News

	Nick Churton, who heads our Mayfair Office in London, is well placed to guage the pulse of the UK property market and contributes regular market comments for the national press.  Here are his most recent offerings, in his amusing trademark style:

UK Mortgage Lending edges higher according to the BBC (June 2010)

Mortgage lending crept up in April compared with the previous month, according to the Bank of England.

The number of mortgages approved for house purchases increased to 49,871 in April from 49,008 in March, a rise of 2%, the Bank's figures showed.

Meanwhile, UK consumers paid back more than they borrowed in April, with the net level of unsecured credit falling by £136m.

This was the first time that the level had fallen since November.

Housing

The Bank's figures show the continued sluggish nature of the housing market in 2010.

The number of mortgages approved for house purchases in April was only slightly higher than the 45,529 of the same month a year ago, and it was lower than the average of the past six months.

Mortgage approvals hit a recent high in November - at 59,531 - just before the end of the temporary stamp duty holiday.

"The data is likely to reflect both the continuing shortage of mortgage funding and weak consumer confidence, and therefore demand," said Michael Coogan, of the Council of Mortgage Lenders (CML).

"The forthcoming Budget represents an opportunity for the government to prioritise support for home-owners, although we recognise the fiscal position leaves only limited room for manoeuvre."

He said that the CML might revise its forecast for the amount of mortgage lending in 2010. It had suggested that gross lending would reach £150bn this year, with net lending at £15bn.

"Nobody can deny that the mortgage and property markets are still very delicately balanced," said Brian Murphy, of mortgage broker the Mortgage Advice Bureau.

The number of approvals for remortgaging remained low, with many homeowners sticking with their standard variable rate.

However, the continued low level of interest rates is putting pressure on lenders.

Since 1 June, new mortgage borrowers with Lloyds TSB, as well as Cheltenham and Gloucester, must pay a much higher standard variable rate (SVR) when their initial deal expires.

Current borrowers revert to a SVR of just 2% above bank rate, so are currently paying 2.5%. But now new borrowers, or current ones who switch deals, will have to revert to an SVR without any ceiling, currently set at 3.99%.

Building societies

Figures from the Building Societies Association showed that the amount saved in mutuals outweighed the amount withdrawn for only the second month in the past year.

Savings rates have been at low levels since the recession

The net inflow of savers' money stood at £537m in April, compared with a net outflow of £318m the previous month.

"Mutuals have been able to attract savers by offering competitive rates, especially on popular Isa [Individual Savings Account] products," said Adrian Coles, director general of the Building Societies Association.

"However, maintaining positive inflows will remain a challenge while the Bank rate remains low as savers may seek higher returns elsewhere, albeit at greater risk, or may opt to repay debt instead."

The Bank of England figures show that the repayment of personal loans and advances led to the drop in net unsecured credit.

Credit card borrowing rose slightly in March, but there remained evidence of people taking a safe approach to their finances owing to the uncertain state of the economy.

The Bank of England figures show that total net lending to individuals rose by £0.4bn in April.

Time For A Move (May 2010)

It’s not just the Camerons and the Browns who are moving home.  Lots of other people have decided that it is time for a change.  Recent activity in the property market is at levels not seen for several years, and now the election is well and truly out of the way there should be even more decisiveness in the market.

Over the past few weeks, while politicians criss-crossed the country, we have been holding an extensive round of face-to-face meetings with our own associated firms throughout the UK.  There is no better way to gauge the state of our nation’s property market than to compare notes with other professionals at the coalface.

So here is a report on the market that our new government inherits.  It is not a bad picture.  Far from it, and many will be pleased that this coalition intends to see off Home Information Packs in the fullness of time.

Prices in leading and popular areas close to London and in other large metropolitan areas have surged back to 2007 levels and - in some key locations - have exceeded even these.  Most other areas have seen prices rise but not to such a generous extent.

First time buyers have not exactly rushed to take advantage of the £250,000 stamp duty holiday set in the last budget, but this is seen as a direct result of there still being some difficulty in agreeing mortgage loans and having to find large deposits.  As lenders become more accommodating to borrowers, and more competitive with each other, this situation should improve greatly.

But the big issue is at the other end of the market.  Larger homes are coming onto the market in greater numbers.  There is clear evidence that most owners of these want to downsize, seeking less but often more contemporary, well-equipped and thermally efficient space.  There are many reasons for this – releasing equity for children’s education, helping offspring with mortgage deposits, labour saving, lower day-to-day running costs, lifestyle relocation, provision for pension, etc.  But whatever the reason it goes hand-in-hand with a prevailing concern that the next few years are not going to be so benevolent to those living far beyond their reasonable housing needs.

This will put greater pressure on good, middle market homes where prices should respond positively to demand.  Larger, older houses away from golden postcodes will still sell, but accurate pricing will be crucial and the days of highly optimistic asking prices in this area may be over for some time to come.

It is manageable, top end houses possessing high specifications and located in the most fashionable of hot spot areas that will really attract the new breed of city bonus spender.

So in these turbulent times, both politically and economically, as we all tackle the real fallout of the recession over the coming months, our advice is this. If you are a first time buyer, save, save, save and then buy carefully within your means.  If you are a middle market buyer or seller the market is rather rosy for you if you price to sell and buy prudently.  If you are a top end seller then get your relocation in first and be fiercely competitive with your price - before many others decide, like you, that downsizing can be both fun and liberating. 

Moving For School (April 2010)

Forget about April showers, in the property market it’s the brainy season.  In homes across the nation students are gearing up for important examinations. But further down the education time line parents of younger children are also being put to the test.  Whether one agrees with the schools’ selection system or not, today a postcode can have as much to do with where a child attends primary or secondary school as their academic potential.

Whilst parents may not always be able to influence their offspring’s ability as much as they would like, they certainly can influence where their child is educated.  Moving to a favoured school’s catchment area can certainly increase a child's chances of getting a place at that school.  But there are some important steps to take before making the move.

It is essential to check with the local education authority about their criteria for placement before making any major decisions.  Then it’s best to speak to a chosen school and ask them the same question.  Once confident that the school of choice will have availability then moving home may very well be worth doing.

Applying in plenty of time for a place is very important so this is the time of year that anxious parents consider a location that promises the best education for their child.  After all, selling an existing property and buying a new one does take time.

But it is not just the primary and secondary sector that is testing parents right now.  Those with offspring going to university also have some important homework to do.  Student accommodation is expensive and for parents who intend to purchase a flat or small house, both for investment and accommodation purposes, now is the time to be looking. City centre flat prices are just about as low as they go right now and this is a great time to get into the market.  

Whatever the requirements for a child’s education the sensible move is to talk to a good local estate agent – perhaps one of parental age who has lived in the area for some time.  He or she will be able to give a huge amount of useful information about neighbourhoods, security, transport, lifestyle and, of course, housing.

In the meantime if you have particularly strong feelings about the state schools’ selection system or about university fees, loans and grants very soon there is an ideal opportunity to have your say in the government’s very own examination room - the polling station!