Archive for August, 2008
Monday, August 18th, 2008
Figures released by Lloyds TSB Scotland show that the Scottish house market is currently behaving rather differently than that of the rest of the UK.
The Scottish House Price Monitor shows in Scotland prices crept up by 1.6% in the quarter to end July. This contrasts well with figures from other UK regions which show prices falling. However Lloyds report also shows a large fall of 27% in the number of transactions completing.
“These figures mirror Caesar and Howie’s experience “said managing partner David Borrowman. “To the half year our sales were down by 22% from last year – but we have not yet found any significant slippage on prices. On the other hand “continued David “sellers have to realise that this is now a buyers’ market – unlike the sellers’ market of the last few years. Fixed prices are now becoming the norm, and sensible pricing with wide internet exposure of the property are keys to selling a house successfully. But most of all – sellers must be patient because house sales are taking longer to achieve. Buying a house is still a big ambition for most in Scotland and we feel that as the mortgage market comes gradually back to normal sales volume will steadily pick up again”
Tags: House Prices, housing market, Scotland
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Friday, August 15th, 2008
Despite the current property woes, an inexorable rise in house prices over the last twenty years or so has good and bad effects for all of us. One of the good effects is the ability of people to accumulate tax free capital for themselves and their family. Elderly couples then often release this capital in their latter years by “trading down” or even contracting into one of the increasingly popular equity release schemes on the market. So many older people in our society see the benefit of previous house price rises.
At the other end of the scale first time buyers particularly in the cities where prices are high are finding it more and more difficult to get into the house market at all. To help youngsters into the market many parents and grandparents are putting up deposits sometimes of substantial sums and guaranteeing mortgages to help their children or grandchildren into the market for the first time. This is a great help for the youngsters, giving them the opportunity to own a first home.
However many parents or grandparents who put up the money are not themselves wealthy, they may have remortgaged their own property to get the funds, and may even be in the position where they may need the funds themselves at a later date. In these situations it is not enough to rely on the youngsters word ‘I’ll pay you back when I’m better off”. Yet many families do rely on such promises – sometimes with disastrous consequences.
The simple fact is that if the house is in the youngsters name alone the deposit is at risk to other creditors if the youngster runs into difficulties with debt. Someone may fall ill, lose his or her job, have no redundancy insurance, a few credit card debts and before you know it the house is repossessed and the deposit grabbed by creditors. The promise of repayment is a bit hollow in these circumstances.
Yet all this can be avoided by some sensible legal steps being taken within the family at the time of purchase. Let’s imagine Mr A lends his granddaughter child B £25,000 on a house purchase of £100,000. A simple contract between A and B can be drawn up, where on any future sale Mr A gets his £25,000 back plus a quarter of the increase in price. If the house sells for say £140,000 in a few years grandfather A would get back (approx not counting fees etc) £10,000 being his share of the gain plus his original £25,000 = £35,000. Granddaughter B would still have released to her £35,000 towards her next purchase.
Moreover that contract can be backed up by a Standard security or mortgage deed over the property ensuring that in the event of any forced sale by granddaughter B’s creditors grandfather A gets his money back first, before any other creditor other than the daughter’s mortgage company.
These contracts and securities can have lots of other issues dealt with if the parties want such as payment of interest. Fees are relatively modest for the peace of mind which such arrangements can give. The principles are clear. We encourage families to take a commercial view of their arrangements and to put in place these protections where monies are changing hands but parents and grandparents want a little protection.
Should the reader wish to investigate these plans please contact Graham Irvine or Carmen McIver on 01506 815900.
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Friday, August 15th, 2008
The latest data from the Scottish House Price Monitor run by Lloyds TSB makes comforting reading for householders. In the first quarter of 2006 house prices across Scotland increased by 4%, showing an average annual increase of 13.9%.
The Scottish Market continued to show higher rises than in other parts of the UK – allowing Scottish prices to catch up a little on the generally higher English prices.
Average prices in Scotland are now £107,789, for flats, £131084 for a semi detached and £205,303 for detached houses – although there are significant regional variations from these “all Scotland” figures.
The rises appear to reflect the continuing confidence of Scottish buyers. The survey suggests that in terms of the amount paid by buyers on mortgage payments relative to net income, Scots house buyers enjoy 24% better affordability than their counterparts throughout the UK.
The local experience at Caesar and Howie seems to reflect the national trend. “Buyers are quite prepared to offer good prices for well presented properties” commented senior sales controller Kirsty Jack. “After all house prices now have risen steadily for a full five years and people believe that a good residential property in a decent location will be a good investment over time. Certainly in our offices selling and buying activity just seems to keep increasing.”
Tags: House Prices, Scotland
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Tuesday, August 5th, 2008
The better news for housebuyers continued this week when more lenders announced rate cuts. Following the lead of the Halifax and others HSBC and the Bank of Ireland announced rate cuts across a range of products. This means now that all the major players in the mortgage market have reduced rates in the last week. Some have also reduced costs associated with their products as well. On top of that the general tightening up of criteria for obtaining finance seems to have stopped. Sandy MacFarlane, an experienced mortgage advisor with Caesar and Howie is confident the market is starting to return to some form of normality. “Generally it seems now that lenders are requiring 10% deposit as a minimum but if you have a good job and minimal other debt most people can now get the funds they need to buy. The 10% deposit rule is a bit of a return to the old day when I started in the business! Many borrowers can come up with these sorts of sums and we find first time buyers are often getting help from relatives.”
As well as easier finance buyers are also finding properties easier to find due to the large volumes on the market and also that sellers are no longer holding out for premium prices. Kirsty Jack, senior sales controller at Caesar and Howie confirms this. “Not many closing dates are being fixed these days, and there are lots of houses now available at quite affordable fixed prices, so buyers can pick and choose. I suspect that when the market comes back to normal a lot of the prices now available to buyers will be seen to be real bargains”
Tags: mortgages
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Friday, August 1st, 2008
After many months of pretty depressing news in respect of house values, mortgage costs and falling sales, householders suddenly received three bits of good news in as little as 48 hours.
The first piece of news did not make many headlines – but possibly was actually the most encouraging of all. Not many homeowners will ever have had much to do with the LIBOR interest rate. This is the rate on which loans between banks are costed – and for the first time for many months this rate reduced significantly last week. This will make inter bank lending that bit cheaper and it has been the banks unwillingness to lend to each other which has been a main cause of the tightening of credit for the consumer.
Secondly and following hard on the heels of the news the LIBOR reduction – mortgage rates started to drop of the consumer. First the Halifax, then a group of lenders including the Bank of Scotland and the Newcastle Building society all announced rate cuts on a range of products. Other lenders are expected to follow suit – prompting some observers to suggest that the “credit crunch” has at least peaked and a gradual return to more normal conditions has already started.
Thirdly the National Housing Federation has just predicted a massive increase of 25% in house prices in England and Wales by 2013. The Federation bases its predictions on an increasing demand for households caused by social trends such as longevity, coupled with limited supply.
All and all this information can only encourage householders, who have been a beleaguered species recently. David Borrowman Caesar and Howie managing partner comments “We have little doubt that housing assets will go up in value over the medium term. All the data we have, increased longevity, immigration, different family groupings point to increasing demand over time for houses. Perversely the current slow down in building units will simply fuel higher price rises in the future, once the current difficult market conditions start to improve”
Tags: housing market, interest rates
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