Reeds Rains Property Blog

The June 2012 Scottish House Price Index from LSL Property Services/Academetrics has been released today, providing a measure of the average house price in Scotland for June 2012.

• Scottish house sales 9% higher than 2011 as market takes first steps towards recovery
• 2,674 more house sales in first half of 2012 compared to equivalent period last year
• Prices in Midlothian rise £20,000 in last year
• Prices in Edinburgh up almost £13,000 over last 12 months

Data from the Scottish House Price Index for June 2012.

Richard Sexton, Director of e.surv chartered surveyors which is a part of LSL, comments as follows in the latest Scottish House Price Index from LSL Property Services/Academetrics published 15th August 2012.

“The Scottish housing market is climbing the ladder to recovery rung by rung. Despite the impact of the Jubilee bank holidays, house sales so far this year are 9% higher than in the equivalent period last year. The fact that activity has increased during a year when the economy has been weak bodes well for the future, and is testament to the underlying strength of the housing market and pent up demand.

“Although bank lending is still in the doldrums, evidently more buyers have been able to access mortgages than in 2011. More buyers have rolled up their sleeves and built the big deposits banks require to access affordable loans, which has eased the gridlock in the market and jump-started activity. An air of cautious optimism surrounds the Scottish housing market at the moment. Slowly but surely the building blocks of recovery are being put in place.

“But there is still a long way to go before the market drags itself out the hole dug for it by the financial crisis. Sales are still at half the level they were before 2008. Recoveries from recessions caused by debt are always fragile, and a severe downturn in the eurozone or a sharp squeeze on the credit available to banks could still shatter much of the progress the market has made. Despite the deposits being saved, the lack of loans to first time buyers is a huge roadblock to a complete recovery.

“Prices are erratic on a regional basis. Areas like Edinburgh and other parts of Midlothian, which have pockets of wealthier buyers, have seen prices rise considerably over the past year. These areas are full of buyers with more equity, so more people are finding it easier to get a mortgage. This is pushing demand above supply and causing prices to rise. On the flip side, less affluent areas with high unemployment have seen activity drop away, which has dragged down prices.”

The latest e.surv mortgage monitor, published Friday 10th August, provides a review of the mortgage market.

• House purchase loans rise to 49,561 in July from 44,192 in June
• But driven by increased activity from wealthier buyers rather than first-time buyers
• Lending to borrowers with low deposits falls to lowest for 12 months. Fewer than one in ten of loans granted to buyers with deposit of under 15%

Increased activity from wealthier buyers pushed loans for house purchase up 12% to 49,561, according to the latest Mortgage Monitor from e.surv chartered surveyors.

The strong monthly increase in July reflects weak lending in June, when purchase approvals fell by 12% compared to May, rather than of a recovery in lending. House purchase loans in July were 2% lower than in May, and on an annual basis were 1% lower than in July 2011, which itself was a weak month by historic standards.

The July mortgage market was dominated by equity-rich buyers. With the economy stalling, the costs of funding a mortgage increasing, and the availability of credit drying up, banks are focusing on sustaining lending to borrowers with higher levels of equity and tightening criteria on high loan-to-value mortgages.

This trend became more pronounced in July, when two-thirds of all house purchase loans in July were to borrowers with a deposit of 25% or more. There were just 4,708 new mortgages granted to borrowers with deposits of less than 15%. This represented less than one in ten of all loans in July, the lowest proportion since July last year.

With high LTV lending shrinking as a proportion of overall lending falling to its lowest level in a year, first time buyer numbers suffered in July. There were just 11,399 loans for purchase of property worth up to £125,000 (typical first time buyer homes). This is 6% lower than the average so far this year of 12,111, and is 1% lower than July last year.

House purchase loans for property worth over £500,000 rose 15%, and loans for purchases over £750,000 rose by 17%, reflecting the disproportionate share of the market held by wealthier buyers.

Rate rates and tighter lending conditions have reversed the tentative growth in high LTV lending since last autumn. It reflects with the Bank of England’s latest credit conditions survey, which warned the summer would be characterised by a reduction in lending and disproportionately fewer loans to first time buyers.

The quarterly average loan-to-value fell below 60% for the first time since Q3 last year, suggesting the mortgage market is regressing back to the suppressed state it was in during the first half of 2011.Richard Sexton, business development director of e.surv, explains: “The surge in July should certainly be taken with a pinch of salt. It was an exceptionally weak June by historic standards, thanks mainly to all the Jubilee holidays. Lending rose in July because the market was making up for all the time lost in June, rather than because it is becoming easier to get a mortgage. It doesn’t hide the two-tier nature of the mortgage market, with equity-rich borrowers dominating activity while many first-time buyers are locked out by banks lack of appetite for high loan-to-value lending. While credit is so scarce, banks would rather focus on sustaining lending to wealthier borrowers and buy-to-let landlords.

The mortgage market has a long way to go before it climbs out the deep hole dug by the chronic lack of first-time buyer loans and the constraints of tough lending criteria. But escape from that hole looks a long way off. The economy is contracting and the eurozone crisis could still bubble over at any point, meaning banks won’t begin increasing their lending to first time buyers anytime soon.”

The July 2012 England and Wales House Price Index from LSL Property Services/Academetrics has been released this week, providing a measure of the average house price in England and Wales for July 2012.

• Transactions and house prices climb as wealthy buyers drive market
• Transactions rise by 11% in July after June lull
• Prices rise by 3.2% on yearly basis, climbing 0.2% compared to June

Data from the England and Wales House Price Index for July 2012.

David Newnes, Director of LSL Property Services - owners of Your Move and Reeds Rains - comments as follows in the latest England and Wales House Price Index from LSL Property Services/Academetrics published 10th August 2012.
 
“The housing market remains a long way away from the heights it hit before the crunch, but both prices and transactions defied the wider economic gloom in July. Sales activity bounced back following the disruption of the additional Jubilee bank holiday in June, with the monthly rise in transactions twice the normal seasonal increase. While the shortage of properties on the market remains a stumbling block to a more sustained climb in transactions, it is playing a pivotal role in supporting prices in many parts of the country, boosting competition among those buyers who have been able to secure finance.

“However, much of the buyer activity is being driven by the top end of the market rather than the bottom. First-time buyers are bearing the brunt of lenders’ caution and the need for larger deposits, and their numbers remain noticeably subdued. Banks and building societies are targeting those with sizeable deposits or equity, and it is wealthier borrowers – alongside cash buyers – that are contributing towards the ongoing resilience of the housing market. Unlocking the lower tier of the housing market remains key to seeing volume recovery and much rests on the success of the Funding for Lending Scheme and traction of the NewBuy initiative.

“There is by no means a consistent picture across the country. While the average national price has climbed, less prosperous areas such as Hartlepool have seen prices fall by 8.3% in the last 12 months, reflecting lenders’ caution in areas with weaker local economies where higher levels of unemployment may threaten borrowers’ finances.

“In contrast, London’s market is going from strength to strength. House prices in 10 London boroughs have hit new highs, with Kensington & Chelsea seeing capital gains of 38% since last June. While the figures may be flattered by comparison to last year’s hangover after the introduction of the stamp duty in April on properties worth more than £1m, money is pouring into prime areas from cash buyers and international investors looking to store their wealth in bricks and mortar. As demand from wealthy buyers continues and first-time buyer numbers remain subdued, the gap between the opposite ends of the market remains."

Tenant demand is on the increase as Reeds Rains recorded a record month in July for tenant applications, with an 18% increase on June.

Reeds Rains Lettings Director, Mark Chatterton commented “This level of sustained growth in the market is a really positive sign for Landlords, as it demonstrates a healthy demand for good quality private sector rental accommodation. It also reflects the skills and proactive approach of our teams, who are constantly working hard to ensure our Landlords have the minimum of void periods to ensure regular cash flow.”
This high level of demand can present a new problem for some DIY Landlords who are swamped with prospective tenants and struggling to ensure they pick the right tenant. The advantage of using a lettings agent makes life a lot easier for landlords, who can wash their hands of the whole affair.

Mark adds “At Reeds Rains our staff are dedicated to providing a smooth and efficient service. We take care of everything for landlords who want a hassle-free life. Our year-on-year demand levels have risen by 12% and there’s no better time for Landlords to switch to a trusted agent and expand their portfolio.”To find out more about lettings at Reeds Rains please visit www.reedsrains.co.uk.

Following on from the recent merger of two branches in Wigan, Reeds Rains have experienced a record month for lettings. The new central office, which is based in the heart of Pemberton and offers a range of residential sales, lettings and mortgage related services, has let over 75% of its stock in the past four weeks.

The past month has seen an influx of tenant enquiries for the estate agent, who have found an increasing number of renters keen to move quickly. Looking for help in their move, customers from all areas of Wigan are choosing Reeds Rains based on their success in the lettings market and fantastic reputation.

Joshua Simms, Lettings Manager at the Pemberton branch said “Letting such a large percentage of our stock in the past month reflects both the continuing growth of the rental market, as well as the great service and expert advice available at Reeds Rains.”

Explaining this growth in lettings, Joshua Simms commented “Around the Wigan area the rental market is booming; due to deposit requirements, first time buyers aren’t able to afford to purchase their own home. We are also finding a lot of homeowners renting out their own property in order to rent another which is more suited to their growing families.”

Joshua Simms at your Reeds Rains branch in Pemberton.

Eager to satisfy its customers’ requirements and as a result of a record month for lettings, Reeds Rains Pemberton is now on the lookout for more three and four bedroom properties across Wigan. Such rental properties are in high demand with young professional couples and families in the Orrell, Upholland, Hindley and Leigh areas.

Joshua Simms added “In the current market, renters are finding it increasingly difficult to locate the right home. Reeds Rains are perfectly placed to help such tenants in their search through expert professional advice, friendly service, as well as same day rental appraisals and viewings.

If you are a landlord or tenant and would like to know more about letting a property in the Wigan area, please contact Joshua Simms and the team at Reeds Rains Pemberton on 01942 216381 or email pemberton@reedsrains.co.uk. You can also follow us on Twitter @reedsrains for the latest in property news.