Musings of a London Property Finder

Boris Johnson’s list of measures announced today to prop up the bottom of the housing market and the construction sector bode well for the latter but surely he is missing the point.  First-time buyers need to accept that if they don’t have the funds to buy in the area they’ve always lived in, they need to buy a home in need of work in an area they can afford, which is likely to improve or hold it’s value.  If they buy at a price which will give them a big enough margin to make a little bit of money they will be able to move onwards and upwards in the future. 

Of course everyone wants to live in the best areas, but buying a new build, even with a discount, isn’t going to help them make money and move on.  A one bedroom flat in a new block with a shiny new kitchen, wood flooring throughout and big shower will be of no help if their situation changes.  What happens if you have children or need to start working from home?  With stamp duty at 3% for properties over £250,000, owners on low to average incomes need to save up to pay the stamp duty if they ever want to move and with little or no increase in the value of their home, they may be homeowners, but they will be well and truly stuck. 

Boris and co should be lobbying to increase the stamp duty thresholds and trying to instill a work ethic and sense of entrepreneurship about property into the young so that when the market starts to recover, said first time buyers will be able to enjoy the fruits of their DIY and embark on the next step up the property ladder.  Television programs showing amateurs paying over the odds for sub-standard property and then wondering why they make a loss have a lot to answer for.  But those heady days for vendors have gone and canny first time buyers should be entering the market now and going head to head with investors to pick up a bargain property in need of TLC. 

Those who follow Boris’ lead and buy new now, and need to sell in 5 years time, will sell for the price they paid if they are lucky, with only a few thousand paid off the mortgage.  Still, for security and boosting savings, it beats renting I suppose.  For further help in finding the right property for you call this London Property Finder

Technorati Tags: First time buyers, London Property Finder, Time To Buy New Build

Tags: First time buyers, London Property Finder, Time To Buy New Build

Musings of a London Property Finder

House prices across the country fell 1.4% in October according to the Nationwide House Price Index but the low volume of sales is indicative of the lack of financial malaise in the market overall, as homeowners refuse to negotiate on price, constricting supply.

Fionnuala Earley, Chief Economist at Nationwide commented “While vendors refuse to cut their price, the levels of activity are constrained. Asking prices have fallen this year but the rate of decline has been significantly behind that of other measures. Consumers still expect prices to continue to fall into 2009 and will therefore be reluctant to trade without some discount on the asking price. This type of stalemate ultimately limits the number of transactions which can take place. This could however indicate that conditions are not yet very stressed, as sellers have not felt the need to dramatically reduce their prices for a quick sale.”

Demand is being stymied by conservative lending on the part of the banks.  According to Nationwide there are 55% less buyers in the higher loan-to-value bands, ie buyers with low deposits, than this time last year.  The best rates are on offer to buyers with 25% deposits but those with 15% can also borrow.  Gone are the days of 90% or 95% mortgages, for now at least, although the mortgage advisers we use have told us they would expect lending to relax next year to allow mortgages at these rates during 2009. 

Anecdotal evidence from our Clients would indicate that many first-time buyers are very keen to enter the market, assuming they can get funding.  Increasingly they are approaching us for guidance in order to secure the best deal and be cushioned from further price deflation, expected next year.  These buyers are key to getting the market moving again, not only through their own purchases but also enabling buyers further up the chain to complete.

Our Clients in the £750,000 – £3 million bracket have tended not to move, rent their property and purchase another or rent their property and rent elsewhere.  The London Property Finder is redy to act when you want to move

Technorati Tags: Add new tag, First time buyers, House Prices, London House Prices, London Property Finder

Tags: Add new tag, First time buyers, House Prices, London House Prices, London Property Finder

Musings of a London Property Search Agent

Last Thursday we posted a blog remarking on the volatile financial markets and our belief that bricks and mortar is the safest investment vehicle.  Further government intervention this week should spell good news for the property market because there is still demand, certainly in London and the South East.  The busy auction market in these areas bears witness to the fact that people are happy to invest in property at the right price.  One of the major reasons the property market has stalled is that those first time buyers who prop up the property ladder from the bottom, can’t enter the chain because they need a 15% deposit to get a good rate.  So in theory, the government’s demand this week that government funding came with it a requirement to maintain “the availability and active marketing of competitively priced lending to  homeowners and to small businesses at 2007 levels.”

This was initially met with concern from the Council of Mortgage Lenders (CML) whose members control 98% of UK mortgages, but it seems everyone just wants responsible lending to people who are likely to be able to repay their debt, not a return to the 125% mortgages given to 22 year olds with good prospects.  It will be interesting to see to what extent this is possible.  Mortgage lending dropped 63% in August 2008 versus 2007, although just over a third of lending was to first-time buyers.  This group needs to make up a similarly significant proportion of future borrowers, if we are going to see real movement in the property market.  Many people further up the chain, often with between 30 and 60% equity in their homes would love to move now, regardless of headlines but can’t because they can’t find a buyer.  We have spoken to dozens of people in this position this year and the options are rent-to-buy or stay put.

It’s certainly been a crazy week and month, but the government has acted decisively and if there is confidence to lend to first time buyers again, everyone else will be able to get moving.  Lets just hope the government can get the Libor rate down – as banks are only going to relax their lending criteria, if doing so doesn’t plunge them into debt.  There are good buys out there and this London Property Search Agent is ready to act.

Technorati Tags: First time buyers, government bail-out, government intervention, House Prices, libor rate, London Property Search Agent, property market, property market news

Tags: First time buyers, government bail-out, government intervention, House Prices, libor rate, London Property Search Agent, property market, property market news