1. Record mortgage lending, but not by building societies
20 August 2007
Mortgage lending reached a new record in July, according to figures from one industry body ... » Read full story
2. London asking prices fall as house market cools
Posted on 20 August 2007
The asking price for a house in London has fallen for the first time in 12 months, according to figures released today.
Property website Rightmove’s August House Price Index reveals that the average asking price for a UK home rose from £240,001 in July to £241,474 in August, an increase of 0.6%. The year-on-year rise was a strong 12.8%.
However, asking prices in London fell by 0.1% in the month compared to an average growth of 2% per month over the last year. Rightmove sees the fall in London and the comparatively modest national increase as indicators of the market’s future direction.
Miles Shipside, Rightmove’s commercial director said: “This fall is the first we have seen for some time and is an early warning signal that even the buoyant London economy is susceptible to market forces.
“This much slower rate is consistent with prices and the market starting to adjust to the increased costs of home ownership. It finally paves the way for a return to a sustainable market without the need for further interest rate rises, though many buyers will still face affordability problems.”
3. London house prices drop for first time in a year as rates bite
London house prices have fallen for the first time in a year, a further sign that growth in the property market is slowing, according to property website Rightmove.
Greater London average asking prices dropped by 0.1pc in August to £394,268 - the first negative monthly figure seen since this time last year, when prices dipped 1.5pc in a month.
Miles Shipside, commercial director of Rightmove, said: "Whilst this month's fall in London prices is slight, this is an early warning signal that even the buoyant London economy is susceptible to market forces.
"The latest evidence seems to indicate that we have now genuinely reached the limit of buyers' ability to afford higher prices in current market conditions."
Thanks to the five interest rate rises since August last year, buyers' affordability has been stretched even further, forcing sellers in some areas of the capital to reduce their expectations.
This month, estate agents took the lowest number of properties on to their books so far this year.
However, stock levels per estate agent have remained static, indicating a correspondingly low level of property coming off the market due to subdued sales.
A further sign of the slowing market is the average time a property sits on the market for before being sold - this has jumped from 80 to 85 days in the last month.
Traditionally, the London market has led property prices across the country, creating a ripple affect.
Previously, asking prices across the country appeared to have peaked in July 2004, but the London 'mini boom' helped drive average national prices up by a further 23pc, an average of £45,262, over the next three years.
National house prices saw a modest rise of 0.6pc during August, up £1,473. Despite the fall in London's average asking prices, they are still 23.4pc - or £74,840 - higher than this time last year.
Areas that continue to do well include Islington, where prices rose 2.5pc in August, and Kingston-upon-Thames, which enjoyed a 1.9pc growth in average asking prices. London's worst performers included Hammersmith and Fulham, where asking prices fell 2.7pc, and Camden, which suffered a 3.9pc fall.
Mr Shipside said: "Whilst a slower market is to be expected in the summer holiday season, it shows that the balance of power has switched from seller to buyer in most parts of the country.
"This could swing even further in buyers' favour if the current credit tightening reduces lenders' ability to provide mortgage rates even without another rate rise by the Bank of England."
4. Off-plan: folly or fortune?
Last Updated: 12:01am BST 21/09/2006
Buying off-plan can be a boon for builders and investors, but there are risks. Jenny Knight weighs up the pros and cons
Buying off-plan means agreeing to buy a home while it is still a figment of the builder's imagination. Buyers hope for a bargain, while the builder reduces his risk by selling early - sometimes before a brick has been laid, but usually after building has started and about a year before completion.
Up and coming: computer-generated of City Tower at Canary Wharf, at Limehouse, East London
Cunning marketing can wind buyers up to fever-pitch so that they behave as if they are at the January sales. Galliard Homes are masters of the art, often refusing to allow viewers on site until the last minute. Buyers dash in, reserve a flat and sign a contract on the spot, using one of a panel of laid-on independent solicitors.
Last month buyers camped out on the pavement for two days waiting for the moment when St James Homes opened the doors at Kingsway Square in Battersea, a Victorian conversion which teams period details with shiny new interiors.
The first flats won't be ready until winter 2007, yet nearly all buyers banged reservation fees of £2,000 down without even viewing, having pre-selected from website floor plans.
All 22 flats sold on the day. A further 11 will be released this weekend, but prices are on average nine per cent higher than on the first viewing. Studios are from £265,000 and three-bedroom flats from £475,000.
Cautious people think buying off-plan is reckless, but over the past few years investors have literally made fortunes.
Ibosa Oshodin, 42, a former British Rail booking clerk, has built up an empire of 100 properties through buying mainly off-plan. He sticks to well-known developers and buys in bulk, as he did with five one-bedroom flats at Capital East, Barratt's development in the Royal Docks, East London. The more you buy, the bigger the discount. "I started buying property in 1993 when new developments were relatively cheap," says Oshodin. "By the time I'd bought the third property I decided to buy off-plan. I was getting a 100 per cent return by the time the places were completed."
Earlier investments included Barratt's Virginia Quay in Leamouth, East London. "Properties there were the right price. I bought at £150,000, and the value rose to £210,000 almost immediately. If you are among the first people through the door of a promising development, and in a position to go ahead with a deal, you're onto a winner."
But Liam Bailey, head of research at Knight Frank, reckons good off-plan deals in London are getting scarce. "Prices have gone up by 20 per cent in London this year and are starting to slow because that rate of growth is unsustainable. In the north, where the market is a bit sticky, off-plan buyers can get good discounts, but not in London."
It used to be only investors who bought next year's properties at this year's prices - enjoying all the price increase while only putting down 10 per cent of the ultimate cost. Now shortage of properties is forcing owner-occupiers to join in. Ed Lewis, of Savills, says: "We are selling 53 flats in Lancelot Place, almost opposite Harrods, for £1million upwards. The scheme won't be launched until next month and won't be ready until next summer, but we have quietly sold half off-plan to owner-occupiers and overseas buyers already because people know you don't get excellent properties in prime locations coming up very often."
Even retirement developments now sell off-plan. The upmarket English Courtyard sells nearly a half of its developments off-plan. Buyers pay a deposit of £1,000 and have around two months to exchange contracts. Kevin Holland says: "There has been a sea change with older buyers, who now realise if they wait until the development is finished there is a good chance that the home they want will already have been sold."
Tony McKay, of Inside Track Group, the specialist off-plan property broker, says: "The largest discounts depend on buying power. Our members invested £550million in 2005, buying five per cent of all new flats that year.
"New-build apartments are tricky to value. In regeneration areas there may be no similar properties for comparison, so it's easy for a developer to offer a so-called discount. If you can't be sure of genuine value and a genuine discount, you have to walk away."
Buying off-plan
Do
• Get a solicitor to check there is insurance to make sure the development is completed if the builder goes broke.
• Buy from reputable builders because off-plan buyers take everything on trust from the build quality to the view.
Don't
• Forget if the market crashes, you still have to pay the agreed price.
• Assume you are getting a good deal. Check on prices per square foot and compare that with local prices.
• Think you can 'flip the contract' by selling on before completing. Most developers now add clauses forcing buyers to complete.
5. Interest rates and rain fail to dampen sales
Posted on 16 August 2007
Rising interest rates and terrible summer weather have failed to prevent growth in High Street sales, according to figures released today.
The Office for National Statistics (ONS) says that the volume of retail sales grew by 1.1% in the three months from May to July, compared to 1.4% growth in the preceding three months. The total volume of sales for the three months to the end of July was 4% higher than at the same time last year.
Many analysts have been surprised by the 0.7% growth in sales during July alone, which BBC News reports is more than three times the expected level.
Although inflation fell sharply to 1.9% in July, the continued strength of High Street sales will maintain some upward pressure on the figure, which the Bank of England is charged with maintaining at 2%. Although many analysts now think an interest rate rise is unlikely in the coming months, today's figures suggest that it remains a possibility.
6. Home information packs are dealt new blow by lenders
· Buyers are told that Hips searches are inadequate · Plan to speed up house sales may suffer backlash
Miles Brignall
Wednesday August 22, 2007
The Hip scheme will apply to three-bedroom homes from September 10. Photograph: Roger Tooth
The government's troubled implementation of home information packs suffered another setback last night after it emerged that some mortgage lenders are refusing to accept a crucial part of the reports.
Solicitors, mortgage lenders and even some Hips providers warned that many homebuyers would have to pay at least another £200 for their own local authority searches because those provided in the home sellers' pack cannot be trusted.
Buyers need to conduct the searches before purchase to establish whether a property faces any planning constraints and complies with planning regulations. The most common problems they reveal are extensions built without planning permission or enforcement orders that have not been complied with.
But one of the biggest mortgage lenders, HSBC, confirmed yesterday that it requires borrowers to undertake a full local authority search because it says those provided in Hips do not carry sufficient insurance.
Solicitors have said they will advise buyers to conduct their own local authority searches.
The latest problem stems from the vast majority of the searches done by Hips providers being "personal" searches, rather than "full" searches provided directly by the local authorities. Personal searches cost about £120, against the £200-£300 charged by local authorities.
From this month, sellers of properties with four or more bedrooms have had to commission a £400-£500 Hip before putting their homes on the market. Last week the government said it would expand the scheme to three-bedroom homes from September 10.
The packs, which include an energy performance certificate, standard property searches and evidence of title, were brought in to speed up house buying and selling by giving consumers more information up front. In June the government dropped the requirement for Hips to include a home condition report or survey after it became clear that buyers would not be able to rely on the findings. Now it has emerged the same may be true of searches.
Solicitor and estate agent Michael Garson, who advises the Law Society on Hips, said yesterday he would continue to advise clients to complete a full local authority search irrespective of whether the house came with a Hip.
"I'm there to act on behalf of the buyer, not the seller, and for me it's all about covering my backside and being prudent."
One recent case where both a full and personal search had been done on the same house produced "eye-opening" differences.
Peter Ambrose, director of Hips provider The Partnership, yesterday predicted a backlash in September when buyers' solicitors will reject the search contents of Hips presented to them. "Sellers paying for Hips containing such searches may well find their buyer's solicitor will not accept them and may want sellers to reimburse them for the additional costs incurred in commissioning new searches."
A spokesman for the Department for Communities and Local Government said: "Consumers have long been able to choose who they want to carry out their searches, as personal search companies have been operating for decades and already cover about 40% of the market. They are accepted by an overwhelming majority of lenders. It is hard to see why Hips should change lenders' policies on accepting searches."
7. Britons 'fear poverty in retirement'
Harriet Meyer
Tuesday August 21, 2007
Retiring in poverty is the biggest fear of a quarter of Britons, latest research reveals, but we are fuelling this anxiety by spending today rather than saving for tomorrow.
According to the survey by Scottish Widows, having fun now is the biggest priority for most of the UK, ahead of saving for a child's future, getting on to the property ladder, looking good, and studying for extra qualifications.
The survey also says that instant gratification gives us the most pleasure, with holidays, spending money and shopping making the top five when asked what
But coming second only to bad health, which secures just over a third of the votes, the fear of not having enough money in old age is most likely to keep us awake at night, ranking above looking old, being lonely and being unable to work.
"The nation has a head-in-the-sand approach to money," said Mike Hoban of Scottish Widows. "We're putting off thinking about our fears until tomorrow while we live for now, but it doesn't stop us from getting increasingly stressed as these worries niggle away.
"Just by being more sensible about money, and putting a little aside regularly for the future, Brits could alleviate their fear of poverty in old age - and perhaps even decide that having a secure financial future is a reason for happiness in the present."
8. Record £34bn borrowed in July thanks to remortgaging
Angela Balakrishnan
Tuesday August 21, 2007
Mortgage lending rose strongly last month as fears that interest rates might increase before the end of the year spurred homeowners to remortgage.
Figures from the British Bankers' Association yesterday showed lending rose by £5.7bn in July, up from £5.4bn in June, despite borrowing costs increasing five times in the past year.
Analysts said that the data reflected increased remortgaging activity in expectation of higher interest rates, rather than a resilient housing market. "This resilience shows the popularity of home ownership and also reflects more remortgaging activity, said David Dooks, director of statistics at the BBA."
The strength of the BBA data was echoed by figures from the Council of Mortgage Lenders which showed gross mortgage lending hit £34.4bn a record for the month of July.
Although many economists reduced their expectations that the Bank of England's monetary policy committee would raise interest rates to 6% following the turmoil in financial markets last week, a slim majority believe a rate rise is still on the cards. The case for another rate rise was boosted after property website Rightmove showed annual house price inflation picking up to 12.8% in the period between early July and early August from 10.3% in the previous period.
Separate data on mortgage approvals sent mixed messages to economists. The Building Societies Association said that approvals - a measure of the future health of housing demand - totalled £3.6bn in July, £4.9bn lower than approvals in the same month last year.
"This is a tale of the five interest rate rises in the last year feeding through to the market," said Adrian Coles, BSA director general. George Buckley, analyst at Deutsche Bank, said while the BSA figures provided a better advance indicator of the housing market, it also possibly reflected a falling market share for building societies. Building societies account for less than 20% of the residential mortgage market.
Home information packs will soon cover all houses with three or more bedrooms.
Millions of homeowners are planning to exploit a loophole to avoid purchasing home information packs (Hips), according to research out today.
Hips, which cost vendors around £400, are now a compulsory part of the selling process for homes with four or more bedrooms, and will be extended to include three-bedroom properties from September 10.
But to avoid paying for a pack, 4.5 million homeowners with four-bedroom properties may be prepared to market them as having three bedrooms, said Abbey.
The most popular way to describe the fourth bedroom is as a study, with other possible choices being a playroom, games room or even a walk-in wardrobe.
"The government has made such a fiasco of this legislation," said Ray Boulger of mortgage broker John Charcol.
"There is no legal definition of a bedroom, and as this is not defined it is perfectly legal to use this loophole.
"Estate agents are masters at describing properties imaginatively so they won't have a problem doing this, and if homeowners can get [a property] on the market and save up to £500 then they will be happy to do so providing they don't think they've missed out."
However, using this loophole may make your home appear overpriced, warned Abbey. It could also be overlooked by the 89% of buyers using the internet to find a property.
"While Hips might seem a hassle, we think it would pay in the long run to play it straight rather than risk going through this loophole," said Nici Audhlam Gardiner, head of mortgages at Abbey.
"By remarketing your home as a two- or three-bedroom house with a study you'll become invisible to thousands of potential buyers that are searching online specifically for three or four bedrooms and above."
Since August 1, people selling a property with four or more bedrooms have had to compile a pack. The Department for Communities and Local Government has since said it has enough energy assessors to produce the packs and energy performance certificates (EPCs) so they will be rolled out to three-bedroom homes from September 10.
The packs, which include an EPC, standard property searches and evidence of title, aim to speed up the house buying and selling process by giving consumers more information up front.
