|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Central London Property We believe it is important for buyers to be able to get an idea of what the industry thinks is happening with the market. We believe in giving an unbiased market outlook. If the market it doing well we will tell you and likewise if times are tough then you should know so you can base any decision on a fair and thought through point of view.. We have enough buyers looking for various different requirements that will satisfy our business at any time in the economic cycle so we don't mind giving negative advice if the situation requires it. As a result we will give a regular update on the current market condition for buyers and sellers and should the market require it a more frequent update.
Park Lane Estates Central London Property Market Outlook GENERAL OVERVIEW OF THE CENTRAL LONDON PROPERTY MARKET What a quarter! We are certainly living in a new age. The world banking sectors are having a shake up and until confidence returns we shall see some major actions from the central banks. And today we have seen it in the UK with another huge rate cute down to half of one percent taking the base rate to the lowest post war rate in the history of the Bank of England. The financial pundits also predict fthat rates might not start to rise for at least 6 months and maybe even over a year. Despite serious shakes to the banking industry over the past 18 months the supply of new quality properties to the central London and Home Counties markets are incredibly limited. The vast majority of the potential sellers are able to afford to wait out the impact of market caution and thus hold out from selling at below market values. The quality of the stock at the moment is not on a par with what it was a year ago, but good properties will still fetch a premium over their average competitors. As to average housing stock; here there is more competition and some sellers are now lowering their prices to make their properties more appealing in comparison to the competition so they can move up or down their respective property ladder. As in any hesitant market, the majority of the quality properties are being held back until the market stabilises leading to a bias towards the mid to lower end grade stock. THE FINANCIAL MARKET SITUATION One of the key reasons for the slowing market is the withdrawal of many of the mortgage products on the market from the key lenders due to the shortage of interbank lending. In the short term this will severely limit the number of buyers able to raise sufficient finance for property purchases. But this can only be a short term issue as the banks survive on the back of lending to new and old clients. After several years of huge profits, the banks are now budgeting in mark downs on their assets and posting short term losses in the early part of this year in an attempt to stem the uncertainty and strengthen their financial positions. Once they have written down their poor credit portfolios, they will be able to focus on the profitable sector again, albeit with stricter lending criteria. The recent Wall Street Crisis has sent shudders through the World financial system and caused mortgages in the short term to escalate in price and restrictions. The world banks have collectively offered cash and investment to the World financial markets which seems to have eased the cash flow issues and enabled some banks to start offering more competitive rates. If the banks continue to hold off their lending for too long they will not be able to make any money on the markets themselves and many will go out of business. Once the key players have made sure that the sub prime issue is mostly absorbed, they will start to open up their mortgage products and get back into competing with each other for mortgage business. Once this happens the market will pick up again and prices and stock will strengthen. BASE RATE The base rate is the interest rate set by the state bank of a country, in this case the Bank of England that sets a precedent and target for the commercial banks to lend at. Many commercial banks base their mortgage and savings rates on the base rate plus a margin for their profit. At the moment, despite base rate cuts many of the commercial banks are refusing to lower their offered rates to customers in order to increase the profitability of the loans and also because the LIBOR rate is still unusual high above the base rate. LIBOR (LONDON INTERBANK OFFERED RATE) This is the rate at which the banks lend to each other. Recently there has been a large difference between the LIBOR rate and the Bank of England Base rate, leading to banks not passing on the savings of the central banks rate cutes. After serious rate cuts by the world central banks, and some stern words from the governments, the commercial banks are starting to pass the savings down the chain, and the LIBOR rate is dropping to the benefit of new mortgage customers. There is a fair amount of speculation that the central banks still need to reduce their base rates much further maybe even down to as low as 1%. Whether the commercial banks will pass this on to their customers is up for debate at the moment. ON BUYERS There are still many buyers out there looking, but with higher mortgage costs and limitations, they are even more hesitant to commit, and many have to increase their deposits and accept higher fees. If you are interested in buying a property make sure your finance is arranged and strictly checked. Do not assume that it will all be ok, without double checking with your broker or bank directly. Many deals fall through when the purchase process is held up for weeks or even months as a buyer struggles to get their finance sorted out or researched properly. ON SELLERS There may be slightly more competition amongst sellers than a year ago, but the quality of the properties is still very varied. If you are looking to sell, the best thing is to make sure your property is shown at its best and that you have a realistic price and you will then be able to get the most interest possible. You also have to be realistic about what you will accept and what is achievable. There was a lot of inflation in expectant prices last year, as sellers forward priced-in future rises, now with the flattening off of the market, the prices have to be reassessed and brought into line with the true values. This is what we are seeing a lot of at the moment. Asking prices are coming down in many parts of the country, but not all of them were up at reasonable levels to begin with, so we are not really seeing crashing prices, just a levelling off of opportunists and their asking prices. According to the Land Registry many achieved prices are not really that much lower than they were a year ago, this shows that London when compared to the rest of the country is still seen as a more secure investment location and will probably recover faster too. The majority of the newspapers all like to focus on the asking prices of a handful of overpriced properties and they cannot sell papers unless they have doom and gloom articles. Remember that the indexes released by the Halifax and Nationwide only show a small proportion of the property market as they only show prices of properties they have mortgaged directly. This will not cover the other banks, cash sales or corporate purchases. ON LANDLORDS With the slow down in property transactions in sales, the Central London and Home Counties lettings market has in comparison seen a boom. Now there are more people renting whilst waiting for the banking sector to level out and open up the finance options for buyers. Although on another point there are a few more properties being supplied to the market from owners delaying the sale of their property by renting it out for year or two. ON TENANTS Now that there are more people choosing to rent property while they wait for the sales market to stabilise the market for tenants has become much more competitive especially with the increase in supply to the rental market from new landlords looking to delay the sales of their properties. New regulations introduced by the UK Government will start to put pressure on landlords in improving the energy efficiency of their stock. This will give some investors another angle for competition and stronger rental yields. LONG TERM OUTLOOK Here at Park Lane Estates we believe that the economy is witnessing a levelling off (flattening) and a realisation that some of the economic sectors including some areas of the property market have been over heating. The banks have put the brakes (much too firmly) on the issue for the short term, and in a way have over compensated by cutting off or penalising a vast proportion of normal buyers. This has caused a sudden drop in purchases and registering buyers, but this will change once the banks reassess and open up their products again, albeit at a more scrutinised level. We may have to wait a year or so for this to fully happen, and in the meantime put up with a somewhat restricted market. The Bank of England has a bit of a juggling act on its hands. Despite the marked slowdown in the UK and world economy, inflation remains high due to inflated oil and food pricing. The Bank has promised to control inflation but has little control over the current cause in the rise. To boost the economy into a recovery tack, interest rates need to be lowered, but at the moment there is a risk of a jump in inflation if this is done. The government and the Bank need to calculate which is more important to the country as a whole. With the slowdown progressing, it should naturally swing inflation back towards the target 2%. Once the Bank sees this happening it can be more flexible with the lowering of the interest rates. Another reason for the slow down is also the Government's introduction of home information packs, now sellers have to commit financially before they instruct the sale of their property, this has caused a lot more sellers to hold off marketing the property until they really have to. The British Government is also considering the options of granting a Stamp Duty holiday for first time buyers, but at the moment will not commit to what will actually be put in place and for how long. This is not having the best effect on the market as some buyers hold off their purchase until they know what the true costs of buying will be. NOVEMBER 2008 Central London Property Market Resources If you are looking to buy or rent an apartment or house in Central London then you will need to understand and get your head around the wealth of factual and speculative information currently on the market via web sites and the national and international press. Here are some of the more useful sites and sources of information to help you make your balanced judgement. Do remember that buying in Central London is often different to buying anywhere else in the country or internationally and also that the media will always have to follow a very generalist viewpoint. Here in the Capital, the market is different street to street and building to building. Market Research
Market Report - International Property The International property market is very diverse, and also affected by many more factors especially when you look at the international holiday and investment property market. Different tax, legal and political factors will affect the market and pricing substantially and many buyers can fall into the trap of not researching their target country and market and get hit financially in the end. But where there are risks there are many opportunities. If you are interested in buying abroad, you can contact us directly for advice and we can help with any questions of the finding of a foreign agency. We can even act as a search agent and do all the leg work too. If you would like an honest opinion on what is happening to the Central London or International property markets just contact us and we will give you the inside information from the industry. |
|||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Copyright Park Lane Estate
Agents Ltd. |
|||||||||||||||||||||||||||||||||||||||||||||
