Musings of a London Property Search Agent

The Royal Institution of Chartered Surveyors (RICS) have warned that construction of new homes could drop below 100,000 per year by the end of this year, missing the government’s target by more than 50%.

As recently as 18 months ago, the government’s pre-occupation with housing centred on creating more homes in order to stabilise house-prices and enable more people to buy a roof over their head.  In 2003 the government commissioned Kate Barker to conduct an independent review of housing supply which led to the government setting housing targets based on projected need which was partly intended to satisfy demand and stabilise the property market.

But in a country where land is at a premium, many councils, particularly in London and the South East have found it very difficult to meet local new housing targets set.  The credit crunch has exacerbated the problem as builders struggle to get finance and sell existing stock.

RICS Senior Economist Oliver Gilmartin said: €œWith finance for projects becoming increasingly difficult to obtain, the Government€™s ambitious target of 2 million new houses a year by 2016 is likely to fall well short. At current levels of production the number of new homes built will fall below 100,000 in the coming year.”

The RICS reports that the Government needs to build in excess of 200,000 new homes each year in order to reach their target of 2 million homes by 2016.  To date, only 66, 220 new homes have been built in 2008, with a fall below 25,000 per quarter likely by the end of the year. 

It would be rather ironic if missing the government target initiated to increase supply and stabilise the property market kick-starts the housing market due to the ongoing problem of low supply and high demand.  But if the outcome, stabilisation of the property market is achieved, then the means is irrelevant.  Until the market overheats again.

Perhaps local councils will apply section 106 agreements more flexibly over the coming months to help developers make the margins and councils to meet their targets.  This has already happened in many London boroughs to date.  If you are cash-rich developer, get those planning applications in.  Seek the services of a London Property Search Agent before it is too late!

Technorati Tags: credit crunch, House Prices, housing targets, Kate Barker, London House Prices, London Property Search Agent, New homes, property developers, property market, RICS

Tags: credit crunch, House Prices, housing targets, Kate Barker, London House Prices, London Property Search Agent, New homes, property developers, property market, RICS

London Property Search Agent

Mervyn King, Governor of the Bank of England issued a statement today saying that: ” In the UK we face a difficult but temporary period during which inflation will remain high…but provided we do not impede the required adjustment we will come through this temporary period and resume a path of normal economic growth with inflation close to target.”

He adds that sharp increases in global fuel and commodity prices, compounded by a depreciation in sterling have largely caused the rise in CPI (Consumer Price Inflation) this year. 

The reason for these increases is due to supply and demand.  The energy needs of India and China, two of the biggest world populations have increased exponentially.  Also, the financial crisis in August last year drew investors to invest in oil, in view of the demand at any cost.  Similarly, commodites are in short supply with major developments in Russia, China and the Middle East fueling demand.

The Governor goes on to discuss the Special Liquidity Scheme whereby banks can insure borrowings to each other and therefore liquidity.  Sensibly in our view, he adds that his proposals to help us through the Credit Crunch ‘will not and cannot solve the shortage of funding to bank lending, including mortgage lending.’

The tax payer should sigh a communal sigh of relief at this news and mortgagees, most of whom will be tax payers should feel the same.  It is tempting to rant about stupid investment decisions based on ridiculous returns on foreign soil, where there is ample space to build a new condo development or trailer park for half the price.  But it is a common error with the British.  We all live on a small island where lots of people aspire to live but there isn’t much room and rightly, our countryside is protected so we can’t just build a new development wherever there is demand.

High inflation is not good.  0% increases in GDP isn’t good.  But at least the Bank of England is in charge of interest rates and hopefully Merv’s knighthood is relatively assured so his priority should be for a stable economy and respect amongst his peers.  Our assumptions being true, he will take the hard line with banks which have made silly decisions.  Likewise British homeowners who have done the same will come acropper.

As we have said before – it is all in the buying.  Buy well, in any market and you should make money.  If you need help – you know our number!

(It’s 0845 459 1703 – if you’ve forgotten – the London Property Finder!)

Technorati Tags: Consumer Spending, credit crunch, House Prices, Inflation and House Prices, Interest Rates, London Property Finder, Mortgage Lending, Property Supply and Demand

Tags: Consumer Spending, credit crunch, House Prices, Inflation and House Prices, Interest Rates, London Property Finder, Mortgage Lending, Property Supply and Demand

Musings of a London Property Agent

As the Guardian reports yet another mortgage broker is banned by the FSA for obtaining a
mortgage by deception, we got thinking about the number of people we know who
in our opinion are too highly geared. 
Undoubtedly the vast majority of people didn’t knowingly put in
fraudulent mortgage applications, but were seduced by high and unrealistic
rental estimates from glamorous sales agents in beautiful show homes and
offices so that applications looked achievable if slightly ambitious on
paper.  Unfortunately when the high-paying tenants failed to materialise, the numbers no longer added up.  

The thing is, before the credit crunch, it
seems that no-one, not the mortgagee, nor the mortgage broker nor even the
lender was particularly bothered whether the mortgage would be paid every month
over the long term, because the loan would be packaged up and sold to a third
party. 

It should be a case of all change now that so many banks have had their fingers burnt. 

But it is still possible to get a mortgage at a reasonable rate, so long as you can prove that
there is a good chance of repaying funds borrowed.  Equally it is possible to find buy-to-let
property which provide a good return, ie the annual rent is 125pts of the annual
mortgage repayments after charges based on a mortgage of 85pts of the property
value.  You just need to know where to look, call this London Property Agent

Technorati Tags: Buy-to-let, credit crunch, London Property Agent, Mortgage over gearing

Tags: Buy-to-let, credit crunch, London Property Agent, Mortgage over gearing