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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Buy to let "BOOM"

Buy-to-let boom shows no signs of stopping as landlords snap up property worth £160bn.........

Read more: http://www.dailymail.co.uk/news/article-2098971/Buy-let-boom-shows-signs-stopping-landlords-snap-property-worth-160bn.html#ixzz1mYmqZYmA

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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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UK Property Investing - Buy to let

We’ve had a big response to our update on bank lending, and we’ve been asked a lot of questions around the Investment Market. I’m pleased to share some general advice around buying and investing.


1. Timings. In general it’s a good time to invest. It’s still a buyers market, and there’s great value to be had.

2. Areas. The best areas to head for are city centre. They are experiencing the best yields and the highest occupancy. The more prime the better.

3. Type of property. Traditional property has always been the best performing compared to new build (measured across both yield and capital appreciation).

4. Rental Market. There have been lots of headlines around a strengthening rental market. Scotland is generally performing better than England. The Student Market is particularly buoyant. Prime city centre areas are best.

5. Yields. Average yields in the industry are 5%. Larger traditional property in city centres gives a yield of 7% and above (that’s an improvement of around 20% due to lower prices and higher rents).

6. Capital appreciation. The long term average is 7% pa. On a geared return that’s a 28% return.
Banks are more active again. The number of buy to let products rose by 26% in the last quarter. B2L lending has increased by 40% on the previous year.

Everything seems to point to investing – but investing wisely. Buying in good areas and at a good price is key.

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