Posts Tagged ‘housing market’
Monday, September 15th, 2008
House market report
We realise how the trying times in the property market are affecting everyone in your position. It is very difficult trying to sell houses at the moment. The house market is often in the media spotlight and hardly a day goes by without some report or other making this or that prediction. Some of these reports are based on National UK data and may have limited application to the local market. I thought it might be helpful to pass on to you the considered view of our partnership on what we think is happening - and how things might develop in the future.
Current Sales
The first thing to note is that there has indeed been a big slump in the market in the Central Belt this year. Some agents and organisations are stating sales are down we understand by over 60%. Our own figures show a slump of 31% - so we seem to be doing better than many but these are still unprecedented drops. Nothing like this has been seen in Scotland before.
Number of Buyers
The reason for the slump is very clear however - it has been wholly caused by the “credit crunch” which has severely limited the ability of buyers to get mortgage funding. We have noticed no lack of willingness in the hundreds of potential buyers for whom we act to go ahead and buy - but many have been frustrated by not being able to get enough of a mortgage. Many of these buyers we believe will come back into the market when they can.
Prices Currently
If anything we think prices are certainly not going up (despite some earlier newspaper reports) and at best they are stable or trending down. ESPC is intimating their figures show a drop year on year of 6.5%. Our own records suggest that that is probably about the biggest fall we have seen.
Will prices fall badly?
The truth is we do not really know. Our feeling is that prices in the central belt will probably not fall very dramatically provided that there are no mass job losses in the region. We think that the will to buy is still there and there is pent up buying demand which has been held back by lack of mortgage availability and also by inability to sell. When buyers feel more secure and can get the money - they will come back into the market. Where there may be bigger price falls might be in particular areas where there is clearly oversupply. For example some parts of Edinburgh and Leith have a huge number of modern flats available with many fewer buyers in that sector than was expected.
Is there any positive news?
Well actually there is a lot of positive news - all of which has started to come out in the last few weeks only.
- Mortgage rates have come down to pre credit crunch levels
- Mortgage availability has dramatically improved - even 95% loans are back
- Stamp duty has been cut for house purchases up to £175,000
- Government help is available more quickly for mortgage arrears
- Further mortgage rate falls are predicted in the future
We believe all these factors coming together are going to ensure buying demand picks up again. Whether it all starts to move again quickly or gently and when exactly we see the effects, we do not know - but buyers will be back. The current market turmoil is unprecedented but people still need homes to live in. We do not believe most families would be happy to rent all their lives - and indeed rental property is quite limited in type in most areas.
What can sellers do to help?
We think there are two key issues here in this market. The first is sensible pricing in accordance with what market information tells us. The days of getting huge “over the asking” prices have gone for the moment. Be realistic and remember if you hope to trade up in the market you need only offer a realistic price also when buying. The second main thing sellers can do to help themselves is to be patient. Sales are taking a lot longer across the board and sellers have to “go with the flow” on this. The market is still operating - it is far from being completely dead - but buyers are not around in volume. But remember you only need one buyer for your house, not five or six and through time that buyer will turn up and buy the house if it suits requirements and is reasonably priced.
What’s the longer term outlook for houses?
Well so many articles are written about house prices it is easy to become obsessed by price movements. The truth is over 95% of our buying clients buy a house suitable for them and their families and not just as an investment. Also most families stay in houses for several years - which means short term house price movements don’t effect them. Even now if prices are down by a few percent many people have been in houses for a good number of years and will have the benefit of several years price increases when their sale comes through. Typically if someone bought a house a dozen or so years ago the value may have gone up by as much as 300%, so a shading of the price on sale of a few percent from last years level is not great but not disastrous either.
Our view at Caesar and Howie is that at some stage house prices must start to trend up again in Scotland for various reasons:-
- Increasing population
- Increasing immigration (in particular Polish)
- Increasing longevity
- Social change creating more family units
- Reduction in new building this year will cause a future supply shortage
- The economic cycle will move back to more growth in the future
All of these issues mean increased demand for housing over time - which must logically mean increasing prices over time. Consequently in the longer term we still see houses as a good investment. Whilst we recognise that investment issues play only a small part in families’ house buying plans - it is perhaps comforting to know that in the long term buying a house will prove to be worth it financially as well as getting your own roof over the family’s head.
If we might take a “weatherman’s” view of the market I think we’d probably be saying something like “still pretty wet and rainy but conditions will improve in time and some gentle sunshine should arrive eventually in most areas”. The difficulty we have is predicting the timing of the improvement. Some commentators say it has already started, some say it will be next spring some say even later. We just do not know - which is why for now patience and realism is perhaps the best approach.
Tags: House Prices, housing market, Market Report
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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 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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Tuesday, July 15th, 2008
The Council of Mortgage Lenders (CML) has come up with a new policy which they hope will rescue the housing market. They are currently pressurising the government to adopt the policy.
The CML have stated that the biggest problem of the stagnant housing market is the lack of mortgages which are being made available to the general public and in particular first time buyers.
The innovative plan drawn up by CML differs from previous policies suggested as it will be the investors themselves who will retain the credit risk and the government will not be required to guarantee the scheme.
The CML hoped that the government would agree to this new proposal as they were confident that if adopted it would allow the housing market to recover quickly.
Tags: housing market
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Thursday, June 12th, 2008
The release of figures from the Government confirms the resilience of the Scottish house market. The Communities and Local Government department have issued its house price index for the year to April 2008 and they show annual house price growth at 7.7% in Scotland to be the highest for any region in the UK. However this does also show a price growth rate slower for Scotland than in the precious year which had been 9.3%. Within the UK figures as a whole there is shown to be a drop in the prices of flats of 0.3 per cent.
John Renton senior valuer at Caesar and Howie confirmed the figures reflected local experience in the Central belt. I think in most of Central Scotland prices are more affordable in terms of their relationship with incomes than in other parts of the UK. That’s what keeps the Scottish market from big ups and downs in my view. On the other hand continued John “I think the data is a little out of date and I think prices are pretty static at the moment. Sellers need to price sensibly and be patient to get their houses away”.
Tags: housing market
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Tuesday, May 27th, 2008
Never has the “House Market” been more in the news than it is now. But so far all the articles I have seen are about houses as a financial investment and whether prices will go up or down. Generally the slant on these articles seems to be it is bad news for prices to go down and good news for them to go up. Certainly there are many in the market to make money one way or another but perhaps many commentators miss the fact that this is a market mostly for homes for families and individuals. This is not a straightforward commodity market. It therefore seems to me that most buyers want a suitable home first and foremost with the secondary hope that it might appreciate in value somewhat over their lifetimes. Long term social trends in this country with smaller, different and more regularly changing family units would tend to suggest a move over time towards more households. Similarly increasing longevity and immigration would seem logically to add through time to housing need. So my feeling is that subject to fluctuations here and there the probable long view is that houses should appreciate in value.
If that is right buyers and sellers alike should not lose confidence in the market but respond sensibly to what seems to be happening in the short term. Currently in the short term the house market looks to be becoming a little smaller with fewer transactions taking place - and to have changed from the rampant sellers market of the last few years to a buyers one - where what pressure there is on prices is downwards.
In this scenario if you start looking at the market from the “home” perspective things look a bit different and more encouraging than perhaps most current commentators are saying. For example newcomers to the market will gain should prices fall. Again if someone owns a property and wants a bigger one - things get better if prices drop. Say prices drop 5% and your were intending selling at say £150 k and buying at about £250k your sale price drops by £7500 but your purchase price drops by £12500 - so you gain - and the higher up the scale you are the more you gain. Usually people trading up are doing so to accommodate the arrival of new member of the family - they are not moving just to make money. Losers in a market where prices are falling would be people trading down - but these tend to be older people who have been in their house a long time and whose mortgages are paid off. So the loss here is generally a paper one anyway as opposed to an actual loss of cash.
Possibly the only real losers may be those who buy with a large mortgage and have to move or sell at a time outwith their control when prices are falling. They may have just bought - then lost their job or have to move job forcing them to sell. This group would suffer on a price fall - but how many homeowners come into this category - probably not very many.
My feeling is that long term prospects remain good in this market, but care must be taken because of the short term buyers market we are in. The short term difficulties are causing delayed sales and creating English like chains where deals are not finalised till the last minute. For sellers that mean selling before you buy and even being prepared to take temporary accommodation before completing your purchase. It also means being patient in the sales process and completely sensible on prices. For buyers it means not paying too much now and also not buying in the hope that a quick sale on can deliver a profit in no time - that will not happen. It means leaving a little spare in the budget to cope with mortgage costs maybe rising. Finally It also means being prepared to see your new property as first a suitable home for you and your family now and only over time a financial investment.
Tags: housing market
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Thursday, May 8th, 2008
The Scottish housing market is still feeling the impact of the slump in house prices throughout the rest of the UK, it has been claimed.
In a report that may be of interest to househunters hoping to buy a house in Scotland, Teresa Hunter, writing for Scotland on Sunday pointed out that Scottish buyers still have to “borrow from the same pool of mortgages”.
She stated that although Abbey and the Bank of Scotland have ‘trimmed’ their deals recently, prices remain high and may do for some time.
“Undeniably the market is slowing, and I’m not convinced Scotland can remain immune, although it may sidestep the excessive price corrections already evident in some overcooked hotspots in the south,” she said.
However, the figures appear to disagree, with the March Halifax House Price Index indicating that over the last ten years Scotland has experienced a 271 per cent increase in house prices.
Tags: credit crunch, housing market, Sottish buyers
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Tuesday, May 6th, 2008
Scottish first-time buyers may be left in a negative equity position if they try and rush onto the housing ladder, if one organisation is to be believed.
Iammoving.com has claimed that first-time buyers should adopt a ‘wait and see’ approach to house buying, in that they should gauge the developments in the market before they make a purchase.
Peter Beckett, business development director of the company, said: “If you rush into something now, you could find yourself in a negative equity position, having borrowed in order to be able to afford to secure the property in the first place.”
Mr Beckett suggested taking out a loan within the family, using savings or inheritance as advisable ways of funding a first property. In addition, he suggested making the commitment in conjunction with someone else in order to ease the burden.
Meanwhile, research from Iammoving.com has revealed that one in three first-time buyers are gambling on their house purchases by taking out unsecured loans and using credit cards for deposits.
Tags: housing market, property, Scotland
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Friday, May 2nd, 2008
In news that may be pertinent to environmentally-friendly househunters looking to buy a house in Scotland, the Federation of Master Builders (FMB) has advised against the creation of eco-towns.
Brian Berry, director of external affairs at the FMB, has claimed that, rather than investing in new eco-communities, a reform of the planning system should be adopted to supply higher environmental standards to existing houses.
“What we want is high quality housing in every village and town and that is much more sustainable than building new settlements that are deemed to be eco-towns,” he said.
Mr Berry argued that sustainable standards are required nationwide and not just in new settlements; however, he acknowledged that there is a need in the UK to create more housing solutions.
Zero-carbon homes will cost more to purchase than standard properties, according to 42 per cent of builders questioned by the National House-Building Council.
Tags: housing market, new homes
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Wednesday, April 30th, 2008
Further weakness in the UK’s housing market has been exposed by statistics revealed by Nationwide, something that may be of interest to people looking to buy a house in Scotland.
The building society’s recorded house price figures show that they decreased by 1.1 per cent, representing a fall of one per cent over the past year.
Fionnuala Earley, Nationwide’s chief economist, commented that this follows the trend that has occurred over the last six months and “reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions”.
Ms Earley went on to say that a lack of demand from people stepping onto the housing ladder - potentially including Scottish first-time buyers - higher mortgage rates and tighter lending criteria have resulted in a record low in terms of house purchases.
However, it was claimed yesterday (April 29th) by property consultancy Knight Frank that the Scottish market was “remarkably robust” compared to the rest of the UK, which may be welcome news to those hoping to buy a house in Scotland.
Tags: credit crunch, House Prices, housing market
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