Bank of England expert predicts future UK property boom

An ageing population and an increasing number of immigrants are set to fuel a property price boom in the UK, it is claimed.

According to Professor David Miles, who sits on the Bank of England’s monetary policy committee which sets interest rates, people will also be older when they buy their first property because of changes in the mortgage industry due to the credit crunch.

In a research paper he says that the trend of rising real incomes and the likelihood of rising population density means the UK should anticipate a rising trajectory for real house prices over the longer term. But he does not indicate exactly when this would happen.

‘This is particularly likely in a country like the UK where population density looks set to rise relatively fast,’ he explained, pointing out that one in six people currently alive in the UK expected to celebrate their 100th birthday and the population is set to rise.

At present, 62.2million people live in Britain, but the Office for National Statistics expects this number to increase to 67.2 million by 2020 and to 71.4million by 2030.

Over the past 25 years, house prices have reached levels which leave many people unable to afford to buy their own home. In 1986, the average home in a British city cost £35,209. Today the same property would cost around £170,000.

In his report on population growth, house prices and mortgages, Miles says that the changes to the mortgage market over recent years will be permanent. ‘The first effect is likely to be prospective buyers postpone their purchase, while they save more to accumulate a larger deposit. As a result, the average age at which people would buy their first home will rise, and the  share of owner occupied houses will fall,’ he explained.

He believes that the changes in the mortgage market is not a bad thing and the fact that banks and building societies insist on large deposits to get the best loan deals is not a sign of a damaged market, or one which is not functioning properly.

He singled out the 100% mortgage deals, prevalent during the last housing boom which allowed people to buy without saving a penny for a deposit. ‘It probably never made sense for there to be 100% mortgages. There may be no price at which it makes commercial sense for such a loan to be available,’ he said.

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Edinburgh’s 509% house-price boom

HOUSE prices in Edinburgh have rocketed more than five-fold over the past 25 years – one of the highest increases in the UK.

Across Scottish cities, property values have shot up by an average of 351 per cent over the period, exceeding the increase of 347 per cent for the UK as a whole, according to the Bank of Scotland.

Edinburgh’s 509 per cent increase is the third-highest of any city in Britain, behind Truro at 550 per cent and Westminster, London, at 522 per cent.

Inverness is also in the top ten, experiencing a rise of 450 per cent.

“With an increasing and more affluent population in Edinburgh over the last 25 years, and strong economic growth for much of this time, it is no surprise to see the city near the top of this table,” said Tony Perriam, director of residential sales at Rettie & Co.

Nitesh Patel, housing economist at Bank of Scotland, said: “Cities have typically seen higher house price growth than the UK average over the past 25 years.

“City house prices are generally supported by demand from those looking to gain from the economic and lifestyle benefits often associated with residing in major urban areas.”

The study, carried out ahead of a new round of applications for city status to mark the Queen’s Diamond Jubilee, found that towns which had become cities since 1986 – including Inverness and Stirling – performed above average.

The 26 towns which have applied for city status this year have, on average, not experienced as rapid a house price growth over the last quarter of a century as existing cities. Scotland’s applicant, Perth, has seen prices rise by 372 per cent since 1986 – well above the average for all applicant towns of 345 per cent.

Ms Patel added: “The performance of cities in Scotland has been similar, with four of the six cities outperforming the Scottish average. Edinburgh and Inverness have seen very strong house price growth, both featuring in the top ten UK cities since 1986. Glasgow and Stirling, however, have seen average prices rise more slowly than for Scotland as a whole.

“There are, therefore, no guarantees that city status benefits its population’s homeowners.”

The experience of those towns that became cities in 2002 to coincide with the Queen’s Golden Jubilee has been more mixed.

Only Newport, Wales, has recorded stronger price growth than its region since 2002, while Preston, Stirling and Lisburn, Northern Ireland, have all underperformed relative to their regions. During the decade prior to 2002, both Stirling and Lisburn outperformed their regions.

Sarah Speirs, director of RICS Scotland, said: “Property in sought-after areas always attracts more buyers and therefore sells for a premium. Cities that offer good jobs, respected schools and a range of social and family activities will always be popular with investors and owner/ occupiers, so it’s no surprise that house prices have risen so much in the past 25 years.

“However, city status alone is not enough to push up prices. The city has to have enough going for it to attract buyers and investors.”

For more information regarding UK residential property investment, please visit www.grantpropertyinvestment.com or contact us directly on +44 (0)131 2473131

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House Prices and Rents to Rise as Homebuilding Figures Stall

The Daily Telegraph, By Ian Cowie February 24th, 2012

A shortage of new homes is expected to push house prices up.

House prices and rental yields will be squeezed upward by a shortage of new homes, experts claim, following the latest production figures from the National House Building Council (NHBC).

Despite various Government initiatives to encourage new building and help first time buyers beat the mortgage famine, the NHBC reports a sharp contraction in public sector residential construction, which fell by 20pc over the year to last month. Meanwhile, private sector production of new homes increased by less than half as much – by 9pc – to bring the total to 7,831 new residences completed in January; little changed on the year before.

Mark Posniak, a director of the mortgage provider Dragonfly Property Finance said: “These latest figures drive home the paralysis at the heart of the property market.

Tracy Kellett, managing director of BDI Home Finders added: “The lack of new homes being built says all you need to know about whether the Government’s initiatives are working. Clearly not is the answer.

“It’s a well-documented fact that there are simply not enough homes for our growing population. The lack of new homes being built is keeping house prices artificially high and causing rents to rise across all sectors.

“For landlords and homeowners, this is a good thing, for aspiring homeowners and tenants, quite the opposite.

Grant Property Investment have helped clients from 30 countries invest in over 1,700 properties across 12 UK cities. We’re the UK’s leading provider of residential property Investment and Management. Our clients range from individuals to institutional investors, with one property to £100mil property funds.

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Housing rebound coming in 2012

Firstly from all at Grant Property Investment, we would like to wish all our clients and suppliers a Merry Christmas and Happy New Year!

Attached and below is a fantastic article from Barclays outlining their forecasts for the 2012 housing market. As we expected they have forecast a bumper year for 2012. We have further press articles relating to a positive outlook for 2012 within our website, please Click Here to see more.

Barclays Capital (BCS: 10.17 0.00%) analyst Stephen Kim predicts a housing recovery buoyed by improving jobs numbers and the fact prices for nondistressed homes will have stabilized without government support.

"In the absence of a government homebuyer incentives, prices for non-distressed home sales have stabilized for almost a year," Kim said. "This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices."

Barclays said recent economic data — including higher job creation in November, housing starts and improved homebuyer traffic — point to some improvement potential in the sector.

In mid-2010, the federal homebuyer tax credit expired, leaving the housing market without training wheels for the first time since the 2008 economic meltdown. Yet, prices in some housing markets remained stable on the back end.

With its new outlook in the market, Barclays upgraded D.R. Horton's (DHI: 11.76 0.00%) stock to buy and raised price targets for D.R. Horton, Lennar (LEN: 18.51 0.00%), Toll Brothers (TOL: 19.26 0.00%) and Meritage Homes(MTH: 20.28 0.00%).

At the same time, the investment bank raised its 2012 earnings-per-share estimates for D.R. Horton, Lennar, Meritage Homes, Pulte (PHM: 5.59 0.00%) and Toll Brothers, while lowering its estimates for KB Home (KBH: 7.03 0.00%).

"Thus, the key to timing housing’s recovery depends primarily on when these first-time buyers decide it is safe to buy a house," Kim concluded.

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Buy-to-Let growth continues as lending hits three-year high

Buy-to-let lending has climbed to its highest level in almost three years, figures from the Council of Mortgage Lenders have revealed.

In the three months to September 34,500 buy-to-let loans worth £3.8bn were advanced, up 16% by number and 19% by value compared with the previous quarter. This is the highest level by either measure since Q4 2008.

Q3 saw 18,580 buy-to-let purchase loans 12% of all house purchase loans up from 9% in Q3 2010.

Charles Haresnape, managing director for residential mortgages at Aldermore, says: “The buoyancy of the buy-to-let sector confirms that investor appetite for residential property remains strong, which has been fuelled by tenant demand.”

For further information on this article please visit our website www.grantpropertyinvestment.com or call us on +44 (0)131 247 3131 

To view this full article through the original author please visit Mortgage Strategy http://www.mortgagestrategy.co.uk/b2l-growth-continues-as-lending-hits-three-year-high/1041506.article

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UK Property Buy to Let Bank Lending

We've had a number of clients ask us where the banks are with property lending.

By way of background, many banks pulled back their lending on property when the financial crisis hit in 2008. They reduced their LTV's and put up their rates. The volume of lending fell significantly. So how have things changed, since 2008?


The short answer is that things have changed, very much for the better.

A number of lenders are offering 75% LTV and even 80% LTV on investment property -  back to the levels pre 2008.

• Base rates are now at 0.5%, down from 5%. 

• They are forecast to remain low for some time to come

• The margins that banks are charging are once again falling, as more lending competition creeps back in.

• The number of B2L products rose by 26% last quarter

The amount of lending has risen significantly as a result. The last quarter showed an increase of 40% on the previous year, according to CML.

There has been a 'golden period' for investing these past few years, although many investors held off. Investors are now piling back in - demonstrated by increased bank lending, and the greater levels of competition we are noticing on the ground, when buying.

There is still good value to be had. Prices fell in 2008. They then rose again and have been pretty stable since. Prices overall are still around 10% down from their peak.

If we can help with any questions on lending and / or investing, we'd be only happy to help. For further information or just a general chat please contact us on +44 (0)131 247 3131. Alternatively please visit our website for more information and view our current featured property lists.

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