Mortgage Lenders Continue To Let Down House Hunters

Buyers are still failing to overcome the significant barriers to home ownership that the current housing market represents, according to the National Association of Estate Agents (NAEA).

The latest monthly market report from the NAEA showed only minor decreases across supply and demand during the month of May, when 275 people registered with an average estate agents office, compared to 277 in April.

The average number of sales agreed per estate agency office stayed at eight for the fourth month in a row. But the percentage of sales to first time buyers increased from 21% in April to 24% in May. The average number of properties for sale per office decreased slightly from 69 to 68.

According to the NAEA, the combination of large deposit demands, pressure on household finances and the gloomy economic picture for the UK is causing stagnation in the housing market.

President of the NAEA, Wendy Evans-Scott said: "Demand for property remains consistent but the barriers to buying are proving impossible to overcome for the vast majority of consumers.

Mark Green, Chairman of the UK’s first not-for-profit online estate agents, imove Cornwall says "The banks must find a balance between the easy ‘give-money-to-anyone’ lending of the past ten years and the strictness of the current mortgage lending rules; the governments attempt to force banks to lend has clearly failed and many buyers are still facing strict criteria which prevents them from obtaining a mortgage”

So is there a solution?  “Well assuming the coalition will steer clear of introducing legislation to ‘force’ the mortgage lenders to actually lend there is no real solution, says Green.  “I think we will have to sit it out and wait for them to begin lending in their own time”

http://www.imovecornwall.org/

House prices will have fallen over 30 per cent in real terms

Unless something odd happens, this week is likely to see an interesting but under-announced milestone: falls in house prices, in real terms, from their 2007 peak, exceeding 30 per cent (on the well-known Halifax measure). In cash terms, house prices peaked in August 2007, and fell 22 per cent to March 2009. After picking up a little in the second half of 2009 and early 2010, they went back to falling from mid-2010, and have been broadly flat during 2011.

But because inflation is high, that flat performance in cash terms for housing in 2011 means that, after adjusting for inflation, house prices have been falling apace. In real terms, since January 2010, house prices have fallen a further 12 per cent.

David Gilmore from imove Cornwall says :
"In real terms, house prices are now down 20 per cent.  They are now back to the levels seen in 2002 – a year in which prices rose around 19 per cent. If the experience of the 1970s and 1990s is duplicated, they would fall perhaps another 5 to 10 per cent. In our view they are only over-priced about 5 per cent now. But when there are large swings, markets overshoot. The price-earnings ratio is now around 4.4. In 1995, the price-earnings ratio fell below 3.1. Falling back to that would mean nearly 30 per cent further falls in prices – as much again as we’ve already had".

"If sellers are motivated to sell they need to be pricing their property to sell.  Do your own research on average prices in your area and select a competitive marketing price".

imove Cornwall is the UK's first not-for-profit online estate agents. Sell any size property for just £399 (no VAT) with all profits donated to local good causes.  www.imovecornwall.org

Urgent reform of the housing market needed

The Joseph Rowntree Foundation (JRF) has called for urgent and fundamental reform of the housing market after the failure of policy-makers to learn the lessons from previous boom and bust cycles, which have led to the UK having one of the most persistently volatile housing markets in the world.

Convened by JRF in 2009 and consisting of interdisciplinary experts, the JRF Housing Market Taskforce has undertaken a system-wide review of the UK's housing market. Its report recommends a series of policy options that together would help create a more stable housing market, to protect existing home owners and enable more new households to get onto the property ladder.

Recommendations to help reduce house price volatility include:

An increase in the supply of housing
Supply is central to managing house price volatility. The scale of the increase required, however, means that this alone will not reduce volatility in the market.

The reform of both Stamp Duty and Council Tax
These existing taxation tools could help to reduce house price volatility in the shorter term. Both Stamp Duty and Council Tax should be linked to the real value of a property and regularly updated.

Stamp Duty: the current 'slab' structure of stamp duty should be replaced with a 'slice' structure whereby only the value that exceeds the threshold is taxed or taxed at a higher rate (similar to income tax). Thresholds should be uprated regularly in line with consumer price inflation.

Council Tax: in the short-term, the number of bands should be extended. In the medium term, there should be a move towards a system based on a fixed percentage of a property's value. In the long-term a national property tax could be created with safeguards for low-income households.

A better safety net for homeowners based on shared responsibility between lenders, borrowers and Government
The current safety net for homeowners is inadequate and has required extensive Government intervention during downturns.

Lenders need to lend responsibly, achieving the right balance between access to mortgages and the risk of default.

Active steps need to be taken to improve borrowers' financial capability to ensure they have sufficient information and skills to make informed choices about what they can afford.

A partnership insurance model with contributions from borrowers, lenders and government should also be adopted to meet mortgage payments when borrowers lose income through redundancy or illness.

Speaking today at the launch of the report, Julia Unwin, Chief Executive of the JRF, said: "Since the 1970s, there have been four boom and bust cycles in the housing market. This persistent instability distorts housing choices, inhibits house-building, and drives arrears and possession rates, putting people at great risk, and creates wealth inequality between the generations.

"We have set out to provide a series of policy options that together would help provide long-term stability in the market. I urge policy-makers to look at these and act now, because the seeds of the next housing boom have already been sown."

imove Cornwall Senior Partner Mark Green says “The instability in the UK housing market has caused a great deal of suffering to many people, reform is something we feel passionately about.  In recent years home owners in Cornwall have seen their house value decline and for many people they are in, or close to negative equity, a familiar phrase for many who remember the early 1990’s”

imove Cornwall is a not-for-profit social enterprise.  imove offers home owners the opportunity to sell their property for a low one-off fixed cost of £399 (no VAT) which will save house owners thousands of pounds.

Trend in house prices continues modest decline

The Halifax House Price Index for April 2011 reports a -3.7% annual fall in prices. During the last quarter prices fell by -1.2% and over the last month prices were down by -1.4%. The average house price is now £160,395.

Commenting, Martin Ellis, housing economist, said: "The latest figures show that the underlying trend in house prices continues to be one of modest decline. Prices in the three months to April were 1.2% lower than in the previous three months. There was a 1.4% fall in prices in April following no change in March.

"Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices. Signs of a modest tightening in housing market conditions, a relatively low burden of servicing mortgage debt and an increase in the number of people in employment are all likely to be providing support for house prices, curbing the pace of decline. There are signs that house sales are stabilising albeit at a level lower than the historical average."

David Gilmore from imove Cornwall, the UK’s first not-for-profit estate agents based in Wadebridge and Truro, says “Sellers need to be careful in these uncertain times. There are buyers who are actively seeking properties, but they are looking for a good deal.  This means that sellers need to select a competitive asking price to entice buyers.  This is of course difficult when many people have seen their equity slowly depleted over recent years”.

imove Cornwall provides a cost-effective platform for home owners to sell their property for a one-off cost of £399, with no VAT.  All profits from imove Cornwall are donated to local charities and other good causes.

“Our solution is to offer house sellers a low one-off fee of just £399” says Gilmore. “People using imove will save thousands of pounds in moving costs and we would encourage people to use those savings to lower their asking price to entice buyers”.

http://www.imovecornwall.org/

imove Cornwall, Warns of Looming Interest Rate Increases

imove Cornwall, the UK’s first not-for-profit estate agents has today warned home owners in Cornwall that the days of low interest mortgage repayments may be coming to an end.

An interest rate rise to halt high inflation is on the cards, experts have warned.
The Bank of England governor, Mervyn King, yesterday signaled that families should prepare for a rise, ending two years of historic low interest rates.
“Higher mortgage repayments could be a major problem for homeowners in Cornwall, who have been led into believing that their monthly mortgage repayments would stay low for years” says Senior Partner of imove Cornwall, Mark Green.
“The Bank of England has predicted a gloomy outlook which may see interest rates rise, affecting a large number of families in Cornwall”
A rate rise to 1 per cent would increase monthly repayments on an average £150,000 variable rate mortgage by £43 a month or £516 a year
Two-thirds of homeowners in the UK have a variable rate mortgage, meaning nearly eight million households would pay more.
On top of the possible interest rate rise warnings, the Bank of England has painted a bleak picture of elevated  inflation, rising energy bills and slow economic growth.

Senior Partner Mark Green says “My concern is, those families who are already struggling to make ends meet may have to think seriously about down-sizing their property or moving to a cheaper area.  But this may prove difficult to accomplish whilst the property market is still somewhat depressed and the cost of moving house is prohibitive for many people” 

“The average cost of estate agency services in Cornwall is around £5000 + VAT” says Green.  “For many people that £5000 is all they have left in their property to enable them to move”

One solution is to use a low-cost online estate agency service.

“Online agents are able to significantly reduce the cost of selling a property, because their overheads are so much lower than a traditional high street agent.  Imove Cornwall has been specifically setup to help people in Cornwall and with a one-off upfront cost of just £399 (with no VAT) we are able to save people thousands of pounds”

Imove Cornwall is a not-for-profit online estate agents serving the Cornish community.  Setup as a social enterprise, imove’s profits are donated to local charities, such as Children’s Hospice South West and other local good causes.

For more information please visit : www.imovecornwall.org

imove Cornwall, Warns of Looming Interest Rate Increases

imove Cornwall, the UK’s first not-for-profit estate agents has today warned home owners in Cornwall that the days of low interest mortgage repayments may be coming to an end.

An interest rate rise to halt high inflation is on the cards, experts have warned.
The Bank of England governor, Mervyn King, yesterday signaled that families should prepare for a rise, ending two years of historic low interest rates.
“Higher mortgage repayments could be a major problem for homeowners in Cornwall, who have been led into believing that their monthly mortgage repayments would stay low for years” says Senior Partner of imove Cornwall, Mark Green.
“The Bank of England has predicted a gloomy outlook which may see interest rates rise, affecting a large number of families in Cornwall”
A rate rise to 1 per cent would increase monthly repayments on an average £150,000 variable rate mortgage by £43 a month or £516 a year
Two-thirds of homeowners in the UK have a variable rate mortgage, meaning nearly eight million households would pay more.
On top of the possible interest rate rise warnings, the Bank of England has painted a bleak picture of elevated  inflation, rising energy bills and slow economic growth.

Senior Partner Mark Green says “My concern is, those families who are already struggling to make ends meet may have to think seriously about down-sizing their property or moving to a cheaper area.  But this may prove difficult to accomplish whilst the property market is still somewhat depressed and the cost of moving house is prohibitive for many people” 

“The average cost of estate agency services in Cornwall is around £5000 + VAT” says Green.  “For many people that £5000 is all they have left in their property to enable them to move”

One solution is to use a low-cost online estate agency service.

“Online agents are able to significantly reduce the cost of selling a property, because their overheads are so much lower than a traditional high street agent.  Imove Cornwall has been specifically setup to help people in Cornwall and with a one-off upfront cost of just £399 (with no VAT) we are able to save people thousands of pounds”

Imove Cornwall is a not-for-profit online estate agents serving the Cornish community.  Setup as a social enterprise, imove’s profits are donated to local charities, such as Children’s Hospice South West and other local good causes.

For more information please visit : www.imovecornwall.org

Cornwall’s not-for-profit estate agents calls for private landlords to help local people

imove Cornwall, the UK’s first not-for-profit estate agents has called for private sector landlords to assist local people with affordable, good quality private rented accommodation.

The current recession is clearly having an impact on the housing market and is placing increasing numbers of people at risk of homelessness, including people who previously would not have been considered vulnerable, according to Cornwall Council’s Homelessness Strategy.

The low-wage economy in Cornwall, seasonal nature of many dominant employment sectors, and low savings levels among average-low income households, place many people at increased risk of homelessness due to financial difficulty, says the report and in spite of recent improvements, Cornwall still lags behind the South West and the rest of the UK in terms of earnings, with average annual earnings 16.4% lower in Cornwall than the rest of the UK.

The geographical remoteness, increasing and ageing population and low wage economy in Cornwall combined with the current problems facing the national economy have led to an increase in demand for affordable accommodation, particularly in the social rented sector.

The cost of buying or renting property in the private sector has remained consistently high across Cornwall over the last few years, with affordability rates across the county in excess of 10:1.  Social housing forms only 12% of the housing stock in Cornwall, compared to 16% regionally and 23% nationally.

“It’s no surprise that many local people, particularly the young, elderly and vulnerable in our community cannot afford private rented properties in their local towns or villages” says David Gilmore from imove Cornwall.

“We would ask private landlords, who have properties to let in Cornwall and who have relatively low mortgage commitments on these properties to lower their rents to make their properties more affordable to local people.  It is a fact that if landlords have buy-to-let properties and want long-term tenants, the best way to achieve this is renting to local people, who are more likely to remain in the property long term”

“It is difficult to strike a balance between landlords who want maximum return for their properties and local tenants who need more affordable rents” says Gilmore.  “However one solution is to agree a program of home improvements between both parties.  This can be very successful.  Quite simply the tenant agrees to remain in the property for a number of years and furthermore agrees, for instance, to redecorate the property over that time.  In return the landlord agrees to lower the rent”

“This means that a local person can afford the rent and over the term of the tenancy can make some improvements to the property and the landlord quite clearly benefits by having a local person living in the property who is going to maintain and make some improvements.  Having a long-term tenant also reduces the cost of void periods and having to make improvements between tenancies”

“This is just one suggestion to improve the situation, but with some clever, out-of-the-box thinking, there are many ways private landlords and local tenants can agree a rent that serves both parties best interests”.

www.imovecornwall.org