carterestateagent

The musings of an Artisan Estate Agent

Is the Bubble about to burst? …Probably!

ImageBarely a day passes without someone asking me “What’s going to happen to house prices over the next 12 months?” This is of course to be fully expected as an estate agent and I answer as I have always done for the past 25 years…. “If I knew the answer to that question then I’d be a millionaire”

Of course it’s a perfectly valid question to ask and I should be in a position to answer with at least some degree of conviction based on current market trends and the general economic and political conditions.

2014 has seen a significant upturn in prices in Denham with many properties worth at least 10% more than they were this time last year. As I have previously written, the Help to Buy scheme introduced last year has been a major stimulus to demand and therefore prices. Indeed anybody who bought in the last 18 months is entitled to feel a little smug as they have seen an instant uplift in the value of their property.

How long will this rampant house price inflation continue and is it a bubble that is about to burst?

Well there are a number of factors that suggest prices have peaked and if you are thinking of selling, now might just be the right time. Consider the following:

–          Anecdotal experience of a slow-down in price rises is borne out by evidence from mortgage lenders and the web portals about both asking and sold prices. Supply is starting to catch up with demand

–          New lending regulations introduced in April after the Mortgage Market Review means that mortgage applications are now subject to tougher affordability requirements.

–          The Government has got nervous about house price increases particularly in London and George Osbourne’s recent Mansion House speech means the Bank of England will have powers to cap mortgage lending.

–          Prices have increased beyond the previous peak of 2007 and the spectre of negative equity and resultant repossessions has appeared to have receded.

–          Interest rates are only going to increase. Interest rates have been at a record low for over 5 years now. They can only go one way. The Bank of England has hinted at it and we are likely to see increases both before and after the General Election next year.

 

The time to buy or sell your property can often be a difficult decision although it is mainly determined by your own individual circumstances. The expression “safe as houses” continues to ring true as most people still see the significant benefits of owning property as a long term investment. If you are in the position to decide when to sell then maybe now is the right time. You might just feel a little smug if the bubble does indeed burst.

 

If you would like a free no obligation market appraisal of your property or to speak to Adrian about selling your property, call Carters on 01895 832155

 

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10 Top Tips when looking to Buy:

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What a difference a year makes! …. At the beginning of 2013 it was still a somewhat nervy post-recession outlook and very much a Buyers’ market. Today it’s the complete opposite, as confidence has soared and multiple buyers are scrambling over the limited housing stock available. Almost everyone who was fortunate enough to buy last year will have seen an instant 5-10% increase in the value of their property.

 

Well, if you are one of those potential buyers looking to move or get on the property ladder this year, here are 10 Tips to help:

 

 

–      Get your finances in place

Make sure you can get a mortgage and you have enough money for a full deposit before you start looking for a home. An estate agent will not take an offer on a property without proof that the prospective buyer has finances in place

–      Don’t dismiss a property before you see it in person

The more homes you visit the better. But act quickly. In the current climate properties are not on the market long.

–      Get a survey

If you are looking for an older, run-down or unusual property it’s worth paying extra for a homebuyer report or building survey.

Your mortgage lender’s valuation is a basic survey for mortgage purposes only and is not a full survey, although they usually include some recommendations for any obvious faults.

–      Budget for the extra costs

Mortgage arrangement fees, solicitors’ fees, surveys: the costs quickly add up.

–      If it’s a leasehold, check the length of the existing lease

The length of the lease will affect the price and your ability to acquire a mortgage.

–      Get independent financial advice

Don’t restrict your mortgage research to the internet or through your bank or building society. Look for an independent financial advisor who has access to the entire lending market.

–      Get to know the area before you buy

A good agent will describe an area honestly, but it’s always wise to revisit a property at different times.  Make a list of what’s important to you. Consider how far you’re willing to live from local shops, schools or public transport.

 

–      Choose the right solicitor

Make sure you choose a solicitor who has a good track record in the local area.  Ask for recommendations from people you know or trust.

 

–      Use local estate agents with local knowledge

Don’t just relying on big property websites like Zoopla or Rightmove, Speak to your local agent. They know the area and by building rapport with them, you may get to know about new properties sooner.

–      Have realistic expectations

Identify the type of property you are looking for and understand  its pros and cons…if you are looking for a period or character property don’t expect it to be in new build condition!

 

If you would like to speak to Carter Estate Agents about any aspect of Buying, Selling or Renting a property, please call us on 01895 832155

The Return of the First Time Buyer

There are lots reasons to feel positive about the housing market in 2014 but perhaps one of the most encouraging aspects is the ‘return’ of the first-time buyer.

There has always been a lot of talk about ‘first timers’ being the lifeblood of the marketplace and, while this pudding can sometimes be over-egged, it is absolutely vital that we help those trying to get on the first rung of the ladder, ensuring they have the ways and means to become homeowners.

It was therefore particularly pleasing to see the latest figures from Halifax’s First Time Buyer Review which showed a notable increase in the number of home-owning ‘newbies’ over the course of last year. Numbers were up 22% on 2012 and it was revealed to be the biggest annual increase since 2001. It estimated that 265,000 first timers were able to make their property-owning dreams a reality – a considerable improvement on the previous year’s 218,000.

All good news which will perhaps be met with most delight by the Government keen to create a feel good factor in the run up to the election in 2015 and who have put considerable political store in their ability to get the entire housing market moving again, but in particular to help first-time buyers. Many previous schemes unveiled prior to 2012 were designed to help first-time buyers however they were often unduly confusing and were ultimately unable to get the anticipated uptake and success.

In Denham we have seen a surge in demand for property as Help to Buy takes effect and we finally see a scheme which can live up to the hype and deliver against expectations. Just how many of those benefiting from Help to Buy are first time buyers is unclear but it appears that, even though HTB was not specifically aimed at new purchasers, it is this very group that appears to be reaping the rewards of the schemes’ introduction.

Looking at things in an historical context however, we might reserve our excitement. Back between 2003 and 2007 – which admittedly was hardly a ‘normal’ marketplace – average first-time buyer numbers were around the twice the number they are today. However, to my mind, this is not a bad thing. How many first-timers entered the market during those years buoyed by a heady cocktail of freely available credit coupled with less than onerous underwriting practices from many lenders? 100% mortgage? No problem. 125% mortgage? Here you go.

Undoubtedly there will be many who became homeowners thanks to these products, however their ability to continue servicing a mortgage when the subsequent recession hit, will have been severely compromised. I suspect that with house price rises during that period, many new entrants then may still be living in homes currently in negative equity. There is much to be said for a controlled approach to supporting today’s first-time buyers to ensure they are not over-stretched in relation to their mortgage and to stress-test their affordability levels now and in the future given the inevitable increase in interest rates. Although borrowers have enjoyed a base rate of just 0.5% for a number of years, I don’t believe any of us working in this sector would regard this as a normal rate and it can only go one way in the future.

Therefore while it is positive to see volumes on the up, it is also appropriate to encourage and support an environment of responsible lending. We hear that many prospective Help to Buy first-time buyers are still not making the grade when it comes to securing a mortgage, and while this is disappointing for the individuals concerned, it is only right that lenders ensure borrowers comply with sensible affordability measures. Too often in the past we heard of individuals who had no deposit to speak of, and little chance of meeting mortgage repayments should rates rise, securing the necessary finance to buy a home: this was clearly a house of cards that was destined to be toppled. We must do everything in our power to ensure that the first-time buyer market in 2014 and beyond is built on much firmer foundations.

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