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

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