house prices
Buying property at auction
Buying property at a house auction is not for the faint-hearted, ill-prepared or risk-adverse.
That said, its a perfectly viable route to obtaining a house to live in or an investment property at a ‘fair rate’ if you do your homework. It is possible to pick up a bargain at auction, if you know what you’re doing and have a smattering of luck – but it’s also full of pitfalls for the uninitiated – who can end up getting much more than they bargained for.
Linton Chiswick recently argued that property auctions are the barometer of house prices – giving us an early warning of the direction of prices. This theory is based on the fact that as I stated earlier, auction prices are very fair – as they very accurately match buyers with sellers in a way that finds the exact highest price that someone is willing to pay for a property.
I looked around an auction property recently – a two bedroom semi-detached bungalow in the Vale of Pewsey needing more than a lick of paint. At £75,000 guide price (and strategically placed as lot 1) it attracted a lot of attention. The viewing we attended was characterised by youngsters with mum and dad, probably looking at any which way to get on the ladder – but who were soon frightened off by the sheer amount of work and money needed to get the place into a livable condition.
Our cursory inspection revealed damp walls, outdated electrics,deteriating asbestos gutters (and in the roof), no central heating system and nothing saveable in either kitchen or bathroom. A lot to take on for a non-tradesam or inexperienced investor or wanna-be homeowner.
House Auctions do have a lot going for them in terms of speed of sale - with a 20 – 30 day completion period bringing urgency and focus to the legal transfer process that can stretch to weeks and months in ordinary circumstances.
Although, this could all change. We’ve recently come across the Clear system of preparing the sellers’ legal pack prior to recieving an offer – in theory eliminating the to and fro between conveyancing solicitors and enabling an on the day completion. We’re watching this novel scheme with interest – one of those ideas that makes you ask ‘why havent we done this before?’
So, if you’re considering buying at auction, do your homework. Look at some properties, go to a few auctions with no intention of buying. Read up on the process, and look at opportunities with very critical eye.
This series of short videos from David Sandeman, Managing Director of Auction Information Company EI Group is a good place to start.
There are over 280 Auction Houses in the UK – see our property auctions UK page to see if there’s one near you.
Last year, 2010, also saw the launch of Zoopla online house auctions. I can’t help but feel that this will become a much more common form of house sales.
After all if people are bidding from out of the room using a mobile phone, why shouldn’t they bid from a computer with the extra security and manageability of online bidding? This also allows home sellers to extend the period of the auction – perhaps allowing more exposure to interested parties and raising the achievable price?
You may remember an article on this blog nearly two years ago Neil Singer of Click to Purchase (who offer online auction software services allowing any Estate Agent to offer an Auction service to sellers) argued the case for online auctions becoming the norm. It’s not now seeming as ‘revolutionary’ as it once did.
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Politicians have no idea about housing
Politicians have no idea about housing, so said the press yesterday morning. Why should they, it’s a market?
No one has really got any idea, so disparate is our market, and with Labour admitting they got it wrong and CLG carrying out a review of the private housing market it’s perhaps time for everyone to go back to encouraging people to move and to stop hand wringing.
Ultimately various Governments have failingly addressed the supply side of the market, and they’ve periodically tried to encourage the demand side with the resulting boom and busts. So sensitive are homeowners as voters that it wouldn’t be that prescient to suggest that interest rates are watched more for their effect on the housing market than they are for Industry or anything else.
If it is that important why is there so little attention given to keeping the wheels oiled. It’s been an immutable law that as Stamp Duty has gone up so the volume of sales has gone down. The plethora of amateur (and apart from the Land Registry that’s all they are) commentators can say what they like about whatever sector but volumes continue to fall and we’re about to get another cynical rise that’s going to lead to a further contraction.
Is it really that much of a leap of faith for the Coalition to accept that the best way they can free us the supply side of the property market is to put Stamp Duty where it should be, at 1%? There’s little doubt prices would come down in the short term but those voters they help move and get on the ladder would, I’m sure, be eternally grateful.
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
Ed Mead is carrying the Olympic torch (not literally)
For many who spent the tail end of last year trying to predict this year it must have seemed a doddle compared to forecasting now. Suddenly the press, and even me, are beginning to sense that although the year may be a dreadful dirge, it does look as if prices in London will end the year higher than they started. This is not saying a whole lot but from where I’m sitting there are occasional deals being done that simply beggar belief, whereas if you wander out of London, particularly in a Northerly direction, the stories are of a very different nature as the press are keen to let us know.
Sadly all commentators agree that volumes will be a victim this year, and many fear this malaise will continue into next year which is depressing. But hang on a minute next year is Olympic year isn’t it? We’re all supposed to feel good about that, and I’ve even registered for tickets as any self respecting Londoner should, but will it be enough to dispel the fog.
One thing everyone forecast, and the auspices loom good, is that rental numbers will increase in London next year because of the 2012 Olympics being here. With perhaps the worst area for sales currently being small flats, no demand from first time buyers still, it’s very likely, and beginning to be the case, that buy to let investors are beginning to lick their lips and dive in. I sat in a meeting with some heavyweight agents yesterday and all the ones I spoke to said if they had money they’d be buying investment property now. The fact that they can’t shows the general level of nervousness and lack of income in the estate agency game at the moment, but perhaps whilst many top end agents gloat about how many £5m plus properties are selling those who deal at the bottom end might just be about to get their own timely boost.
Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find him online are the Douglas & Gordon blog and Twitter
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Ed Mead: Sellers need a notional interest rate rise to smack them across the face
Today was a corker. Daily Express headlines saying that the property market is set to surge this year, sadly they were narrow mindedly talking about prices only, and on the same day the FT were talking about prices set to fall.
I’m guessing that overall we know who to believe even if we want to believe The Daily Express.
But it sums up the issues puzzling any buyer or seller. It seems buyers mostly want to get on with it and most sellers exist in a world of inertia, needing a notional interest rate rise to smack them across the face and get them moving.
What I can tell you is that a couple of weeks in to the new year and it’s beginning to look a touch better here in London. A strange confluence of events, namely mortgage rates bottoming out, dollar pegged buyers from India Russia China and the US here in strength, Eurozone buyers worried about the future of their currency and looking for a safe home for their money, and the fact that Stamp Duty Land Tax (SDLT) is going to 5% for transactions over £1m (not that uncommon in Central London), means that perhaps a market that never really kicks off until the end of Jan might just be perking up a bit earlier.
More soon.
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Ed Mead is a regular contributor to The Big Property List blog. An Estate Agent for over 30 years, he has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
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2011 property market…early signs?
Frankly there wasn’t much appetite or excitement for predicting what might happen in 2011. It’s a mug’s game at the best of times and most of us in the business have been so worn down by the last few months of 2010 that anything would be better. So are the first signs good?
Well it depends again on who you are and what constitutes good. If you’re an estate agent the chances are it’s not looking overly good right now. More of the same grind with no sellers and a frustrated bunch of buyers who have good mortgage offers but nothing to buy.
If you’re a property owner in London chances are you’d be feeling happy with that as the lack of supply is creating the same effect as a strong demand, ie it’s keeping house prices up. Indeed for really good quality property this year is looking very good for values.
But is that what the market needs or wants? For all the people jumping up and down delighted at any woes affecting estate agents it’s worth reiterating that estate agents are the bellwethers of the wider economy. If agents are going bust (and they have been, with 40% of individual agents out of work since 2008), and companies likely to this year, then it means the entire industry that depends on property: building, decorating, soft furnishings, surveying, solicitors, movers etc etc are all in trouble. If people aren’t spending on property the chances are they aren’t spending elsewhere. That’s a universal truth whether you like it or not.
So there’s nothing much more to say as it’s early, and things may yet get busier, but if they were going to get busier I’d be seeing more sellers looking to get their properties valued now with a view to taking on the Spring market. I cannot grasp why sellers aren’t going for it with historical low rates for buyers likely to have bottomed out and price gains from the unexpected bounce last year still crystallised, and perhaps looking as if they may slip later this year. Perhaps we’re back in that dreadful spiral that potential sellers can’t find anything and so aren’t bothering to go to the market.
As usual when these situations arise it’s difficult to see who’ll blink first, and with buyers very reluctant to pay the asking prices some desperate agents are putting on property, I think it’ll be sellers who’ll blink and go to the market, the only question is can the cleverer ones avoid a possible lemming like rush later in the year.
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Focus on Turkey: Undervalued property in the fastest growing economy in Europe
The Turkish property market is currently enjoying a boom, not least because its economy is currently the fastest growing economy in Europe according to the OECD. This is a position that will not be relinquished any time in the near future said the body.
This is due to the country being in much better shape than the rest of Europe, with a stable banking system, controlled inflation a budget deficit currently thought to be running at around 2%. Its growth is set to continue thanks to its youthful population and the transition of many citizens from eastern Turkey into the cities.
Although the downturn sent property prices down in Turkey, this now means that they are undervalued when compared to the rest of Europe, which makes them a juicy opportunity for investors.
Tourism in Turkey is still growing rapidly and the population is expanding, which when coupled with low interest rates ensures that the property market is increasing in momentum.
The Turkish government makes it relatively easy for foreigners to buy property although there is a little red tape to be negotiated. This red tape comes in the form of the military which has to approve every purchase making sure it does not endanger national security. However because of the rapid pace of reform, which looks like bringing the military under the control of civil courts for the first time in Turkey’s history, this may be removed in the near future.
Rental yields on Turkish apartments are good, with gross yields being up to 7.5% for a relatively small apartment according to research by the Global Property Guide. Larger apartments tend to generate a little less income with yields being around 3.7% to 5.7%.
Finally, increasing accessibility through improved airport facilities means that this country will continue to be popular with tourists, which are bound to boost the property market even further.
This is a Guest article by Julian Walker of Spot Blue, a Turkish real estate agent currently marketing property in Turkey from as little as £25,000.
House Prices: London may continue to confound
For years it’s been said that what starts in London spreads out to the rest of the country. Whether that’s been true in the past or not those of us who live in London recognize now perhaps that there’s a disconnect between us and the rest. Resentment outside the Capital towards those of us that live and work here has always been rife, but having been convinced we were all in this together I’m beginning to think that the London housing market might just be different, and lucky, enough to avoid some of the larger slowdowns affecting those living elsewhere.
Photo by Diliff
The first thing that needs to be defined though is what constitutes a slowdown. It’s been increasingly easy over the last few years to be smug about London property and it’s been the smiles on faces of these London homeowners that have perhaps been in the crosshairs of those looking to have a pop at us. We’ve been lucky in Great Britain, a quirk of geographical fate has determined that not only are we an island but also on the Greenwich Meridian. This means, and has done for centuries, that we’ve been politically and economically stable, and has meant that whichever part of the world is doing well, and there’s usually at least one, those who’ve benefited financially tend to want to have a place somewhere in London. Over the last few years pretty much everyone has hence why values have gone beserk.
But a slow down, or a poor market, can de defined in two ways: prices and sales volumes. What has perhaps surprised many is the resilience of Greater London in the maintenance of those prices, but what’s bad for the economy as a whole is what’s maintaining those prices, low volumes. And it’s going to get worse, or better, depending on how you look at it. Some agents are reporting record numbers of sellers withdrawing from the market. It’s tempting to ask why, the recently deserting foreigners, having taken advantage over the last three years of a weak Pound, now appear to be coming back because they fear for the future of their currency and are wanting to buy whilst their exchange rate remains relatively, for them, advantageous.
Those of us who work in London are more likely to earn relatively well, have deposits and thus access to historically low mortgages, so it’s likely demand will remain relatively strong. So why are sellers abandoning ship when more buyers are chasing their properties. Taking off the market for Christmas always was a waste of time, and at the moment there’s an odd feel that’s unlikely to be as positive at the beginning of next year when perhaps more sellers will come to the market.
So, if you’re the kind of person who watches prices, London may well continue to confound. As someone who recognizes the importance of volumes to the wider economy I fear that this market is disappearing up it’s own b***side.
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Ed Mead is a regular contributor to The Big Property List blog. He has been an estate agent for over 30 years, and has been writing and commentating on the market for over half of that as the Sunday Times Property Expert and The Agent Provocateur for the Telegraph. He sits on the Board of The Property Ombudsman Ltd, has a regular LBC slot, and is happy to say it as it is.
Other places you can find Ed online are:
Douglas & Gordon blog
Ed Mead on Twitter
How much did Sarah Beeny pay for Rise Hall?
Everyone keeps asking me if I’ve seen Sarah Beeny’s new TV show, Sarah Beeny’s Restoration Nightmare, which I mentioned in the blog last week. This tell me two things, 1. its very popular and 2. not many of my friends read my business blog.
Since the last piece we’ve received a deluge of enquires asking ‘How much did Sarah Beeny pay for rise Hall’? Usually I refer to the brilliant houseprices.co.uk which instantly tells you the sold price of any house in the UK – from the year 2000 onwards. And here lieth the problem - Rise Hall was bought in March 2001 but its sold price is not freely available online.
So to answer the question we went to the the Land Register (www.landregistry.co.uk) where all property trancsactions are formally registered and recorded. Records are available to the public (at a charge) and nowadays you can view them online (in the past you had to either go to London or order copies in writing).
So to satisfy your collective curiousity we paid £4 to get a copy of the registration documents of Rise Hall and can reveal that Sarah Beeny’s husband, Graham Swift paid £441,101 for Rise Hall on 16th February 2001 and it is registered solely in his name.
If you want your very own Rise Hall – see what £441,101 would buy you today, which according to www.whatsthecost.com would be worth £529,294.18 today taking inflation into account.
Searching for Houses for Sale under £525,000 in Yorkshire on The Big Property List does leave us just over four thousand pounds to spend on any renovations but unfortunately doesn’t offer you much as grand as Rise Hall, but certainly more modern run of the mill dwellings such as a ‘A well presented and extended four bedroom detached family home offering superb living accommodation and located in this highly sought after South side location.This delightful family home is presented in tasteful decorative order throughout.’
Hmmm, not quite the 97 room pile I was looking for thanks.
The after show ‘live chat’ on the Guardian website revealed mixed feelings from viewers, with many viewers and ex-pupils of Rise Hall saying how thrilled there were to see the place being restored. Others showed an impatience with the show and Ms Beeny at a time when many in the housing market are suffering.
One commenter asked:
‘How does it feel to have contributed so much to the madness of the constipated UK property market by producing endless TV shows that encourage people to become obsessed with the whole thing and are you making this new show now only because the arse has fallen out of the same market and no one can actually buy a decent house to live in anymore – without a TV presenter salary?’
Well, Dimbleby wouldn’t let ‘em ask questions like that on question time would he!
Many comments have been deleted by editors and there is no record of Sarah’s responses to the Live chat questions. Either way I enjoyed the programme more than I thought I might and if I happen to be sitting down whilst it’s on this week I will probably watch it.
Catch Sarah Beeny’s Restoration nightmare on channel 4 at 8pm on Thursday.
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Government shake up of house price indices
The UK Government has just announced that it has asked the Office of National Statistics to investigate the coherence and comparability of house price indices..
Tax payers are currently funding two indices, produced by the Department of Communities and Local Government (DCLG) and the Land Registry.
Add in the indices produced by the RICS, major estate agents, property portals and building societies and you can begin to see why the general public gets confused as to the state of the market.
I’m all for market clarity and a shake up in the way that property is marketed and analysed.
Nobody will ever be able to predict the future of house prices but we certainly should be able to say what they have done with some degree of accuracy and consistency.
If you have a view on the usefulness of any of the current indices please do let us know and we’ll be sure to pass it on to Messieurs Cameron and Clegg.
Author Biography
Graham Downie has 25 years international property experience including longs stints at both Savills & Chesterton. In 2003 he moved to Cognac, SW France where he now practices as a private client buying agent. He also offers freelance marketing & writing services to companies servicing the property industry.
email: info@grahamdownie.com
twitter: @cognacproperty
The question on everyone’s lips – is now a good time to buy?
Following the emergency budget last week, many homeowners and landlords are picking through the new factors that have been thrown in to the to-buy-or-not-to-buy conundrum.
A few reassuring points remain:
- The new Government have some measures in place to tackle the wider fiscal issues over time.
- The public sector has scope to cut costs without dramatically pushing up unemployment which should keep demand healthy.
- Prices will be stable or only grow slowly for a fair while yet, allowing incomes and house prices to get that bit more comfortable in their relationship and give people time to clear other debt.
- We are still a nation of aspirant homeowners and property should remain a viable investment; and certainly the only one you can live in!
What about first time buyers?
Many people believe that house prices are unlikely to reduce further, so now could be a good time to take that step on to the first rung of home ownership. The biggest barrier facing first time buyers is getting an affordable mortgage and a big enough deposit.
For us, that’s where the regional building society can help. Knowledge of the local area and manually underwritten mortgages makes Saffron able to help first time buyers in our community. And that extra guidance and support from your mortgage lender makes a real difference when taking out your first mortgage.
What will happen to interest rates?
This is a question which we ask ourselves regularly. It’s a difficult one to call – and though there have been some murmurs that, considering the rise in inflation, the Bank of England ought to lift base rate off the floor, they’ve not moved yet, and when it does, it’s unlikely to be dramatic.
Saffron is prepared for base rate to remain at 0.5% throughout 2010 and we don’t anticipate it rising by more than a percent or so in 2011. It’s quite a conservative projection, but we have to play it safe and reforecast regularly as the climate changes.
Ultimately, though, this is all based on conjecture and opinion. To help you make up your own minds, here are a few facts:
- For the first time since the Thatcher days the percentage of people owning a home in the UK has declined.
- This recession was worse than the previous 2 – GDP fell for 6 consecutive quarters by 6% peak to trough, where as in 1980/81 and 1991/92 it fell 3.8% and 2.5% respectively.
- Industry faired better this time around, keeping more people in work – with unemployment peaking at 5% versus 1980/81 at 10.3% and 1991/92 at 9.9%.
- House price falls were bigger and quicker this time around with a range of 7 – 33%, against ranges of 0 – 12% in1980/81 and 0 – 15% in 1991/92.
- Low interest rates are helping keep repossessions low being at a peak of 6% pre this recession against 15% in both the 80’s and 90’s.
This article was written for thebigpropertylist.co.uk by Michelle Monck DipM ACIM, Head of Marketing at Saffron Building Society.
Saffron Building society is a regional building society that has been providing savings accounts and mortgages to communities in the East of England for over 160 years. They offer a range of fixed rate mortgages and tracker mortgages. They have over 120,000 members and are the ‘most followed’ Building Society on Twitter! Visit their website at www.saffronbs.co.uk or follow them @SaffronBS
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