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Interest Rates Cut & Fall in Property Prices – Good Combination?

Published
by
Property Know Team
on May 26, 2008
in Property Know
. 0 Comments

A rocky road ahead, like most of us predicted the housing market is slowing down, the property craze seems to have run its course and the bubble is about to burst. For many of us we have witnessed a turn in the economy. With the current economic situation in terms of the credit crunch it is affecting mortgage lenders there is no question about that.  The credit crunch in the US has had a huge effect in the UK, there have been stricter controls to whom banks lend to, there has been a steep drop in mortgage lending, with less than 3000 products offered to consumers today compared to May 2007 in which there were as much as 11,000 products. This has made it increasingly difficult for first time buyers to get on the property ladder as they will have to save a lot more for deposits or wait till they get a better paying job but waiting for that could be too late. As more of us are watching our spending carefully, there seems to be fewer buyers out there and this will eventually cause an excessive supply of homes with a lack of demand, which could result in the price of properties continuing to fall dramatically.

Another blow to our pockets is the intensity of the cost of living, noticeably the price hikes in everyday essentials such as petrol and food, with this in mind many of us are holding back, that means stepping away from the property market, keeping every penny in our pockets and being extremely conservative with our spending. It looks set that the UK is about to follow suit of the Americans and possibly head towards a recession.

Although the government has tried to stimulate spending within the economy by cutting interest rates to 5%, this may not necessarily improve the situation within the property market for home owners. Reduced interest rates as well as declining house prices, has not boosted spending or maintained property value which has had a knock on effect on the wealth effect in which people perceive themselves to be richer but in this case are worse off, in which case the wealth effect is playing in the opposite direction of the fall in house prices. An example of this is when, with a £100k mortgage and a drop of 0.25% in interest rates would lead to fall in monthly payments of £21. On the other hand a drop in house prices of 0.25% a month would lead to a loss of equity of roughly £250 on a £100,000 property. The home owner ends up paying £21 less then usual a month but the house price drops makes the interest rate cut redundant making the home owner lose equity in the long run.

With the current economic state, getting a mortgage has become incredibly difficult as lenders have become quite demanding to who they will offer mortgages to and when they do offer them, the rate will not be cheap. Despite this, its not all bad news, as property prices seem to be unstable, more people are turning to renting, this new trend has increased rental prices for landlords and seen the sales of buy to let market rise in the past few months.

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London Property Prices: Are they dropping?

Published
by
Property Know Team
on May 25, 2008
in London Property Market
. 2 Comments

There is currently a great amount of speculation in the London Property Market. Will it drop? Has it dropped? Is it dropping? In short the answer, is yes - certain parts of London have dropped in price, however Central London prices will hold strong.

Following up from a previous post “30 Year Low for Property Sales” talks about property sales in the UK dropping and that asking prices have had to been dropped. And we at the London Property Market side, completely agree.

We have always held to the opinion that the best place to invest is in Central London (places such as South Kensington, Queensway, Notting Hill Gate, Knights Bridge, Regents Park, St Johns Wood etc). If you look at that specific part of Central London, the prices have not changed much compared to the rest of the UK and Greater parts of London.

Why is that?

Lets look at the Supply and Demand, in Central London it is a known fact there is NO MORE LAND to build property on. So supply will pretty much or less stay the same, however demand will always increase (due to population growth, it is Central London where people want to live, Foreign Investment etc). So even if there is a dip in the local economy, there will be foreign investment to pump into the London Property Market. Demand will be increasing, and supply will stay the same - hence prices will increase! The hardest thing in buying in Central London is that the “barriers of entry” are extremely high. To get a decent 400-500 sq/ft 1 bedroom apartment, you will most likely be looking for a minimum of £375, 000 and go up to well the millions!

How about outside Central London?

The problem about outside Central London (mainly Zone 2 onwards) is that there is still Land to develop properties. Lets take Canary Wharf for example, which was a “boom” zone for buyers and investors. But if you look at the Canary Wharfs Property Market, owners are having problems to cover their mortgage payments and value of their properties are depreciating! And why is that? There is so much development that supply in Canary Wharf keeps on increasing - so it can meet demand. So prices are either stable or going to decrease due to Supply over lapping Demand. This is the current situation.

So just be very careful when you invest in property at the moment. The markets are soft in many areas in the UK, so you will have more chance of getting a good deal. In Central London, throw a bit more caution.

All the best!

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30 Year Low for Property Sales

Published
by
Property Know Team
on May 25, 2008
in Property Know
. 1 Comment

Just recently it has been predicted that the number of properties sold in the UK this year will be at its lowest for 30 years. Which is approximately 30% lower then 2007.

This prediction was made by a housing expert by the name of Richard Donnell. He made this prediction as an uncertain housing market is bringing about many would be first time buyers to wait and observe the market in case prices drop even further. We all know that the market is stabilizing and not booming as it once was. Don’t get me wrong its not totally flopped but a friend of mines apartments market value dropped £40,000 in the space of 3 months, it’s a good job they were buying to live and not buying to let. With these gloomy forecast properties are staying on much longer then they used too regardless if they are excellent buys the market is just so unpredictable nowadays it just knocks all the confidence out of the most poised buyer.

Another recent announcement from the council of mortgage lenders to dampen our spirits, they are predicting that there will be a 7% fall in prices in 2008.These announcements are like air raid sirens in the property world, reading from a newspaper a home seller was just finding impossible to get any interest to sell. They had to reduce asking prices by 15% to even get the faintest of interest. Eventually when they did get interest potential buyers are just sitting back and waiting for more house price falls and cashing in when they get cheaper. This is proving to be effective for the buyers but for the sellers some just can’t afford to cut prices. With more people renting instead of buying its making sellers jobs harder ten fold, making properties on the market stay for much longer and some just not being sold at all. One estate agent believes that house prices will drop by at least another 5% this year.

For sale board are just not coming down

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Hotel Development Booming in Manchester

Published
by
Property Know Team
on November 28, 2006
in Manchester Property Market
. 0 Comments

Yet another, exciting commercial development has risen within Manchester.
The former redundant BT building on London Road has finally been rescued by the Scottish Leisure group Macdonald Hotels hoping to successfully transform the run down building into a luxuries 4* hotel. Construction is currently underway, which for many visitors of Manchester may witness as they travel into central Manchester.

The project is expected to cost roughly £33 million, with as much as 2,000,000 sq meters of floor space the plan is to create 215 bedrooms on 11 floors, located in the heart of Piccadilly, which has excellent transport links to other cities across the country. The hotel will have an impressive glass- clad exterior, within the building there will be an extensive range of facilities comprising of large conference space combined with the latest technology, the ability to hold up to 280 individuals. Furthermore, it will contain a stunning 150 seated restaurant, positioned on the first floor of the hotel. The hotel is scheduled to be completed and open for business in October 2007, generating an estimated 130 jobs.

Hotel developments have been big business for Manchester, with many investors continuingly snatching up run down buildings and selecting ideal locations, transforming the buildings into beautiful, modern hotels. This attracts tremendous publicity and visitors to the North West capital. The boom in this industry has been due to a number reasons, but mainly the focus has been on the leading football clubs in the region especially Manchester United Football Club, based in Old Trafford and vast number of shopping amenities available to visitors such as The Arndale and Trafford Centre. In addition there has also been an increase in the popularity of Manchester as a business, sporting and entertainment venue.

The opening of this fantastic new hotel will create greater competition on an existing saturated hotel market. Competition will be rife in particular the Piccadilly area in which many of its prestigious hotels Malmaison and Radisson Edwardian are already situated. Also a popular destination for visitors is Deansgate which holds the 5* Hilton situated in Beetham Tower, which is nearby to Piccadilly. Consumer’s choice has forever more increased with now such a varied selection of hotels available to us in Manchester, this market looks set to continue to grow from strength to strength, visiting Manchester couldn’t be anymore relaxing and enjoyable.

There are also plans to build another leading 4*Hotel in the huge Inacity Tower, situated in the Piccadilly area, which will be Europe’s highest residential building. It will incorporate a massive 220 bedrooms for the hotel and a staggering 430 ultra modern apartments, if all goes to plan it is expected to be completed in 2009.

Although at Rent Home Manchester we believe these hotels are brilliant for Manchester’s economy, as this indicates Manchester has a high volume of visitors, and these hotels can accommodate most of them during their stay in the city. In addition high profits can be obtained for businesses and therefore money can be reinvested into the city. However there seems to be a lack of real affordable family homes being built, in which we feel are vital in order to ration out the demand of housing and prevent further prices rises for homes in Manchester.

Source:
http://business.scotsman.com/media.cfm?id=1702012006

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New Development - Luxury New Apartments!!!

Published
by
Property Know Team
on November 27, 2006
in Sheffield Property Market
. 0 Comments

Sheffield city centre will be graced with prestigious luxury apartments by around 2010. These apartments will be held in what will be the tallest building in Sheffield. This block will be a 32 storey high building situated between Arundel Gate and Peace Gardens. The price range on these flats are between £130,000 to £290,000 in phase one and £407,000 for a penthouse in the next phase. Ground work has already started on the site and actual construction of the site due to start around February 2007. in the beginning there was concerns with the construction of the 32 storey block, with the scale of the construction so close to the Victorian Town Hall and also the shadow that would be cast on the Winter Gardens but after careful consideration Councillors gave the go ahead. The St Paul’s Tower which is what the tower is to be named is the latest phase of the £180 million Heart of the City Programme.

However some critics have doubts on the need of more apartments being built in Sheffield. With more and more apartments getting built and even some apartments are left standing empty there is some doubt to whether more apartment are really needed. But we at Rent a Home Sheffield Team believe that the construction of the St Paul’s Tower is a well timed asset to the city. It has been timed perfectly with the regeneration project of Sheffield’s city centre. The towers prestigious appearance and luxury apartments will attract the right sort of crowd the new “Sheffield” will need after all the regeneration projects have finished. The towers image will attract the young professionals and classier individuals who lust for the best of the best of style and attention to detail.

st pauls tower

The Harrogate based City Lofts , which is working with Heart of the City developers CTP St James are also behind projects in Liverpool, Salford Quays, Leeds, Nottingham and Cardiff. Mr Hurst on behalf of the St Paul’s Towers said “this is our most prestigious building to date, no question about it. It will be a landmark building and carry our flag for some time to come” As said above the Rent a Home Sheffield Team think that the success of the tower and the success of the regeneration project was attracting the type of commercial development that would bring investors and individuals interested in the city.

Source - Sheffield Telegraph

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Eco - Friendly City apartments and homes

Published
by
Property Know Team
on November 22, 2006
in Manchester Property Market
. 0 Comments

Looking for a change? How about living in an environmentally friendly village?

Yes that’s right, Manchester City Council are in talks with big developers, regarding an ambitious scheme to build a ‘eco- village’ just outside Manchester city centre, in the heart of Oldham town centre.

There are discussions to build a 10 storey apartment, with more than 121 apartments, and additional penthouses, on a large plot of land, which is currently a used car park. Furthermore, planners are hoping to build many 3-4 bedroom houses near a site at St Mary’s. These challenging plans are the intentions of major players of the construction business ‘Gleeson Homes’. The scheme is part of the council’s housing renewal program. Renewable energy sources will be produced on site through solar panels and wind turbines. They expect the mixture of different types of housing will attract the young professionals and families seeking contemporary modern flats in the city. This is brilliant news; as many of us can save much more on the dreaded utility bills.

eco village

With the current environmental concerns in the UK, and the increase in car ownership, the general public may view this as a possible solution to the problems. As green house gasses can be reduced up to an incredible 70%. However, it may not be attractive nor completely eradicate the pollution and global warming in the long term, but in the short term, these developments may encourage other councils to think carefully about doing their bit to protect the environment.

Initial ideas are to build one bed city apartments at 517sq ft up to 3 bed flats at 1,087sq ft and 4 bed houses at 1,389 sq ft. Although prices are not set in stone yet, construction will begin hopefully early next year.

Source:http://www.manchesteronline.co.uk/homesearch/latest/s/228/228277
_ecovillage_with_real_staying_power.html

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Interest Rates Rise!

Published
by
Property Know Team
on November 14, 2006
in Property Know
. 0 Comments

After huge speculation over the forth coming interest rates, people’s predictions have been confirmed. We at Rent Home Manchester, probably like most of you out there, believed this was going to be the inevitable outcome. On the 9th of November 2006, interest rates rose from 4.75% to 5%, its highest level since September 2001.

Mervyn King (head of Monetary Policy Committee); decided upon this rise due to number of reasons, firstly there has been a sharp increase in prices in all aspect of the economy. In particularly the housing market has seen considerable prices rises, as house price growth has exceeded expectations due to a shortage of supply. Following this we have seen positive economic growth, an increase in consumer confidence and in particular a substantial rise in energy prices.

The rise in interest rates is necessary in order to curb inflationary pressures, especially house prices which are continuing to rise about 8% every year, and at the same time needed to promote economic prosperity. However this news won’t come lightly to home owners, as this will no doubt increase their mortgage payments. For example a person with an £150.000 mortgage will expect roughly a £20 increase a month on their existing mortgage. Consequently this will place added debt problems with many more increasingly finding it difficult to make repayments readily, on an already over stretched debt nation.

Although we at Rent a Home Manchester, believe the rise in interest rates won’t have a significant effect on peoples spending habits, nor will it cool down the property market. As we have seen in the past years it hasn’t been borrowing costs affecting the housing market, instead it has been the supply and demand of houses. We are still witnessing a shortage of supply and considerable high demand; therefore prices can only continue to rise rapidly. We expect property prices to rise in the near future, due to the consequence of population growth, especially the expansion of the European Union, and a trend of number of people living alone, but remember this is only Rent a Home Manchester own opinion.

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Pimlico A Hidden Gem in London

Published
by
Property Know Team
on November 13, 2006
in London Property Market
. 1 Comment

IS this true? A Hidden Property Gem in Central London?

Destination: Postcode SW1 and Traditional Stucco Mansions – Pimlico
Public Transport: Pimlico Underground Station – Victoria Line

Pimlico is situated right next to Belgravia and Westminster, and is often overlooked by many property hunters for reasons that remain unknown to the Rent A Home London Team. It is on the edge of Zone 1 on the Victoria Line, and is blessed with the waterfront of the River Thames. Its close link to the Victoria Underground station, provides it with easy access to Victoria Coach Station and Train Station – which both provide Public Transport to all areas of the United Kingdom.

Pimlico is an ideal location to live in Central London, especially since it is still undervalued. It is not a sought after place by many of the high flyers, because it currently does not have the reputation of the likes of Chelsea, Fulham, Notting Hill Gate and so on. The area is roughly delimited by Victoria Station to the north and the River Thames to the south, spanned by Vauxhall Bridge, which allows ready access to Vauxhall. The entire district was formerly owned by the property owning Grosvenor family.

Pimlico’s most famous attraction is the Tate Britain on Millbank. This is the original Tate Gallery and is home, as the name suggests, primarily to art of specifically British origin. The district’s association with fine art has been reinforced by the Chelsea College of Art and Design’s recent move to the former Royal Army Medical College next to the Tate. This has also had the happy result of opening up the spacious college quadrangle so that the three extensive and elaborate red brick college blocks can be appreciated.

One set back is the lack of shopping areas available to Pimlico, however since Public Transport is close by, it is very easy to take the London Underground to Oxford Circus or other shopping areas nearby.

“Developers are hastily converting townhouse offices into flats and two large new developments are pencilled in for the southwestern corner: Grosvenor Waterside, ritzy apartment blocks built round an old dock, and Chelsea Barracks, which developers are now fighting over. These developments will blur the border between Chelsea and Pimlico. Typical buyers at the moment are “City workers in the second salary tier”, says Dawes. “Those with seven-figure bonuses still chase places like Notting Hill because Pimlico isn’t fashionable, but it will be in about three years. It’s the next hotspot.”

“Everyone agrees that Pimlico prices will keep rising. “We’ve lots of investors who can’t believe how cheap it is, when it’s so good for commuting to the City and has great infrastructure,” says Dawes. “Pimlico has further to go in terms of prices than Belgravia,” says Young. The area is brilliantly situated, with Tate Britain, the Thames, Kings Road and Belgravia’s Elizabeth Street shops within a short walk. Victoria station serves Kent, Sussex and Gatwick as well as Oxford Street and the City. Politicians can nip to Parliament within the requisite eight minutes when summoned by the division bell.”

http://property.timesonline.co.uk/article/0,,14050-2443923,00.htm

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Canadian Ian Bromley brought in to reshape Sheffield

Published
by
Property Know Team
on November 13, 2006
in Sheffield Property Market
. 0 Comments

Sheffield has just recruited a 43 year old Canadian man from Toronto, that man is Ian Bromley. He was selected on the basis of his reputation for leading economic development in both the private and public sectors in North America. Sir Peter Middleton who chairs the creative Sheffield board, describes him as an experimental and skilled professional. Ian already admitted that he had a soft spot for the UK from the previous consultancy work he did in the past years. He also got advice from friends which he took on board, they told him that Sheffield was a safe city and also a lot of good schools in the area.

Ian will have an initial budget of £6 million a year, this money was funded by the central government and European regeneration funds. One of Ian’s main tasks will be to create an effective mechanism for the regeneration of the city, he has to tackle jobs which include reducing overlapping boundaries of existing organisations.

sheffield regeneration

The Rent A Home Team believes that Ian has a difficult task ahead of him. While he is consolidating the whole regeneration team as a whole, he could create uncertainty and inefficiency, with potential investors and developers unsure which organisation to approach. Ian on the other hand doesn’t just have to manage the regeneration project, he also has the task of marketing Sheffield not just nationally but internationally, to get the Sheffield brand known world wide. This marketing will most definitely be a huge boost to Sheffield economy and have the potential to reap huge economic rewards and status to the city. We the Rent A Home Team believe that Sheffield has the potential to be a key city with significant driving force to Britain’s economy, obviously remembering this is our opinion only.

sources: Sheffield Telegraph, www.propertytelegraph.co.uk

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London – Property Market News

Published
by
Property Know Team
on November 9, 2006
in London Property Market and Property Know
. 0 Comments

london westminster

London – Property Market News

The Property Know Team Formerly the Rent A Home London Team; has randomly composed some interesting facts about London’s Property Market and Property News in general.

Did you know – that in FIVE (5) years from now, the average home will be £400, 000. Well that is for London only. Currently the average house price is £330, 000. Also the London Housing Federation are predicating that in five years time, you will need a salary averaging £80, 000 to get an “average” mortgage! For your information: The average house price is calculated from the average from the; average price of a detached house, a semi-detached house, a terraced house and finally flats/apartments.

Do you watch Location, Location on Channel 4? Well from their Best and Worst Places to live for 2006 – London’s boroughs/areas scored the highest for, unfortunately, the worst places to live! Hackney came first, and tower Hamlets came second and Islington came fifth! So think twice – if you are planning to move there!

To have an atheistically pleasing bathroom or a new kitchen or not? Well in the view of the Rent A Home Team – we have always thought that it would be more beneficial and cost effective to either expand your property, by creating more space or adding another room (loft conversions etc). They both roughly cost the same price, and we all know that the more rooms the more expensive the property. A One bedroom house or a Two Bedroom house? You tell us! So do not jump into renovations, and calling your local builder to fit a new kitchen or go on a spending spree in B&Q or Homebase. You might splash around £2000 - £4000, and chances are in proportion of what you spend is what the increase in value will be! On the other hand – if you add another room you will hit the jackpot!

Sources: http://www.housing.org.uk/regions/aboutus.asp?region=4 & http://news.bbc.co.uk

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