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Seasonal summer dip fails to impact UK property market as demand remains high
House prices in the UK fell 0.8% this month, but this is much less than the usual summer seasonal fall off, according to the latest index from property portal Rightmove. Overall the marginal fall compared to a post credit crunch average August fall of 1.5% and a shortage of new sellers, down 8% on same period in 2014, and active buyers help to minimise usual summer holiday price falls. This takes the average asking price of a home in the UK to £292,284 which is 6.4% above a year ago, the data shows. But there is considerable variation within the market. First time buyers face a 1.8% rise with the average price in this market £177,977 while at the top end the average price is £524,822, a fall of 2.2%. Rightmove says that the strongest August price performance since 2007 demonstrates the continuing supply/demand imbalance in the property market. It reveals that the top three reasons for people not moving are not able to find somewhere to buy, the cost of moving and affordability. ‘While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively. At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline,’ he explained. Another factor highlighted by Rightmove is the lack of new build supply with current new home volumes still being well below the levels reached just before the credit crunch. ‘The historic new build shortfall results in there being a smaller overall housing stock available to come to market, while the current new build shortfall also limits the number of existing property owners who are looking to sell their house in order to buy the limited number of suitable brand new homes available,’ Shipside pointed out. ‘The shortage of suitable property being built exacerbates the vicious circle of not enough property on the market to meet demand, increasing prices, and a reluctance among home-owners to come to market if they think the prospects of finding and funding their next move are severely compromised,’ he said. ‘These stay away sellers who are seriously considering a move but have yet to put things into motion have concerns around a shortage of choice and stretched affordability. They could be helping to get the country’s limited property stock circulating, but they have concerns about coming to market, deepening the supply shortages affecting many areas,’ he added. He also explained that home owners are reluctant to put… Continue reading
Some landlords struggling to get buy to let finance, research suggests
Despite a choice of 900 buy to let mortgages available on the market, lack of finance is hindering almost a quarter of UK landlords, new research has found. The situation is preventing them from expanding their property portfolios, according to the study conducted by online letting agent Property Let By Us. Overall one in 10 landlords has had difficulty securing a mortgage over the last 12 months but 82% of landlords have managed to successfully secure a mortgage at a when the buy to let market has been challenging for landlords. Indeed almost 80% of landlords are reporting rent arrears, nearly a quarter of landlords have served an eviction notice and 7% have had to resort to the courts to evict tenants. The good news is that void periods are down as demand continues to outstrip demand. ‘While the booming buy to let market looks like good news for landlords, the real picture is not so rosy. Spiralling rents are great news for yields, but the down side is that it brings with it a higher risk of rent arrears,’ said Jane Morris, Managing Director of Property Let By Us. ‘Securing finance also looks like it is going to get tougher for landlords. A new high street crackdown now means landlords will need a bigger deposit and face tighter checks for a buy to let loan. High Street lenders are introducing strict criteria in a crackdown on the buy to let boom, which is feared to be pushing up house prices across the UK,’ she explained. ‘The amount landlords will be able to borrow is expected to fall by thousands and they are likely to face new tough lending criteria to secure a buy to let loan. Landlords must also prove that they are not wholly reliant on their rental income and that they will also be able to cope with void periods and any repairs to the property,’ she added. Morris also pointed out that some lenders are introducing new affordability checks, which require landlords to answer such questions as how much they spend on household bills and childcare before they can get a loan. Lenders may also refuse loans to anyone dependent solely on a rental income and some providers expect applicants to have income of at least £25,000 a year from other sources. ‘Landlords need to thoroughly research lenders and ensure they meet the lending criteria before applying for a mortgage,’ Morris concluded. Continue reading
Portugal’s golden visa scheme reduces real estate investment for certain locations
The Portuguese government has reduced the minimum required amount for its golden visa for those investing real estate from €500,000 to €350,000 for certain locations. But the new lower amount only applies to property located in districts designated for urban renewal and is designed to reinvigorate interest in the popular visa scheme and provide a boost to Lisbon's regeneration programme. The scheme is also getting a boost after it was suspended earlier this year as a result of a legal void created by a piece of new legislation which did not address certain aspects of the existing golden visa laws. It is one of several so called golden visa schemes that allows property investors from outside of the European Union to get a visa to live in the country by investing in real estate. Others are available in Spain and Greece. ‘It was already the most popular scheme of its kind in Europe, but the government wants to cast the net wider. Spain and Greece launched similar visa systems in 2013 and have taken some of the market share, so the authorities are using properties in regeneration areas across cities like Lisbon to inject more interest in the scheme,’ said Nicholas Leach at Athena Advisors. According to the latest figures from the Serviço de Estrangeiros e Fronteiras (SEF) 2014 was a record year for Portugal with 1,526 successful golden visa applicants in total. However this year there has been less, with only 398 successful applicants in the first six months of 2015. ‘After the initial surge of investment into the scheme, there was bound to be a let up in demand. The demand of immigration incentives peaks and troughs, and this is why the government has shaken up the terms, to try and keep the rhythm going,’ explained Leach. Between its launch in October 2012 and the end of June 2015 the Portuguese Golden Visa scheme attracted €1.47 billion of investment, of which €1.33 billion or 90% was through the purchase of real estate, accounting for 2,289 golden visas. By comparison, the Spanish equivalent of the scheme generated around €700 million, granting 530 foreign buyers with a visa between its launch in September 2013 and March 2015. According to Leach some golden visa investors have looked to the Algarve and Silver Coast north of Lisbon, but Lisbon's city centre has been the main target due to the value and potential uplift. ‘Prime properties in Lisbon are a third of the price of their London and Paris equivalents, and if you look towards central regeneration areas like Mouraria there is even more value,’ added Leach. Following the recession of 2008, much of Lisbon's city centre fell into disrepair as both businesses and people left the city. Developers have targeted these areas over the last few years, renovating historic properties and even entire districts, upgrading real estate to international standards, thus enticing golden visa investors. Most of the city centre's sought after districts fall within the boundaries… Continue reading
