|UK House Prices - UP AND DOWN!
This early New Year anomaly will confound those property price indices producers Halifax and Nationwide who year on year out publish statistics on average house prices of no relevance to anyone buying anything other than the average house!
Early reporting from leading property agents and developers show some dramatic changes in the UK property marketplace. Whilst would be purchasers can readily obtain discounts of 10% or more on new build apartments in most locations including secondary London postcodes, those making optimistic offers on prime London and surrounding locations are meeting resistance and there are even reports of "gazumping" returning to the property market. International Mortgage Plans end of 2005 newsletter hinted at this market change but its scope and early impact are surprising.
There is considerable evidence of house builders fearing unsold stocks, discounting new builds via "cashback", payment of Stamp Duty and/or legal fees. This has had the effect of clouding the true valuation of new properties and lenders are now reluctant to offer high percentage loans on discounted sites.
As reported in the Financial Times potential buyers at a Leeds Morris Properties Group block of studios were offered a 15% discount, at the Albany Building in Liverpool a 10% reduction was normal and at Crest Nicholsons Harbour Side development in Bristol a 9% discount was readily agreed.
London is not immune to this bargain basement clearing of the decks. Lovells were happy to offer an 8% discount at their Heart of Bow east end site. Berkeleys have offered 10% off units at their Luna Bermondsey east London development and Barratts have offered price reductions as high as 15% at their Plumstead site on the eastern fringe of London. In general there is widespread informed comment on residential new build apartments to the east of London being difficult to sell. Possibly builders have been wrong footed by the expected market impetus that inclusion of buy to let properties in pension planning would have brought. Oversupply of similar units would now seem to be a major sales problem.
Lenders reluctance to offer high percentage loans will not help this scenario. The Mortgage Works, a leading buy to let lender have been concerned enough to withdraw entirely from new build apartments describing their valuation as more of a "black art than a science".
So much for the downside but what has been happening to bring gazumping back to us? The Centre for Economics in Business Research (CEBR) estimate an average UK property price rise of 4.4% in 2006 - again what is average?
According to Knight Frank prices in prime Central London rose 8.2% last year the highest increase since 2001. Hamptons International say they saw a 50% surge in buyers registering against the same last quarter period in 2004. Hometrack the most credible of price index researchers report that it is the prime boroughs of Kensington, Chelsea and Westminster that are seeing a real return to a sellers market. Sealed bids have made a return and agents like Cluttons, Haarts and Beaney Pearce all report increased viewings and buying activity. Hurford Salvi Carr who focus on the City and Dockland report a lack of good properties with that shortage fuelling the market. David Salvi interestingly comments, " We have worked out over the years that by the third week of January we can tell what is going to happen in the market - you've just heard it!"
Expat Mortgages - Preapproval essential
Whether you form that purchasing group intent on making the most of developers over supplied buy to let apartments or want to stake your claim in a rising "prime area" market an acceptance in principle from a lender is an essential planning tool. International Mortgage Plans (IMP) make no charge for this service but will put in place a preapproval facility to your maximum loan availability. Whilst a loan application is required the property details are left blank for later submission.
IMPs chosen lender will clear their status checks via proof of address, identity and provision of financial documentation. All this can be handled by IMP without cost. As a result the intending purchaser will receive a letter approving a loan subject to provision of acceptable property details .This can be given to the vendors or estate agent as evidence of the ability to complete a purchase quickly as just a valuation will complete the lenders file
Expats wishing to compare their own loan package with what is currently available should click on IMP's website at www.international-mortgage-plans.com which gives an overview of the current marketplace, lenders comparable terms and incorporate a cost and commitment free 48 acceptance in principle.
Matthew Wright Dip PFS
International Mortgage Plans
International Mortgage Plans are regulated by the Financial Services Authority our registration number is 302775.