There’s blood on the streets of Britain’s housing market. Five successive interest-rate rises have gouged deep wounds, but the coup de grâce could be yet to come – an estimated 2m people on fixed-rate mortgages will have to take out new loans at higher rates within the next 12 months, sending their monthly payments soaring and reducing their ability to trade up.
Of course, the market, especially in London and the southeast, is being underpinned by a rising population and a shortage of housing. But we can only handle a certain amount of debt, which means prices cannot keep on going up at the same rapid pace for ever. There comes a point when something has to give.
Over the past decade, it has been possible to trade up the ladder simply by owning a place on it – as I know from my own experience. During that period, without moving more than a mile within the same patch of southwest London, I have gone from my first flat right through to a large house with private parking on my favourite street, all by refurbishing and extending each property. The builders move in next week to start digging out the cellar, which will mean that, so long as I can still afford the mortgage when our fixed-rate deal expires, we – that’s the wife and two kids – are all set for the future. I have no intention of moving again. Nobody has a crystal ball. I certainly struck lucky a couple of times with market timing, but we also bought and sold well, and did the right work on the right properties.
In paper terms, bricks and mortar have been making money at a far greater rate than I’ve been earning from my day job. And that’s true of many people. Owning land or property has always been part of the British culture, but it became an obsession during the boom years.
Having read, watched or surfed our way through the extraordinary amount of magazines, television programmes and websites dedicated to all things property, we’re all now fully fledged, albeit self-certified, property experts.
Yet it has been much too easy (at least for those of us who got on the ladder early enough, if not for today’s struggling would-be first-time buyers). I meet people all the time who have made big mistakes in the past – going way over budget on the renovation – and have gone without punishment, as the market has effectively caught up and washed away their mistakes.
Don’t expect that to continue. Make a mistake in today’s market and you will have to pay the price. Most of us are not nearly as clever as we like to believe – and, yes, I include myself here. The genuinely stupid people, however, are the ones who, in the misguided belief that they were truly better off just because their house was worth more, went out and spent their increased equity – or paper money – on cars and holidays.
We’ve come to expect to make money on our homes. We’ve even come to demand it. So it is going to be a nasty shock when a slowdown means that isn’t going to happen. We will have to make a conscious effort to outperform the market, rather than simply ride it.
So, there you are, Mr and Mrs Average, with a sprog and a dog, squashed into your three-bedroom house, thinking about trying for another baby and worrying about needing a bigger place. What should you do?
Let’s imagine that you already have a decent slice of equity, but no great promotions or pay rises on the horizon, and that one of you would like to give up work when junior number 2 comes along. With the high costs of moving, and without the market to help this time, you’re going to have to get it absolutely bang on.
You will be forced to make compromises somewhere, so focus on finding flexibility – a home with room to grow into. It is always cheaper to build extra square footage than it is to buy it on the open market. You need to buy a property you can improve in terms of internal layout or fittings: one you can extend outwards (or up or down), or one in an area that becomes increasingly popular during the time you live there. The best opportunities combine all these elements.
Remember: “Location, location and location.” Well, I would say that, wouldn’t I? But it remains the truth – you’ve got to get it right to stand the best chance. The next district to “come up” and benefit from above-average price growth is likely to be one that borders an area that is already popular. Most buyers will be prepared to compromise on their ideal location in order to buy a larger property adjacent to their favoured position – hence this ripple effect. Even in highly developed and mature markets, it is still possible to find a few postcodes surrounded by more expensive property on all sides. If the architecture in these emerging locations is similar, then, however shabby or unfashionable the area, the anomaly in values is likely to correct itself at some point.
Much of our housing stock was designed and built with the lifestyles of our Victorian and Edwardian ancestors in mind. These days, there is a preference for more open-plan, less formal living, with fewer but bigger rooms. Opening hallways, removing doorways, shifting corridors and repositioning partition walls are simple changes that make better use of the space and can provide a more contemporary environment, leading to subsequent increases in value. Kirstie Allsopp, my co-host on Location, Location, Location, recommends lying on the floor and looking up at the ceiling to gain a better perspective.
To increase the likelihood of outperforming the market, you’ll need to work harder to find a house that combines as many of the above elements as possible. Remember, any property can be a good deal – provided you buy at the right price.
Home straight – the best in the business
Today, Phil Spencer, from Channel 4’s Location, Location, Location, joins Sarah Beeny and Kevin McCloud as part of the Home team
Monday, 31 January 2011
Easy money from property? - Times Online
Sunday, 30 January 2011
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Saturday, 29 January 2011
Larry Summers vs. the Tiger Mom - WSJ.com
But he recalled anyway some of his more turbulent exchanges there, like the time he once told puzzled faculty members: "I think you have to decide whether achievement is the route to self-esteem or whether self-esteem is the route to achievement. I think you guys think self-esteem is the route to achievement, and I think you're wrong.
German Real Estate More Attractive Than UK To Some Investors
By Jonathan Buck Of DOW JONES NEWSWIRESLONDON (Dow Jones)--Germany has overtaken the U.K. as the preferred location for investment in nonlisted real estate funds, according to a survey released Tuesday by the European real-estate investment body Inrev.
"This is a dramatic change in sentiment," said Inrev's director of research and market information Lonneke Loewik.
"While the U.K. remains well represented in the top 10, investors seem wary of higher property prices and a slower economic recovery in the U.K., but attracted by growing confidence in the German and other European markets," she said.
The U.K. is now less attractive than Germany, France and Nordic countries, according to the survey, the seventh of its kind, which was carried out last month and gauges insights from investors, funds managers and fund of fund managers. Inrev, the European Association for Investors in Non-listed Real Estate Vehicles, has 341 members drawn from leading institutional investors, fund managers, promoters and advisors across Europe and represents real-estate assets under management of over EUR135 billion.
In terms of investment strategies, 90% of investors expressed a preference for a single country strategy, an increase of 13 percentage points on 2010. Almost 90% of investors also preferred a single sector strategy, such as retail, office or industrial.
"These statistics suggest that investors believe that possessing a deeper understanding of a particular location or sector could be less risky than the benefits of diversification through a multi-country, multi-sector strategy," Loewik said.
Appetite for the nonlisted real-estate sector has increased over the past two years, with over half of respondents intending to increase their allocation to the nonlisted sector. Access to expert fund managers and the importance of risk/return ratios were seen as key influencing factors.
Though transparency has improved, investors were looking for greater involvement and greater control, with 90% of investors surveyed preferring to be active investors compared with less than 80% last year.
-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; jonathan.buck@dowjones.com
Friday, 28 January 2011
Banks will have to raise billions in capital to cope with credit crunch, says FSA - Times Online
Contingency plans should be made to deal with an economic downturn as severe as the recession that struck in the early 1990s, according to the head of the City's watchdog.
Hector Sants, chief executive of the Financial Services Authority, has warned banks they will need to raise billions of pounds in capital to cope with a worsening credit crunch.
His comments follow yesterday's announcement from the Royal Bank of Scotland (RBS) that it made pre-tax losses of £691m during the first half of this year - the second biggest UK banking loss in history.
For the same period last year RBS posted profits of £5 billion.
In an interview with the BBC Mr Sants said he had expressed his fears "fairly forcibly" to bank bosses.
Asked whether financial problems could become as bad as those of the 1990s, Mr Sants said banks should "plan on that type of assumption" and have enough capital behind them to absorb the impact of the credit crunch.
June saw the biggest increase in the number of people claiming unemployment-related benefits since 1992, while, according to the Council of Mortgage Lenders (CML), almost 19,000 homes were repossessed in the first half of this year which is 48 per cent rise compared to the first six months of 2007.
Homeowners are struggling to meet mortgage repayments and are unable to remortgage their homes to free up extra funds.
Mr Sants also warned there would be "consequences" for banks that pay employees big bonuses for risky deals and said such rewards had played a part in causing the economic problems now being faced.
Credit crunch explained | Property & Mortgages | Times Online
IT was once an arcane term only known to economists, but the phrase "credit crunch" has been so widely used over the past two years that it has been added to the latest edition of the Credit crunch: timeline of events
Consumer Credit Counselling Service
Financial Services Authority - Mortgages made clear
Five videos
Thursday, 27 January 2011
UK Investments, Savings, Bonds, ISAs, Hedge Funds & Property
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Wednesday, 26 January 2011
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Saturday, 22 January 2011
Put your home to work - Property, House & Home - The Independent
Rent out your parking space
You can earn an average of £30 a week from an empty garage or driveway, according to Anthony Eskinazi, founder of parkatmyhouse.com. "If you live near a major sporting or music venue, a busy airport or train centre, or in a city centre, you could earn a lot more. Some of our users make £7,000 a year."
To assess your space's value, use parklet.co.uk's price-guide tool for longer-term parking and www.parkatmyhouse.com for short-term parking. All the big parking websites are free to list your space on and although most take commission, usually 15 per cent, they sort out contracts and offer a secure method of payment.
Property prices: What to expect - news and predictions | This is Money
What's the latest?
Commentary by property editor Simon Lambert
The December Rics report provided further evidence that the property market is headed for another freeze.
A lack of confidence has combined with continuing low interest rates to create a wait-and-see stand-off. Buyers are understandably cautious about paying over the odds, while sellers still don't want to accept they must lower their expectations and are not forced to do so, as mortgage rates are low.
Clive Rutland, Rutland Chartered Surveyors, Southampton, Hampshire, seems to sum up the mood perfectly.
'The public spending cuts, the budget and the weather have all combined to provide ideal circumstances for potential buyers, and sellers, to do nothing,' he says.
'People are sat upon their hands waiting for some better news or certainty.'
Read more: http://www.thisismoney.co.uk/property-prices#ixzz1BlIJ8WJE
Friday, 21 January 2011
Thursday, 20 January 2011
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Wednesday, 19 January 2011
Tuesday, 18 January 2011
Economists downbeat despite housing market activity - Property, House & Home - The Independent
Economists downbeat despite housing market activity
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Economists remained downbeat about the prospects for the housing market today despite evidence that activity had bounced back in January after stalling during December.
Nearly two-thirds of estate agents said the number of potential buyers registering with them during the first two weeks of January was higher than they would normally expect for the time of year, while 26% said levels were consistent with the average for the month.
Related articles
At the same time, 45% of estate agents reported an increase in enquiries from people considering selling their home, according to the National Association of Estate Agents.
The rise in interest from potential buyers is in line with figures released earlier this week by property website Rightmove, which recorded its busiest day ever on January 11, with a record 28.3 million pages viewed.
The pick-up in interest comes after the Royal Institution of Chartered Surveyors (Rics) said the number of properties coming on to the market fell at its fastest rate for 18 months in December.
Enquiries from potential buyers also fell for the seventh consecutive month, with surveyors saying the shortage of mortgages, particularly for first-time buyers, was the biggest barrier to any improvement in the housing market.
Unsurprisingly, given the fall-off in activity, the majority of surveyors also continued to report falling house prices, with a balance of 39% saying values dropped rather than rose in December, although the figure was a slight improvement on the 44% who saw falls in November.
But there was a glimmer of hope in the Rics figures, with the number of completed sales during the three months to the end of December stabilising at an average of around 15 per chartered surveyor estate agent, although this is still well down on the long-run average of 27.
The shortage of sellers, which the Rightmove figures indicated had continued into the new year, could also be good news for the housing market, as it should go some way towards correcting the current mismatch between supply and demand which has been putting downward pressure on prices.
A shortage of homes for sale, combined with an increase in potential buyers, could help to moderate the current price falls.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "Clearly if the house supply-demand balance moves increasingly away from buyers towards sellers, it will provide significant support for house prices.
"Even so, we still consider that the fundamentals remain largely unfavourable for the housing market."
He added that speculation the Bank of England may raise interest rates in the first half of 2011 to counter above target and rising inflation, was further bad news for the housing market.
He said: "Any early interest rate hike would be likely to weigh down on prices - not just the rate rise itself but the impact on potential house buyers' psychology resulting from the fact that they would be facing rising interest rates."
He expects prices to fall by around 7% during 2011.
Ed Stansfield, chief property economist at Capital Economics, said: "Activity and house prices both softened in December.
"Although the drop in sales instructions was particularly striking, it does not necessarily follow that supply shortages will underpin house prices this year.
"We think that the labour market holds the key to the house price outlook. If, as we expect, unemployment rises significantly this year, we think that house prices could drop by 10%."
Meanwhile, figures from the Department for Communities and Local Government showed that house prices fell for the fourth time in five months during November, dropping by 0.1% to average £208,585.
Annual house price inflation also slowed for the sixth month, although it remained positive at 4%, its lowest level for a year.
The annual rate of growth worsened in all regions of the UK during November, apart from London, the East and the South West, with Scotland, Northern Ireland, the North East, North West and Yorkshire and Humberside all reporting year-on-year price falls.
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Monday, 17 January 2011
40% 'will sell up to pay for care' - Money News - MSN Money UK
Four out of 10 people fear they will have to sell their home to fund long-term care as they get older, a report indicated
Four out of 10 people fear they will have to sell their home to fund long-term care as they get older, but the majority of people have never discussed this with their children, a report has indicated.
About 38% of people aged over 55 think they will be forced to sell their property to pay for care for themselves or their partner in the future, according to law firm Dickinson Dees.
The figure rises to 44% among those aged between 35 and 54, with only 11% of people claiming it was not at all likely that they would have to sell up to pay for care.
But despite the high number of older people who think they will have to sell their home, 32% of adults aged under 55 said that inheriting their parents' property was important for their own financial stability during retirement.
Three-quarters of this age group have never discussed with their parents how they will meet the cost of their care as they get older, even though 29% of parents aged over 60 who have not broached the subject with their children would welcome it if they raised the issue.
Deborah Jude, a partner within the wealth management practice at Dickinson Dees, said: "Families need to break the taboo of silence on infirmity and mortality that currently leads to two generations being robbed of a pleasant retirement, replacing it with the misery of a battle to meet escalating care costs.
"Plans need to be drawn up when people reach retirement, not once they are already drifting into infirmity and the risk of health problems.
"Families who do not discuss these issues and plan ahead face a potential financial disaster when homes are subsequently sold to cover care costs - devastating the retirement assets of both the elderly and their grown-up children, who had counted on inheriting the property for their own retirement plans."
The research also found that 57% of people thought care costs for elderly people should be paid for by the Government, rather than individuals.
YouGov questioned 4,490 people between July 30 and August 2.
Sunday, 16 January 2011
Money blog + House prices blog | Money | guardian.co.uk
Acadametrics data shows third monthly fall in house prices, as one industry analyst says the market is 'stuck in the doldrums' Continue reading...
http://www.guardian.co.uk/money/blog+series/house-prices-blog
House prices surveys: who publishes what and when | Money | guardian.co.uk
House prices surveys: who publishes what and when
A CML press release shows why the many house prices indices vary so much, and which are based on the most reliable information.
http://www.guardian.co.uk/money/blog/2010/dec/24/house-prices-surveys
Homeowners must 'act quickly' for best fixed-rate mortgages | Money | guardian.co.uk
* Money
* Mortgage rates
Homeowners must 'act quickly' for best fixed-rate mortgages
Despite the Bank of England base rate remaining at an historic low, swap rates have been rising over the past few weeks, mortgage experts warn.
http://www.guardian.co.uk/money/2011/jan/14/homeowners-best-fixed-rate-mortga...
Mortgages: Fixed-rate or tracker? Or both together? | Money | The Guardian
Mortgages: Fixed-rate or tracker? Or both together?
Choosing between a tracker and a fixed-rate mortgage is becoming harder to judge. But, as Patrick Collinson found, you can mix and match to guard against uncertainty
http://www.guardian.co.uk/money/2011/jan/15/mortgages-fixed-rate-or-tracker
Dealing with a deceased person's money and property : Directgov - Government, citizens and rights
Small estates and dealing with immediate debts
If the deceased person left a small amount of money (usually £5,000 or less) in his or her estate, it may not be necessary to obtain a grant of probate or letters of administration to withdraw money from the deceased's account with a bank or financial institution. This can be useful if money is needed from the deceased’s estate to pay for immediate expenses such as the funeral, mortgage or house insurance. Each bank or financial institution has its own rules on what proof it requires and how much money it will release to the person acting in the estate of the deceased.
If the deceased person had several bank accounts, each holding only a small amount of money, but in total exceeding £5,000, then it may still be possible to access the money in those accounts without a grant of probate or letters of administration. Again, each individual bank or financial institution will decide whether or not to release the money to the person acting in the estate of the deceased.
If a bank or financial institution does not require a grant, it may ask the person acting in the estate of the deceased to sign an indemnity. The purpose of this to protect the bank or financial institution if it later turns out that the money has been paid to the wrong person.
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Saturday, 15 January 2011
Garden Design Crouch End
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Friday, 14 January 2011
Property And Money by Brett, M at Construction Books Direct
Another book on property investment.
Thursday, 13 January 2011
Investing in Property, News, Housing Market - MoneyWeek
Everyone talks about money and property, not so easy to do however.
Wednesday, 12 January 2011
Eleven ways to make money in 2011. #7: speculate on property | Money | The Guardian
Eleven ways to make money in 2011. #7: speculate on property
It'll be hard to go wrong buying within the M25, and there will be money to be made outside it too, if you are predatory
- Henry Pryor
- The Guardian, Saturday 1 January 2011
- Article history
The housing market will be driven this year by the three Ds: death, debt and divorce. Photograph: Corey Hochachka/Design Pics Inc/Rex Features
Someone is going to make a killing in property in 2011 and, as the National Lottery slogan goes, "it could be you." Despite most forecasters predicting falling house prices, look at what the property investors of yore did. They didn't make money in property because they sold it for a lot but because they bought well, and I predict 2011 to be a year you can buy property well.
Let's be clear, 2011 will also be a year you can lose your shirt – and many will. A government report in December suggested that as many as 4 million mortgage holders would be in negative equity if prices fell 10%. The main house price indices confirm that they are already on the slide. It is the people who have got it wrong who will provide many of the deals for those who will lay the foundations to a property fortune.
Investing in any asset is not for the faint-hearted: if you are squeamish, go and find a friendly deposit account. Making money in property requires you to take advantage of others' misfortune. The three Ds will drive the market this year: death, debt and divorce will be the motivators that throw up the bulk of the opportunities.
Geographically, the UK residential market will be divided between the gated community within the M25 and everywhere else. The London market will prosper and almost anything you buy in the right location and at a sensible price will increase in value in 2011. Outside, you will need to follow my carnivorous instincts when I am advising clients and be predatory. Unless a property is seriously cheap and the seller is offering his first born to take it from him, the chances are you will find you are paying too much for something that will be cheaper tomorrow.
This year we will return to the Sarah Beeny school of property investment. Look for something you can add value to. The days of sitting back and watching values rise like barometric pressure are history. Look to convert old pubs. Watch out for commercial properties that were originally houses – they will readily convert back. Identify what people are looking for, check that they can actually buy and then go source the raw material.
On the subject of buyers, forget the literally "poor" first-time buyers. Let the government worry about building for them (which they won't). No one wants to lend to them and they struggle to save the £35k deposit out of taxed income now that they have to repay their student loans. People downsizing have cash and they don't need to borrow.
Abroad, follow Ryanair. Where can you fly for a fiver? Look to buy or rent a second home there. As with the UK, follow the smell of rotting meat and make derisory offers.
Don't forget buy-to-let. It may not be fashionable to say it but income is good and, if you're clever, you should also get capital growth.
Housing expert Henry Pryor was an estate agent for 25 years and now advises high net worth and media clients. More at housingexpert.net
And here are the rest of our 11 money-making tips for 2011:
1 – make things, 2 – get a better paid job, 3 – buy and sell shares, 4 – open your own coal mine, 5 – invest in a high risk fund, 6 – rent a room, 8 – trade in your clutter, 9 – antique furniture, 10 – clinical trials and 11 – sperm and opinions.
Here are Patrick Collinson's best and worst investments of 2010, and Rupert Jones provides tips on how not to make money.
Related
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Large mortgage deposits are creating a lost generation of homebuyers
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's comment
Comments in chronological order (Total 18 comments)
Staff
Contributor
The whole tone of your article is that it is good idea for house prices to keep rising at a rate faster than inflation. Actually all this means is that those who own or have borrowed to purchase property make money for no effort and young people who are not home owners find it increasingly difficult to buy somewhere to live. I do however get some comfort from your analysis:
Someone is going to make a killing in property in 2011 and, as the National Lottery slogan goes, "it could be you.
Actually the chance of winning Lotto is 1 in 13,983,816.With the changes to the student lettings market from the fee increases, a likely increase in interest rates and changes to Housing Benefit you might just be right.
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"Be rich and socially parasitic and you could make yourself even richer!"
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As someone completely locked out of the housing market, I despise you and everything you stand for.
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What an abhorrent article. Its up there on the same despicable level as keeping grain in silos to keep the price up whilst theres famine in another country.
Also click on Henry Pryors profile photo (is that your real hair Henry), see his article from 28th August saying house price recovery is a distance away, this 'expert' hasnt got a clue.
2011 is going to be very very interesting for property.
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The article is about making money, not making the world a better place. I agree that it is all pretty predatory, but sadly this is the way you make money from property. The system isn't nice or fair - in fact it's horrific - but unless the government decides put making this country a better place to live for us proles ahead of a minority's ability to make a profit (fat chance), then that won't change.
Besides, you may feel that it is wrong to offer someone who is desperate to sell a property a low sum, but they're only in that position because no one else will offer them more.
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I must confess I haven't read the article, but I feel visceral upset at the title, sufficient to complain. A vision for the collective future of our markets and society isn't something to be outsourced to politicians: it is a collective responsibility. You (author and editor), just shirked it. So much for CP Scott's legacy. And don't bother replying to this post with some claptrap about the adversarial marketplace as I won't read it.
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What about campaigning for reform of the housing market? Can we have articles on that please?
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@chrysanth
Why not read the article before commenting? And there are plenty of articles on reforming the housing market in the Guardian.
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I agree that there is something really nauseating about the tone here (and I too wondered if he is actually a real person, and I'm one who, despite having strong opinions, is not often drawn to making that sort of personalised comment).
Anyway, there's a massive inconsistency here. For the UK - go super expensive! For everywhere else - go dirt cheap! From my knowledge of mainland European markets (I live in them), the gains are being made in the sought-after / pricy areas, that's where the population is stampeding too right now (like in the UK). Not the cheap places where nobody wants to live.
This is a mistake that a lot of Britons have made in recent years (anything cheap in Europe is automatically a bargain rather than just.......cheap, because there is no market) . I am not surprised to see the latest bankruptcy from someone who has tried to earn a living writing about their French barn conversion (Lauren Booth). But I am surprised to see an "expert" doing it. It also means that many Brits thinking "ooh, I'll go abroad, it's cheaper" will quickly find themselves disillusioned because in most places people want to live now, usually because of work or trendiness, it is not.
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Thadd,
And there are plently of well written articles on making money in the FT. The once great telegraph is where you can read half-baked articles on how to ruthlessly lose money.
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@ Inacoma
And your point is???
Yes, far better for Brent and Newham Councils to spend nearly £200 million on deluxe new offices for themselves than doing anything about social housing in London
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I think Inacoma was being sarcastic LANDLORDX.
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Speculate on property?
There's a million flat owners out there that bought off plan and have lost a fortune.
Go on then, waste your money, especially this year.
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Mmmmm property is always a way to make money. . . were any journalists actually out of short pants in 1990 because they have bloody short memories if they were?
You remember 15% interest rates and auctions full of repossessed homes?
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Henry sounds absolutely charming...
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Sigh
I remember the recession of the early 1990s fondly - I bought a lot of cheap property at the time and made good money out of it.
Recessions are sooooo good for business....
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@ LANDLORDX
I started out in 2001 and made a bit before 2008 - that was a good decade. I still can't grasp how the individuals on this board think that buying a property that is for sale by it's owner is heartless and evil. Even knocking the price down as the author suggests is actually helping to keep prices reasonable. We can't win.
Property is a good investment, and government policy and the open market together make it so - the 'greedy landlords' label often pinned to us is very amusing to me. The commentators on these boards seem to think a landlord is only socially acceptable when they are not a landlord.
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