that more homeowners will be facing financial difficulties as a result.

Recent research from Findaproperty.com and Primelocation.com suggests that older buyers are likely to travel further when they purchase their new home.

Amongst the over-55s, buyers were looking to relocate an average distance of 48 miles. This figure dropped to 29 miles for 45 to 54-year-olds, 14 miles for 25 to 34-year-olds and 9 miles for those aged 18 to 24.

Last year, there were 800,000 houses built in Spain – more than France, Germany and Italy combined. This follows a number of previous years, where Spanish builders were working night and day to satisfy the demand from overseas property investors for apartments and villas near to the coast.

House price inflation in Spain has pushed up prices beyond that which is affordable by Spanish professionals. Singles and newlyweds are increasingly staying with relatives, until such time as they can afford to get onto the property ladder.

UK Spanish Property website The Spanish Property Register has seen hits drop from 2000 hits per week to around 900 hits per week in the last 6 months. Interested buyers are now starting to look further afield for cheap properties, especially into the new tranche of European Community members, such as Bulgaria and Slovenia.

About 750,000 British citizens have property in Spain, and we are now starting to see the “Holiday Homes Abroad – the Disasters” type program on TV. We see dubious planning practices, which allowed developers to build properties on land that you personally own, and new developments of high-rise apartments interposing themselves between your dream home and the spectacular views for which you bought the property in the first place.

There is also a trend for families and retirees who moved to Spain for the climate, trying to move back to the UK. The problems for them are twofold. Firstly, the glut in Spanish properties, and the changes that the country has seen in residential developments, means that prices in Spain are dropping. Secondly, the UK is continuing to experience house price increases, year-on-year. These two mean that many ex-pat families are finding themselves in a situation where they cannot sell their overseas property for enough money to enable them to buy a property back in the UK.

Dream home abroad? Think seriously about it.