I trust that you had an enjoyable Easter with your family and friends.
The property market remains buoyant with strong levels of viewings and offers in both sales and lettings.
Is there or isn’t there a housing bubble?
Talk of a housing bubble refuses to go away. The reason for this is that house prices are now rising right across the country, rippling out from prime central London. Hometrack reports that prices rose by 0.6% in March, with all regions registering higher prices for the first time since the height of the last boom. The same report also shows that the time on the market for a property has fallen below 8 weeks, which is the shortest time since 2007. In addition, the average house is now selling for 96.2% of its asking price and for over 99% in London.
We have a healthy and encouraging pipeline of properties under offer and we are looking forward to an exceptionally active market as we go into May.
Help to Buy is being blamed in some quarters for stoking prices. However, the latest data suggests it is the low cost of mortgages and the shortage of property for sale rather than the Government’s scheme that are the main drivers. Although one in five purchases are made through the scheme, most Help to Buy purchases are not being made in property hotspots such as Ealing & Shepherds Bush. Instead, they are being made in the more challenging areas, where sales are relatively flat.
More significantly, average mortgage rates have fallen from around 5% to 3%. The resulting reduction in monthly payments has made it possible for people to borrow larger sums of money. At the same time, the shortage of property for sale has restricted supply and added to the upward pressure on prices. Indeed, the National Association of Estate Agents says that in March 2014, supply dropped for the sixth consecutive month and is nearing a ten-year low.
The Mortgage Market Review (MMR) which came into effect last week, is expected to make access to finance harder and the changes will definitely have an impact on those looking to secure a mortgage.
Firstly, now that banks are wholly responsible for determining whether an applicant is able to afford a loan and the repayments, they will be scrutinising the ‘affordability’ of that loan much more closely. This will see them going into greater detail on an applicant’s income and outgoings.
As a result of this, it is almost inevitable that the maximum amount that an applicant can be loaned will decrease for the vast majority of people. It will also unfortunately mean that all pre-approved mortgages will need to be re-approved.
Secondly, now that all mortgage applicants will need to be ‘advised’ rather than just sold to, banks are having to retrain a lot of their front office mortgage sales people to allow them to advise applicants. This requires a lot of new training, systems and processes and as many lenders are not fully prepared, it is likely to result in delays to the application process, which could ultimately impact on a property purchase.
Securing your dream property will require planning. Timescales have been lengthened as a result of MMR and you need to be speaking with a qualified adviser early in the process.
“Accidental” landlords are cashing in
The lettings market has showed no signs of slowing down. Our offices are seeing an increasing amount of multiple offers on the same properties as the market is getting more competitive. We are finding that a large number of ‘accidental landlords’ are choosing to cash in on the booming market, leaving the lettings market with a diminishing register of available properties.
Our Lettings Director, Silvia Eldawi comments: “As the summer market approaches, we are already working with lots of relocation agents, searching on behalf of executives looking to move to West London with their families. They’re keen to find a home, and that all important school place for their children, in plenty of time for the start of the autumn school term in September. We are seeing a high demand for three bedroom plus properties ideally available for 3 year tenancies.
“Relocation agents are placing an emphasis on high end presentation and more frequently on those properties offering the professional management service throughout the tenancy. Management is the key extra benefit and generally a prerequisite requirement.
“Capturing the interest of the market is vital to limiting void periods and securing increased rental yields – one sure-fire way to do this is to employ the services of a reputable and professional management team to look after your investment interests. This in turn safeguards the longevity of tenancy occupation.”
Should you be looking to sell or rent out your property, or if you would simply like to discuss the market in more detail, please do feel free to contact your local branch where one of my experienced team can help and offer you advice on how to make the most of this fast changing and very exciting market. Or request your free valuation online.