The latest report published by Worldwide Property Group revealed that 75% of respondents consider the best first choice for investment, out of all options, is property, which clearly indicates recent government changes in legislation did not affect market confidence. 

In contrast, only 2% of people responding to the June survey would put their money into shares. Even gold received only 17% of the voting.

When asked if the current historically low-level interest rates had increased desire to buy property, two-thirds replied Yes, with 79% saying now is a great time to buy a property in the UK. 

Sixty-five percent of respondents shared the view that property values will continue to increase over the coming year, with 4% believing this could rise by as much as 15-20%. 

Buying overseas property attracted a very respectable 62% of voters actively seeking foreign property opportunity at this time. 

The US, particularly Florida, appealed to many with France (see our Blog and News 5th July, France ~ 100% Loans ...), Cyprus, Spain and Italy also ranked highly amongst those looking for a second home.

Even though the stock market performed well over the past 12 months, it has fallen since mid-April (FTSE 100 losing nearly 1000 points). Property, by comparison, has demonstrated a greater robustness during recent global turbulence, having regained much of the value that was lost over the last 2-3 years (see Blog and News 10th June, Property Prices Creeping Up Says, Assetz). 

The results of the WPG survey clearly indicates UK public confidence is rapidly returning in the property market.

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Combine a lettings market with low stock and, a Buy-To-Let market with not enough competitive mortgages and what do you get? Well you know: more people staying at home (and more ulcers for Mum & Dad)!

Thank goodness the former will get a boost from the greatly improving availability of BTL mortgages predicted as banks turn their heads around and start lending again.  It is predicted that 20 more lenders will soon join the pathetic few (currently 4) offering suitable products for the landlord/investor.

With increasing competition (some of it coming from, would you believe, China) comes more available money at better rates. 

Currently anything over 60%LTV attracts with it a higher lending rate, typically 4.7%APR. Whereas 4.7% works when current rental yields exceed 6% (e.g £470pcm mortgage payment with £600pcm rent) nevertheless any lowering in the borrowing rate means increased cash-flow in your pocket thank you very much.

For the analytically minded amongst you, funding dropped 81% since 2007.  In 2009, it dropped 69% compared to 2008. There is a staggering 1,400 less suitable products on the market than in 2007 but we are pleased to report that this trend is now seriously reversing. 

Professional Landlords, more and more, represent an agreeable risk to lenders who are beginning to view this type of business as increasingly profitable for them.

As recovery in the BTL market continues, we shall all be glad to see lending rates 'tumble'?! 

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Housing affordability is at its highest level since 2003, according to Zoopla with the average 2:3 UK income earner now being able to afford a home.  

This is up significantly by comparison to the property market peak in 2007, when just 1:3 of homes were affordable.

The current levels were last seen in 2003 when the affordability rate was 56%. Over the past 10 years, affordability levels reached their highest point in 2002 at 66% and then fell steadily over the next five years.

The most affordable markets were generally in the North and the least affordable were in the South. Bradford was revealed as the most affordable UK city as 82% of homes could be bought for residents on the average local income. Hull came second with 81% of homes now deemed affordable. 

London tops the list of the least affordable housing markets in the UK with only 32% of homes affordable for residents. Southampton was second with 44%.

Nicholas Leeming, commercial director of Zoopla, commented: "We are at levels of affordability not seen in the UK housing market for almost seven years which makes it a great time to buy, especially if current low interest rates can be locked in by the borrower."

Zoopla calculates the affordability rate using median incomes and average house prices in each geographic area along with mortgage rates. A home is judged to to be affordable if one third of the median income is sufficient to cover mortgage repayments.

In 2002 using one third of income to meet mortgage repayments allowed a purchase of £118,934 whereas today, given the current low financing costs and increased incomes, the same proportion of income finances a purchase of £188,423.

Source: Morrtgage Solutions

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The main UK event this year will be the General Election (which must be called before June). After the election the main effort of incoming Government will be balancing reductions in public expenditure with the recovery in the economy by keeping interest rates low, wage demands low and slowing the rate of unemployment.

Dominic Farrell, Director of Distressed Assets says, “The UK property market will not collapse in 2010. The same pundits who predicted a collapse in 2009 are predicting a collapse of 20% this year. 

"They got it wrong last year and they will be wrong again this year. 

"Given low interest rates, a shortage of supply, economic recovery (albeit weak) and growing confidence amongst business owners, industrialists and bankers, I personally predict a rise in property prices in the UK of up to 5%.

“The two key factors supporting property markets are the availability and cost of finance as well as general consumer confidence. In both cases there have been substantial improvements since this time last year.” 

Farrell's views are supported by a recent report by property website Zoopla: “Around 81% of people expect house prices to rise during the coming six months, predicting average increases of 5.4%. The figure is a significant turnaround from a year ago, when only one in five people expected property values to increase during the first half of 2009.”

What We Say ~ we share the view that UK property (even global property), will continue to recover during 2010 and beyond though we hopefully we will see a more steady, sustainable property growth rate than the years before 2007. 

This is good news to property investors who will see their asset steadily increase in value.  The flipside of course, is that each additional property is going to be more expensive to buy.  Using Farrell's prediction for next year for example, a £100,000 property today will cost £105,000 at the end of the year i.e. 5% more. 

Our recent Blog & News "BMV Changes 2010" offered current consideration for BMV purchases in the light of changes in the marketplace and we recommend another read to you.  

 

Our message remains constant.  If you intend adding to your property portfolio and want the best prices, remain active for suitable deals on a weekly if not daily basis.  Call us to discuss your particular needs and remember, we will give you advanced warning via SMS TXT in addition to our normal Property Alert emails if you ask us to. 

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