Entries Tagged 'housing' ↓

With house prices on both sides of the Atlantic falling, those wishing to sell their house are placed in a more difficult situation. Although, it is currently a buyers market there are some tactics that can be used to maximise your selling price.

Choose Right Valuation.

Just because house prices are falling, don’t despair and set a price that is undervalued. At the same time, avoid being greedy and setting a price that is too high. Take several valuations and choose one in the middle. You need to choose a fair price which will encourage others to come and view. If you get enough people viewing the competition may push up the prices.

Compare with Similar Properties.

The housing Market can be a highly localised affair. Sometimes, even though national house prices may be falling, certain areas can hold their value. Even, within one large city, house price valuations may be moving in different directions. Therefore, it is important to get an idea of the local market. To get a real feel for the local property market, take time visiting estate agents and even visit other houses on sale. Look at the valuation placed on other houses and judge a competitive price for your own. Looking at other properties will also give you a good idea about what works well for selling houses and what puts a prospective buyer off.

Increase Value of Your Own House as Much As Possible.

There are several things we can do to increase the selling value of the house. Many of these are common sense, but it can be surprising how many homeowners don’t take advantage of them. Continue reading →

As the saying goes – There are lies, damned lies and statistics.

It seems that there are no end of statistics about the housing market, some of which can seem a bit contradictory.

At the moment there is a general assumption that UK House prices are set to fall and are vastly overpriced. However, before you rush out to sell your house, there are a few things worth bearing in mind.

1. House prices are not significantly above long term average compared to earning.

Graph of House Price Affordability 

• I should point out that this graph finishes in 2005, and since 2005 house prices have increased considerably. Therefore the ratio of house affordability is higher than this graph shows.
• If you had chosen 1995 as the starting point of the graph, of course, things would look a lot different, (in 1995 the affordability of housing was at an all time low) Even since 2003, there has been a considerable increase in the ratio of house prices to earnings. (See ratio of mortgage costs to earnings for first time buyers)
• However, compared to the peak in 1990 house price affordability is not that bad.

Why are House Prices Still Affordable despite House prices doubling in the past 5 years.

There are two factors which determine the cost of buying a house.

1. The actual house price
2. Interest rates, which will determine the monthly repayments. Continue reading →

The UK housing market is very significant for both the economy and the general population. Housing is the biggest form of wealth and also the biggest cause for financial difficulties. In the recent housing boom there have been clear winners, but, there have also been clear losers. These are my recommendations for a more equitable and efficient housing market.

More Flexibility in Supply

Increasing supply of houses, especially in property hotspot areas is important for dealing with the fundamental imbalance between supply and demand. Greater flexibility would prevent future rapid house growth caused by a bottleneck in supply. Admittedly increasing supply is easier said than done. However, I believe the government should take the initiative in building good quality council homes. – for either sale or renting to low income households.

Deal with Scandal of Empty Houses.

It is estimated that there are nearly estimates that there are 840,000 empty homes in the UK ( Empty Homes Agency) The National Land Use Database figures suggest there could be a further 420,000 homes in commercial properties. Making use of empty homes would go along way to relieving the shortage of supply, without the environmental costs of building in green belt land. (Why are they empty?)

Continue reading →

Buying a house can be one of the most stressful events that people take part in. Unfortunately, there is no guaranteed time to complete the process of buying a house; it will depend upon many factors. However, if you are lucky and things go smoothly then it may go through in 5 weeks time from putting in an offer to completion.

Time to Buy A House

Pre offer Stage – Looking around for properties and putting in offers. This period can take several weeks. It is best not to rush it, but also, it is best not to endlessly wait for the ‘perfect house’ This period is also a good time to arrange a mortgage, so it can be put into place when you buy.

Continue reading →

The law now requires homesellers to have a home information pack HIP when selling your house. From 14th December you can have one in the pipe line but that wouldn’t impress me as a buyer. From June you will have to have one from when you start marketing so here are some quick tips.

Quick Tips For Home Information Packs

• Make the HIP part of your sales process so it should be professional and give confidence.
• Consider a strong brand to supply the HIP – a recognised name would be more appropriate than ‘Forced to do it flashy Hip Co Ltd’
• If your estate agent or mortgage provider offers a ‘free Hip’ make sure you understand all the terms and get out clauses. There are so many ups and downs with house sales it is best to be prepared
• Also be prepared for suppliers to use the Hip to advertise there services with logos etc. Continue reading →

Despite the prospect of falling UK house prices, there remains some good news for Buy to Let tenants. Average rents are continuing to rise, buoyed by rising demand.

A key factor in the rising demand for rentable properties is the growth in immigration, especially from Eastern Europe. This means that with rising demand, the price of renting has continued to rise. According to Mortgage lender, Paragon Average rents were £11,066. This represents an annual increase of 10.2 per cent.

The rise in demand is not being met by a rise in supply. This is due to the general shortage of houses, but, also the reluctance of buy to let investors to increase investment in a potentially falling  property market. Therefore, a drop in UK house prices may not be matched by a fall in renting prices.

Sub Prime Buy to Let 

A problem looming on the horizon for many sub prime buy to let investors is the fact that many banks have reduced the range and scope of sub prime mortgages. The definition for a sub prime mortgage is anyone who has a record of mortgage defaulting, resulting in a CCJ (County Court Judgement). Because less sub prime mortgages are available, many buy to let investors will be forced to take out more expensive SVR loans, when their mortgage term expires. This gives buy to let investors another reason to sell.

see: Buy to let landlords fear they may have to sell 

Nationwide Building Society released their latest figures from the state of the UK Housing Market. These statistics suggest that house prices fell by 0.8%. It is the largest monthly drop since June 1995

Combined with other statistics and reports, it shows there has been a fundamental shift in the prospects of the UK housing market.

There is increased expectation that interest rates may be cut soon. One of the members of the Bank of England Monetary Policy Committee Mr Blanchflower has expressed his concern at the state of the UK economy. He is the strongest voice for lower interest rates.

Yesterday, Mr Blanchflower, was in Birmingham stating that the worst was yet to come for house prices and the housing market. – UK House prices set to drop (at icBirmingham)

However,

The title of this post is slightly misleading. Monthly changes in house prices can be volatile. House prices are still higher than this time last year. see this post:

• Are House Prices falling?- a guide to the complexities of the housing market statistics

Also, are falling House prices a bad thing?

Yesterday, I wrote that 2008 can still be a good time to buy a house 

The Independent expressed similar sentiments in their article on the housing market here 

The Buy to Let Housing market has grown in size and importance in recent years. The rapid growth in house prices have provided excellent returns for investors. However, there is concern that the boom period of the buy to let housing market is now over and 2008 could witness falling prices.

Buy to Let Housing Market in 2008

• House prices may start falling. See: Reasons house prices may fall.
• Interest rates are forecast to fall – Bank of England forecast interest rate cuts
• Despite dire forecasts of falling house prices. Many argue there are still good prospects for the buy to let sector. This is mainly due to rising cost of rents. – Buy To Let helps stabilise the market
• There has been a remarkable growth in buy to let mortgages in the past 8 years. Last year saw a 60 per cent increase in the number of buy to let mortgages from 44,000 to 69,000, in 2007
• A key issues is the extent of volatility in the buy to let sector. Some suggest buy to let investors will panic at the sign of falling house prices and look to cash in their gains at the top of the market. However, others argue that buy to let investors are often in the business for the long term. Capital growth is only one aspect of buy to let. The main criteria for buy to let investors is rent able income against mortgage payments and costs. Buy to let could threaten house prices
• Buy to Let specialist Paragon has issued a severe profits warning – see mortgage news

• Are UK House prices set to fall?
• UK Housing Market

France has been a popular destination for UK residents looking for a second house. Buying a house in France provides many benefits.

• House prices are much lower than in the UK.
• There is a greater potential for capital growth. The Ratio of House prices to income is 65% in France, but, 146% in Britain.
• Better weather

French House Prices

• Because of the potential in the French housing market, the past few years have seen strong house price growth. House prices have increased 210% in the past 12 years, since 1995. This has led to a great return for those British investors who have already bought a house in France.
• However, the prospects for future house price growth are less certain. These are some of the factors which will affect the future French Housing market
• Supply constraints are much lower in France than the UK. In 2006, a record 420,000 houses were built. (This compares to less than 200,000 new houses in the UK). Therefore, this glut of houses will definitely put downward pressure on house prices.
• Like any Country the price of French housing can vary depending on the usual factors such as location, state of repair. There are still many bargain in the countryside for houses that need some renovation.
• The New president Nicolas Sarkozy is said to favour homeownership. If there was a shift in French attitudes it would definitely encourage greater demand to buy houses. This might cause long term house price growth.

Related

• Getting a Mortgage for French properties
• UK Housing Market
• French Property Prices
  
• French Housing Bubble set to burst

Data on house prices are often unreliable. The government doesn’t actually have a national official house price statistics (it really ought to, given the extensive press and economic interest they generates)

However, despite the fact that there are conflicting reports, there are an increasing number of reports which suggest house prices in the UK are now starting to fall.

According to the Royal Institution of Chartered Surveyors House prices are falling at their fastest since mid-2005. Last month, was a bad month for house prices as higher interest rates increasingly started to bite. There was also a change in confidence and outlook caused by the problems at Northern Rock.

This survey by the Chartered surveyors comes a week after the Halifax building society reported a second consecutive month of falling house prices.

Although just to confuse the issue the Nationwide claim house prices are rising and have increased by 10% since this time last year.

Problems in measuring House Prices 

A note on Monthly falls and Yearly falls

When look at house price statistics it is important to be aware of the distinction between a monthly fall and a yearly fall.

For example, the Halifax may report house prices in October fell by 0.8%. However, if we compare October 2007 with October 2006, house prices have still risen by say 8.1%.

Therefore, we can experience a temporary fall in monthly prices but still have quite a positive annual % change.

The annual % change in house prices gives a more reliable indication, because it is not subject to monthly fluctuations. But, it also hides recent changes and developments in the UK housing market.

If you want to have a newspaper headline

“House Prices Collapse” you can always find some statistic to back you up. Therefore, it becomes a bit of a mind field in actually knowing what is happening to house prices.

Geographical differences. Sometimes house prices can fall significantly but be confined to certain areas of the country like say Central London (where house prices are more volatile) again using geographical based statistics can give a biased snapshot of UK house prices

guardian article on house price