Browsing articles tagged with " bank lending"
Feb 19, 2012
blogadmin

Location Location Location – West/South Hampstead

In my last blog entry I wrote about property prices in the affluent areas of London, and why property prices are holding in the affluent areas. West Hampstead (this includes South Hampstead) is a unique area because it has three mainline stations, you have the Underground Jubilee Line Station, the Overground Station and the Thameslink, and these excellent transport links have made the area very popular with the city slickers. Being in zone two it has quick and easy access into the city. As an agent I used to describe to prospective buyers and renters that West Hampstead has a village type feel which is another attraction of the area, but now days I find it difficult to say this as in the past few years we have seen the likes of Tesco and Sainsbury move in so the local family businesses and boutiques are slowly vanishing.

You may or may not be surprised to learn that West Hampstead has the second highest number of estate agencies in London, a whopping 37 agencies, it was 40 at one point! As you walk down West End Lane, every other shop you will notice an estate agent. We used to have our own offices on West End Lane, until we received an offer which was difficult to refuse and we sold our premises to a restaurant and takeaway business. Along with estate agents, café’s, coffee shops and restaurants are also plentiful in West Hampstead.

My family had been in business in West Hampstead for more than thirty years and we have seen how the area has evolved. Due to the location, transport links and the character of the area it has been very popular with young affluent professionals. The lettings and sales market has always been buoyant in West/South Hampstead. Even during the tough times when prices have been falling elsewhere in the country, West Hampstead has managed to hold its own and buck the trend; such is the appeal of the area.

The prices in West/South Hampstead have been high for some time and the crash in 2008 did not seem to have much impact but I have seen signs in the last 6 months that the prices are correcting in the area. As the lending has become tighter and with the risk of redundancies, the high flying city slickers have become more cautious and are not prepared to splash out on properties like they used to. A few of months back I saw there was a two bedroom flat being marketed in South Hampstead for £749,950 (Leasehold) it had no buyers for several months and then in the end it sold at the end of last year for £649,950. That is a whopping 100k less than the asking price. This perhaps shows that the high prices people were prepared to pay to be located in West/South Hampstead might be fading slightly. You see it is all about valuing a property correctly, evaluate what the property has to offer and do not be afraid of putting in lower offers (by that I mean realistic low offers not absurd offers), what’s the worst that could happen it will be rejected. The important thing is to evaluate a property correctly so that you offer the right price; take into account the location, the size of the property (how much space are you getting for your money?), the quality of the property (is the property in good condition, consider if you will need to spend any money on the property), make comparisons with other properties in the area and have a look at past sold property prices in the area. Valuing a property is not dependant one thing alone, you have to weigh up and consider all the different factors.

I am not saying that the prices in West/South Hampstead are going to fall dramatically or you will be able to pick up bargains, but I do believe that the prices are going to be more realistic and you will have a better chance of paying market value prices now, as vendors who cannot sell their properties, are much more open to offers. Provided that you buy wisely, I think that you can never go wrong if you buy a property in West/South Hampstead. It has always had an excellent buy-to-let market, the rental incomes have always been consistently high and at present they are at an all-time high. For investors West/South Hampstead is still at the top of my recommended areas, it will never lose its appeal. The transport links are being improved, the Thameslink station has been vastly improved with a grand ticket office now on Iverson Road which has lift access, making it ready to handle the high volumes of commuters which will pass through West Hampstead during the Olympics. Both the West Hampstead Jubilee Line and Overground Line go to Stratford, so West Hampstead will be a thriving transport hub during the Olympics and savvy landlords would be wise to cash in on short-term holiday lets!

The Agency currently has two superb brand new flats for Sale in South Hampstead

http://www.the-agencyltd.com/index.php?page=29&pref=33

http://www.the-agencyltd.com/index.php?page=29&pref=34

 

 

May 7, 2011
blogadmin

With UK property prices falling, is it the right time to buy?

Falling UK property prices

In the past few months we have seen both Halifax and Nationwide reporting that house prices have fallen, but there have also been occasions where they have contradicted each other, where one reports rising prices and other falling prices. The land registry figures also show conflicting evidence. With growing concerns over the economic outlook and public spending cuts weighing heavily on the minds of would-be purchasers, it is no wonder they are confused and unsure on whether they should wait or buy now. So the question is what is happening with house prices and where are they heading?

In my view house prices have been on a downward spiral since the back-end of 2008, although not all the figures and surveys released would agree with this. When the credit crisis erupted and reports began to come out about property prices falling, everyone refused to believe it, how can property prices fall? We have been riding a wave of ecstasy where we believed that property prices would just keep rising. The property prices have been over-inflated for some time now, the incompetent and greedy lending policies of banks and mortgage companies had fuelled the property price growth to a confounding level. People on earnings of 20K a year were obtaining mortgages 8-10 times their salaries, and it was this sort of incredulous behaviour which was creating a bubble waiting to burst. The underlying fact is that everything was being fuelled by greed, estate agents were also grossly over-valuing properties, because we all know the higher the price an agent sells a property at, the higher the commission they earn.

It was not until the credit crisis hit and the banks reigned in their lending policies that people realised that actually I cannot afford to buy a home at these super inflated prices. Many who found themselves out of a job suddenly learnt how difficult it was to repay the exorbitant mortgages they had taken on, which ignited a spate of repossessions. So why do I think prices are coming down and have come down? Well it comes down to affordability, we are taking reductions in our salary, unemployment is high and the banks do not want lend, all these factors point to a fall in house prices. If we want to see the property market moving again then prices will have to come down to a level where first time buyers can afford to buy again and get a mortgage. First time buyer participation is central to any sustained recovery in house prices and the property market as a whole.

Tightened Mortgage Lending

Mortgage lending has become so tight that it is fuelling the decrease in house prices. Since the banks tightened their lending, the common scenario has been: ‘Mike and Julie find a property that they like, the property is on the market at £350K they negotiate the price down so that vendor agrees to a purchase price of £325K, vendor and buyer are agreed and along comes the bank with its mortgage valuation, and it comes in at £300K. Bank says we will lend you 85% on our valuation but not on your agreed price. Mike and Julie need to make up a difference of £25K which they simply don’t have and the purchase falls through.’ I am sure there are many people who can relate to this situation as it has become so common, the mortgage valuations are all being down-valued because the lenders want you to put in as much equity as possible, this is another indication of why prices are and should be coming down. The stark reality for first time buyers is that if you do not have at least 30% to put down on a property, you will find it extremely difficult to get a mortgage.

So why are the lenders not lending? Well they are nervous about the state of the economy and the future direction of house prices, and some say their ability to fund their mortgage lending is constrained by the demands from the regulators to bolster their capital reserves. This means that only the best quality borrowers are being offered loans, and on much tighter criteria. The concern is that we are not clear out of the recession yet and there is a possibility of a double dip recession, it is this fear and uncertainty which is leading the banks to fill their coffers for rainy days. The banks will never be worse off and for some of them to report profits in the last year is absolutely confounding, when a year earlier they were all in trouble writing off billions!!!

Where are UK property prices heading?

Coming back to the direction of house prices, I feel in 2011 prices will continue to fall until we reach the middle of the year and then I expect they will become stagnant for the remainder of the year and not until the beginning of 2012 we will begin to see a rise again. With the Olympics in 2012 there will be an influx in UK tourism, which should help the British economy and generally the feeling will be more optimistic for 2012. You tend to find that when the public and the markets are both optimistic then generally the trend is for things to rise again. For those who want to own their own home, 2011 will be the right time to buy, but I would advise you keep your search on-going because if you find a property that you like then you can negotiate hard and get the price down. Do your research before you buy, speak to estate agents even though you have to take some of what they say with a pinch of salt, I tell you this being in the business myself, unfortunately some agents give the few honest ones a really bad name (after politicians, lawyers and bankers now, estate agents are probably the least trusted).

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