Posts tagged: house prices
Understanding Property Valuations and Structural Surveys
Once you have found the property of your dreams and have had your offer accepted, it’s time to think about a structural survey. Not obtaining a survey might save you money, but could cost you dearly in the future.
What is a Structural Survey?
A structural survey is designed to evaluate a property and give the consumer peace of mind that there are no structural defects. This type of survey can be very useful in identifying defects that are not noticeable to an untrained eye and can help you to make an informed decision before signing on the dotted line.
There are 3 kinds of structural survey to consider:
Basic Valuation
Homebuyers Survey and Valuation
Full Structural Survey
Each report differs in detail with the basic valuation obviously containing the least amount of detail. The full structural survey report will be the most in-depth and many people choose to purchase this type of survey for additional peace of mind. For example, older properties are more likely to have more defects and therefore a more in-depth report will highlight these and allow you to either accept these defects or withdraw your offer and move onto another property. The ‘Homebuyers Survey and Valuation’ is by far the most popular chosen by consumers and gives a good amount of information.
Basic Valuation
A basic valuation is usually performed by your mortgage lender. They need peace of mind that they are making a sound investment in your property and that in the event of you defaulting on your mortgage they will make their money back. This valuation isn’t really a survey as such and the inspection criteria is very limited.
Homebuyer’s Survey
A homebuyer’s survey is the most popular of all three types of survey. The format of the survey and the criteria within are areas which have been defined by the Royal Institute of Chartered Surveyors. Designed for properties that were built within the last 150 years, this survey report focuses on urgent or significant problems or causes for concern. These might include:
The general condition of the property
The value of the property on the housing market
Comments about drainage, insulation, roofing, damp proofing
Results of any tests such as dampness
Any defects which may affect the value of the property
Urgent problems which need attention before you exchange contracts
Full Structural Survey
If you are buying an older house or you have cause to believe there are some structural defects then a full structural survey is a good idea. Whilst this survey is the most expensive of the three it could save you money in the long run. Armed with a list of surveyed defects you could approach the seller of the property to negotiate a lower price. For example, if the survey makes a recommendation for a new roof you could negotiate the price of this work off of the asking price of the property. The surveyor will have estimated the rough total for any works required and this can out you in a great bargaining position. On the other hand, many people get the results of a full structural survey and choose to walk away from a property if the works required are too extensive. A full structural survey can give peace of mind and also save you a lot of heartache.
The Biggest Purchasing Decision of Your Life
For most people, buying a house is the biggest purchasing decision they will ever make. Buying a home is expensive and for this reason many people choose to scrimp on the survey and rely on the information given in the basic valuation. This could turn out to be a costly mistake and spending a few hundred pounds before you buy the property could be much more cost effective. Paying out £1000 for a full structural survey may sound like a lot of money, but imagine moving into a property only to find you need to spend £15K on re-roofing. Remember, once you have exchanged contracts, the seller is no longer responsible for the works on the property.
There are many companies offering surveys with prices differing wildly. Obtain some quotes and more information before you go ahead, but try to get the best survey you can afford. It could save you money in the future.
Click here to compare survey quotes from local surveyors
Property Prices In Yet Another Tumble
Once again the housing market has taken a tumble. The average cost of a home fell 1.4% last month – a drop that hasn’t been seen since July 2009. The Halifax house price index reports the latest plummet has led to property values being 3.7% lower in April than during the same period last year. This is the biggest decrease since October 2009.
What’s the Cause?
Well, Halifax have blamed the recent fall on fragile and cautious consumer confidence. The economic climate is still relatively uncertain and this has decreased demand on property and caused a downward pressure on property prices. Since the low that property prices hit in April 2009, they have only risen 4% whilst they are still 20% below the peak they hit before the credit crunch struck back in August 2007.
During the past year, house prices have been particularly volatile and if you’ve been keeping track of the Big Property List blog then you’d have seen our reports of house prices going up and down like a yo-yo. House prices have dropped in seven months, risen in four and remain unchanged in one month and that volatility looks set to continue.
Often seen as a slicker and better indicator of property market trends, the quarter on quarter indicators showed acceleration in the rate of falling property prices. During the three months towards the end of April, homes lost 1.2% of their value. That’s double the 0.6% drop that was recorded during the three months to the end of March and also the most dramatic quarterly fall since October last year.
Regardless of these miserable figures, the Halifax has said that they expect the rate of falling property prices to slow down. Martin Ellis, Halifax’s housing economist, said “Signs of a modest tightening in property market conditions, an increase in the number of people in employment, and a relatively low burden of servicing mortgage debt are all factors that are likely to provide support for house prices, curbing the pace of the decline.”
Are the signs there?
Martin Ellis also went on to say that he thinks the signs that the housing market is stabilising are there albeit at a lower level than the historical average. However, Howard Archer, chief UK and European economist at HIS Global Insight showed less optimism saying, “We believe that house prices are likely to end up in decline by around 10% overall by the start of 2012 from their peak in 2010. This implies that they will fall by about 5% more.”
It seems to be a tough one to call, but one thing’s for sure. The Big Property List will be reporting on property market news as it happens and giving you access to the latest views from the industry experts.
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A Hidden Boost for House Prices?
It’s Budget time and many of us will be frantically scouring the budget news for proposals, price hikes and changes that will affect the property business.
House prices could be set for a boost by a multi-million pound stream of buy-to-let investment by institutions, including the biggest insurer in Britain, prompted by an often-overlooked clause in the Budget.
Whilst a lot of attention has been paid to the £250m of new loans made available to help 10,000 first time buyers, less attention has been focused on the reforms to stamp duty for people looking to ‘bulk buy’ residential properties. Not getting excited yet? Wait until you see some of the figures.
If the Budget proposals pass into law, the tax bills for institutional investors and other buy to let landlords could be slashed by 80%. Anybody purchasing a property portfolio of let’s say 100 homes worth an average of £200,000 each following the 6th April would attract a Stamp Duty charge of 5% of the 20m deal value or £1m.
However, Chancellor George Osborne is proposing a change to the way these taxes are calculated. The proposal means the rate applied will be based on the average value of the properties concerned and not their total value. If we use the example given above, because the average price paid for the properties was £200,000, the rate of Duty falls to 1% resulting in a tax bill of £200,000. That’s some drop!
James Moss, a director at Curzon Investment Property, said “This will be a huge boost in the private rented sector as it will allow pension funds to buy homes in bulk without any unfair spikes in Stamp Duty.”
That’s an understatement! When you consider the sums of money that insurance companies and other institutional investors have under their management, any increase in this allocation to residential properties could have a dramatic effect on UK house prices.
Aviva, the biggest insurer in Britain today, has confirmed they are considering setting up a £1bn residential property fund so they can take full advantage of the proposed tax break and other big names are very likely to follow suit. Some market analysis has suggested that many properties still remain overpriced, but figures show that the rental market has held up despite the recession.
No matter how you look at it, bricks and mortar are still attractive for many institutional and individual investors. The next few months look set to be interesting and the result on the housing market could be dramatic although don’t expect these changes to occur over night.
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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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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
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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