Since 2008, London has been the most traded real estate market in the world [...]]]> The London property market has seen a huge increase in global capital flight- as it is seen by many as a safe haven during the eurozone credit crunch.On the high end of this scale of capital investment is the commercial property market.

Since 2008, London has been the most traded real estate market in the world with 60% of the total investment from foreign investors.

The system in London is very investor friendly with transparent legal structures and it has fiscal benefits in terms of tax and capital gains which give it a certain advantage.

International corporations use London as a base for Europe, Africa and the Middle East- and London also responds quickly to global market pressures.

In late 2008, there was a 40% drop in values post the Lehman Brothers crash and as Sterling weakened. Bizarrely, perhaps, this huge markdown did little to dampen investor sentiment. In contrast to the fortunes of the US and other real estate markets, it led to a substantial increase in overseas interest.

As such, London stole the crown from New York in 2008 as the most traded real estate market in the world.

During the 2008-2011 period, some 42% of sales were from UK owners to foreign investors, with just 6% being traded the other way.

These foreign investors are discerning and are focusing on prime assets.

UK buyers are still the biggest group, holding 48% of all property here, followed by German investors which own 16%, US investors which own 10% and Middle Eastern investors which own 6%.

Japanese investment has fallen two percentage points from a high of 11% in 1995, while and European investment excluding Germany has fallen to 5% from a high of 8% in 1995.

There has also been a growing trend towards the super-rich, often labelled high net worth individuals, buying property.

The super-rich are also buying in the City. Officially they own some 6% of the office space there, but many think that could be an underestimate as it is difficult to trace ownership and there is a culture of secrecy.

The temporary exemption meant first time buyers were free from the [...]]]> First time buyers will no longer receive an exemption from stamp duty from March 2012 as the government says the relief is “ineffective”.Documents with Chancellor George Osborne’s Autumn Statement reveal the view that the tax relief failed to get more people on the property ladder.

The temporary exemption meant first time buyers were free from the 1% stamp duty on homes costing under £250,000.

A lenders’ group described the decision as “disappointing”.

The Council of Mortgage Lenders (CML) said first-time buyers’ purchases could be bunched up at the start of next year before the concession is scrapped on 24 March.

The documents show that the Office for Budget Responsibility (OBR) believes that the UK housing market will remain relatively stagnant.

It predicts that, even without the relief for first-time buyers, stamp duty land tax receipts will only grow marginally from £6bn in 2010-11 to £6.4bn in 2012-13, before rising more sharply to £7.5bn in 2013-14, and accelerating to £11.4bn in 2016-17.

Stamp duty thresholds

• 1%: Properties of £125,000 to £250,000, but first-time buyers are currently exempt
• 3%: £250,000 to £500,000
• 4%: More than £500,000
• 5%: More than £1m, residential property only

In the Autumn Statement documents, the government said: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first time buyers entering the market.

The government’s housing strategy, announced earlier in the month, included a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes.

Paul Smee, director general of the CML, said: “While the stamp duty concession may not have stimulated additional demand, it was a significant help to home-owners entering the market and its removal runs counter to the themes of the new housing strategy.

“It is likely that we will see a bunching of eligible first-time buyer transactions early next March to beat the expiry date on the concession.”

The National Association of Estate Agents (NAEA) said [...]]]> First time buyers are “rarely seen”, estate agents warn with their share of the UK housing market having fallen to a three year low.Sales to those buying their first home fell from a 22% share of the market in September to a 16% share in October, figures suggest.

The National Association of Estate Agents (NAEA) said this was the lowest proportion since December 2008.

One economic research company has also scaled back its price growth forecast.

The level of sales and homes going on the market in the UK was little changed in October compared with September, according to the NAEA.

However, it said that first time buyers had suffered a “heavy blow” to their share of the overall housing market.

The association said that, despite some evidence of mortgages being approved by banks, there remained significant lending barriers for those trying to buy their first home.

“The first time buyer is rarely seen as they struggle to get mortgages and over-optimistic vendors with a lack of motivation continue to stifle certain areas of the market,” said Martyn Baum, who represents the NAEA in the Midlands.

It still believes that house prices will rise from next year.

The research company also said that the government’s housing strategy could initially push up prices slightly but would have no effect on values after the first year.

That figure represented a [...]]]> Mortgage lending in Scotland rose in the third quarter – but at a much lower rate than the UK as a whole, according to the latest data released by mortgage lenders.The Council of Mortgage Lenders (CML) Scotland said 12,400 loans were taken out, which was 900 more than in the previous quarter.

That figure represented a rise of 8% for the period.

In the UK as a whole, lending for house purchase increased by 16%.

Loans to first time buyers and home movers in Scotland increased in the third quarter.

A total of 4,600 loans worth £429 million were advanced to first time buyers, which was a rise of 7% by volume and 10% by value.

CML Scotland said there were “small improvements” in lending criteria for all Scottish house purchasers in the quarter.

First time buyers typically borrowed 80% of their property’s value, up from 79% in the second quarter – bringing the average loan-to-value ratio in Scotland in line with the UK average.

Home movers borrowed on average slightly less of their property’s value from July to September than April to June – 70% compared to 71% – but they spent 8.8% of their income on mortgage interest payments, the lowest since records began in 2005.

A total of 9,600 remortgage loans worth £900 million were taken out, a 5% increase on the previous quarter.

CML Scotland policy consultant Kennedy Foster said: “The mortgage market in Scotland is currently stable, albeit at a low level.

“We anticipate growth is likely to remain slow going forward, although welcome developments – such as smaller deposits – have emerged and a Scottish mortgage indemnity scheme for new-build properties is being introduced.

“The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland, as in the UK in general.”

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month [...]]]> Economic uncertainty makes the future of the UK mortgage market “difficult to call”, a mortgage lenders’ group has said.Paul Smee, director general of the Council of Mortgage Lenders (CML), said the market for home loans was currently stable.

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month before, the CML said.

First time buyers needed an average deposit of 20% of a home’s value.

The number of mortgages approved for house purchases was 3% higher than in September 2010.

However, mortgage lenders have suggested that the cost of loans has started to rise because banks are charging more to lend to each other.

The rising cost has resulted from banks’ confidence in lending to each other being knocked by the eurozone crisis, and Mr Smee said this made the future for the mortgage market more difficult to predict.

“Although both house purchase and remortgage loans experienced a small drop in September the overall market to date shows a stable picture,” said Mr Smee.

“However, the backdrop of global and domestic instability makes the future more difficult to call.”

Over the third quarter of the year, the number of home loans advanced for house purchases was up 16% compared with the previous quarter at 144,200.

This was 6% lower than the number in the same period in 2010.

The number of homeowners remortgaging in the third quarter was up 23% on the same three months in 2010.

However, the latest figures show the steam might have come out of the remortgaging market, with the number of remortgaging loans approved in September down slightly on the previous month.

The number of loans taken out by first-time buyers rose slightly in September from a low base.

The level of deposit required remained unchanged compared with August, but had eased compared with a year earlier.

More surveyors reported price falls than price [...]]]> Economic uncertainty and a lack of mortgage lending led to the sluggish housing market, the Royal Institution of Chartered Surveyors (Rics) said.Fourteen homes were sold per UK estate agent in the three months to August – the lowest total for more than two years, a survey has found.

More surveyors reported price falls than price rises in August, Rics said.

And an increasing proportion expected prices to drop further in the next three months.

“The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available,” said Alan Collett, housing spokesman for Rics.

The Rics report reported that surveyors regarded economic uncertainty as the biggest factor affecting activity in the housing market, followed by a lack of mortgage finance.

A smaller number considered that buyers and sellers were staying away from the market because of fears over further house price falls.

The Council of Mortgage Lenders said last week that first time buyers were typically having to find a deposit of 20% of the purchase price to get a home loan.
School effect

House prices in year to July

• Wales: down 0.1%
• England: down 1.5%
• Scotland: down 1.8%
• Northern Ireland: down 4.1%

Source: Department for Communities and Local Government

Often this was because they had bought at the height of the market, had found it easy to get a 100% mortgage, but now needed a bigger home having had children or found a partner.

Nationally, Rics said that prices continued to increase in London, with prices falling the most in East Anglia and the West Midlands. Scotland and Northern Ireland also recorded house price falls, the survey said.

In the last year, prices have fallen the most sharply in Northern Ireland (down by 4.1%), according to the government’s own house price survey.

Property prices fell by 1.8% in Scotland in the year to July, and dropped by 1.5% in England and 0.1% in Wales, the Department for Communities and Local Government (DCLG) said.

It said that UK house prices fell by 1.5% over the year to July.

However, it said prices rose by 0.3% compared with June, making the average home worth £207,690.

Prices paid by first-time buyers were 0.5% lower on average compared with a year earlier and prices paid by former owner occupiers decreased by 1.9% over the same period.

The number of first-time buyers, at 18,200, fell back by [...]]]> The number of mortgages lent in July was still much lower than a year ago, figures from the Council of Mortgage Lenders show.The number of new loans to house buyers was 48,400 in July, up 1,000 from June but still 6,900 lower than a year ago.

The number of first-time buyers, at 18,200, fell back by just 300 from June and was 1,300 down on a year ago.

First-time buyers are still having to put down deposits averaging 20% of their purchase price to obtain a loan.

“August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months,” said the CML’s director general Paul Smee.

“However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages,” he said.

Figures from the Bank of England showed that in July 49,239 new mortgages were approved, but not yet lent, to house buyers. That represented the third monthly increase in a row and would normally suggest an impending upturn in sales.

With house prices rising slightly so far this year, the average new mortgage has gone back up to £120,000, the CML said.

As a result, the total amount of money involved in the new loans in July rose to £7.3bn from £6.9bn in June, putting gross lending at its highest level since August last year.

Mortgage rationing in the past few years has led to home sales [...]]]> The number of mortgage deals available has returned to the level of early 2008, before the banking crisis reached its peak.Of the 2,557 mortgage types on offer, 64% require at least a 20% deposit and only 2% need a deposit of 5% or less.

Mortgage rationing in the past few years has led to home sales falling by more than half.

Moneyfacts, which compiled the figures, said lending to people with small deposits was still very restricted.

“While the number of deals for borrowers with a 5% deposit or less has increased, the majority require a guarantor to qualify or are from lenders which offer restricted lending,” said Michelle Slade of Moneyfacts.

“First-time buyers still really need at least a 10% deposit before they can find any real mortgage options.”

She said lenders were worried about borrowers defaulting if interest rates rose, and were concentrating their lending on people who could put down at least a 25% deposit.

Severe mortgage rationing has been in place since 2008, when banks and building societies decided to restrict their lending because of the financial crisis.

The knock-on effect has been that people who would normally be regarded as highly creditworthy have been having problems obtaining a loan to buy a home.

Despite a clean credit history, several lenders are rejecting home loan applications.

As a result the mortgage decision making  process is getting slower and slower. Previously mortgages were agreed in six days or so now the process can take up to three months.

The predictions come amid a period of sluggish activity in the market.

London is [...]]]> Surveyors are “pessimistic” about UK house prices in the next three months following a slight fall in property values in July.Some 13% more surveyors expect prices to fall rather than rise in the next quarter, the Royal Institution of Chartered Surveyors (Rics) said.

The predictions come amid a period of sluggish activity in the market.

London is still bucking the national trend, with prices having increased in July and predicted to continue rising.

The findings suggested that, in most of the UK, would-be buyers were being put off by large deposits being demanded by lenders.

Potential sellers were unwilling to accept lower selling prices and so were reluctant to enter the market.

“While the holiday season appears to have had some impact on the market, the continual problem of inaccessible mortgage finance is still preventing first-time buyers from accessing the market,” said Ian Perry, of Rics.

“Unsurprisingly, with prices continuing to fall, many would-be sellers seem unwilling to lower their expectations and are reluctant to place their property on the market.”

The data will come as bad news for those who have borrowed more in a mortgage than the value of their home.

The Council of Mortgage Lenders (CML) recently calculated that 827,000 mortgage-holders were in negative equity, although this was lower than the estimated 1.6 million households in the same situation in the early 1990s.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of [...]]]> Mortgage lending jumped in June- allbeit from a very low level, the Council of Mortgage Lenders (CML) has said.The total number of new home loans to house buyers rose by 22% from May, to 46,700.

And those specifically to first time buyers reached a 10 month high, up 24% from May to 18,100.

Although the level of lending was still significantly lower than a year ago, the CML said the latest figures were encouraging.

“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while,” said Paul Smee, director-general of the CML.

The number of new mortgages arranged in June was back to the level recorded last October.

It was also 63% higher than in January this year, when newly arranged loans had been at their lowest monthly level for nearly two years.

Despite more first time buyers coming on the scene, they still had to put down an average deposit of 20% of the value of the home they were buying.

The CML said although this was down from the high point of 25% recorded during 2009, it was still much higher than the “historic norm” of 10%.

Potential buyers are also being helped by a fall in the interest being charged on new fixed rate deals.

The financial information service Moneyfacts said the average five-year fixed-rate deal was now at 4.99% – and that this was the first time since 1988 that such offers had been below 5%.

Households have now [...]]]> UK Homeowners added £5.8 billion into their properties in the first quarter of 2011- marking three years in which they have injected equity, according to the Bank of England.The Bank’s economists think that while some people may be trying to cut debt, the shift to equity injections more likely reflects falling house sales.

Households have now added £63.6 billion to their housing equity – the share of their housing wealth that does not have lending secured on it – since March 2008.

The latest net injection followed a record £7.1 billion the previous quarter.

In contrast, the housing boom years saw a trend for equity withdrawal, as many cashed in on the value of their property by using at as security to borrow and spend.

There is concern that, just as withdrawals supported spending, injections – such as lump sum payments on the mortgage principal – could have a reverse effect.

The shift has often been attributed to households’ desire to shore up their finances.

However, Bank economists think that, while some people may be trying to cut debt, the shift more likely reflects falling house sales.

The overall effect of a housing chain of buyers and sellers would normally be an equity withdrawal, since the equity injected by a first-time buyer is typically “dwarfed” by the withdrawal made by the person at the end of the chain.

“Fewer homeowners trading down and selling a property without buying another mean that a large source of equity withdrawal has disappeared,” a Bank report noted.

The figure is 17% higher than the same month a year ago.

Home loans for house [...]]]> There were 33,900 remortgage loans advanced last month – up 16% compared with the previous month, the Council of Mortgage Lenders (CML) say.
Expectations of interest rate increases led to larger numbers of homeowners remortgaging in March, UK lenders say.

The figure is 17% higher than the same month a year ago.

Home loans for house purchases also proved to be more popular, although the lenders’ body said the market remained “subdued”.

The number of home loans was up 24% compared with the previous month. However, it was 17% down on March 2010, and the CML warned against reading too much into one month’s figures.

Remortgaging accounted for 37% of all lending during the first three months, up from 30% during the previous quarter.

The CML said it was likely that this was linked to expectations of an interest rate rise in the coming months, making mortgages more expensive, even if this increase was only small.

The number of home loans made in March to first time buyers was 28% higher than in February, but 17% lower than a year earlier.

Typically, buyers now have to provide a 21% deposit to get on the property ladder for the first time. This is a little less difficult than the 24% typical deposit required a year ago, the CML figures show.

Only 4% of first time buyers now choose an interest only mortgage compared with 30% before the financial crisis, when these loans were much more available from lenders.

Many first-time buyers find it difficult to purchase a home because lenders are asking for [...]]]> Councils are to help first time buyers get on the housing ladder by topping up their deposits.
Five councils are pioneering a scheme aimed at buyers who can afford the monthly mortgage repayments but do not have a lump sum saved up.

Many first-time buyers find it difficult to purchase a home because lenders are asking for hefty deposits.

The councils will put 20% of the price in a Lloyds TSB account, with the lender asking for a 5% deposit.

The funds will not go to the buyer and the mortgage rate will be lower.

The councils risk losing money if a buyer defaults, but they get a generous interest rate themselves.

The scheme could benefit up to 300 first time buyers in each area, but if other councils join, thousands could potentially benefit.

Another 10 councils are waiting to join the scheme- which is called Local Lend a Hand.

The councils involved so far are Warrington, Northumberland, East Lothian, Blackpool and Newcastle-under-Lyme.

The scheme was welcomed by Housing Minister Grant Shapps, who encouraged the industry to offer greater help for first-time buyers at a recent summit.

Figures from the Financial Services Authority (FSA), published earlier this week, showed that only just over 2% of new mortgage lending in the final three months of 2010 was to those who could offer a deposit of less than 10% of a home’s value.

It found the biggest shortfall would be in London, the South East of England, the [...]]]> England is facing a “growing housing crisis”, according to a report which estimates a shortfall of 750,000 homes by 2025.
The country needs to build more homes even if the economy continues to stall, the Institute for Public Policy Research (IPPR) concludes.

It found the biggest shortfall would be in London, the South East of England, the East, and Yorkshire and Humberside.

Only in the North West of England could supply meet demand, it said.

The think tank studied a number of different economic scenarios, and how this would affect the housing stock.

A faltering economy would still lead to demand for more than 200,000 homes a year, it concluded. There was a need for 280,000 more homes a year needed if the economy bounced back strongly.

Using the government’s projection for household numbers would lead to a shortfall of 750,000 homes by 2025, it found.

On a regional basis the biggest effect would be in London, with a housing gap of 325,000 homes, followed by Yorkshire and Humberside with 151,000 homes too few.
The predictions by region are:

* London: 325,000
* Yorkshire and Humberside: 151,000
* East of England: 132,000
* South East of England: 77,000
* East Midlands: 66,000
* West Midlands: 28,000
* North East of England: 16,000
* South West of England: 7,000

Such a shortfall of homes would inevitably have a effect on house prices.

The report said that only in the North West would there be more homes than households.

A spokeswoman for the Department for Communities and Local Government, said: “The government has introduced a wide package of reforms designed to boost housebuilding, including reform to the planning system.

The CML said the fall was larger than expected at the time of year and due to an “unusual [...]]]> The number of new mortgages lent to house buyers slumped by 29% in January compared to December, the Council of Mortgage Lenders (CML) said.
At just 28,500 the figure was also 12% lower than in January last year.

The CML said the fall was larger than expected at the time of year and due to an “unusual combination of factors”.

The figures suggest the property market may be heading for a new downturn in activity due to mortgage rationing and the uncertain state of the economy.

“With the effects of last year’s government spending cuts beginning to bite, and rising inflation and tax measures putting pressure on household budgets, potential house-buyers are likely to have been discouraged,” the CML said.

“This, coupled with December’s extreme winter weather, and uncertainty over future interest rate rises, has led to a lack of movement in the mortgage market.”

January’s fall in mortgage lending, which the CML admitted was “substantial”, takes lending back to its difficult position seen in the first few months of 2009, in the immediate aftermath of the international banking crisis.

Compared to earlier in the decade, the latest figures are a massive drop.

For instance, in January 2003, 90,300 new mortgages were agreed with home buyers.

For the few first-time buyers able to agree new mortgages – just 10,500 in January this year – borrowing requirements eased slightly.

The average deposit they had to put down fell to 20%, the lowest level of downpayment for more than two years.

This is [...]]]> Northern Rock has announced that it is to  start offering again mortgages of up to 90% of a property’s value for the first time since it was nationalised.
It is to start offering a two year fixed rate home loan at 5.99%, a three year loan at 6.49% and a five year loan at 6.59%.

This is not the cheapest on the market, but the bank said these products were designed to appeal to potential first time buyers unable to raise a large deposit.

Prior to nationalisation, the lender was criticised for offering it’s Together mortgages, which allowed customers to borrow up to 125% of the value of a property.

Recent figures on prospective mortgage lending suggest there will be little pick up in activity in the coming months.

However, these actions strengthen the conclusions drawn from property professionals which have shown that the start of 2011 has been sluggish for the housing market.

The number of properties sold in England and Wales was lower towards the end of 2010 than during the same period a year earlier.

This [...]]]> UK mortgage lending fell by 13% in January compared with December to the lowest level for a year at £9.2bn, mortgage lenders say.
This was still 5% higher than the same month a year earlier, the Council of Mortgage Lenders (CML) said.

The mortgage market was likely to “remain constrained” in the coming months, the group said.

This reflected the “sluggish” state of the UK economy as a whole, as well as a lack of demand, it added.

All the recently published data have shown a lack of any impetus of growth in the mortgage and housing markets, according to CML economist Peter Charles.

He said that the year-on-year rise in mortgage lending in January was distorted by the low levels a year ago – owing to the hangover from the end of the stamp duty holiday.

He offered little cheer for first-time buyers, saying that lenders were still being pushed towards less risky customers owing to lending restrictions. This made things difficult for those unable to offer a large deposit.

The CML also released figures showing that many first time buyers must save the equivalent of more than a year’s salary to be able to afford a deposit for a home.

The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010.

Figures show a downward trend in first time buyer numbers throughout 2010.

There was a [...]]]> New research has found that 23% of people who planned to buy a property in the coming year will be first time buyers.Generally, it is thought that double this proportion of first time buyers is a sign of a healthy housing market.

Figures show a downward trend in first time buyer numbers throughout 2010.

There was a sharp fall at the end of the year, according to the British Bankers’ Association (BBA), although this was skewed by the rush to beat the end of the stamp duty holiday at the end of 2009.

First time buyers are regarded as crucial to any housing revival, but many have only been able to get onto the ladder with financial assistance from relatives.

Some 84% of those aged under 30 required such assistance, the Council of Mortgage Lenders (CML) said.

The average deposit required when buying a property was 23% in December, according to the BBA, up from 21% the previous month.

This has been partly the result of strict lending criteria from mortgage providers – including turning down potential borrowers with any blot on their credit history.