06/11/2008 : Greek Real Estate Boom Defies Market Doldrums

Increasing numbers of Europeans are buying or building luxury properties on the Greek islands, even as the market for top-end holiday homes in other European destinations like Spain and Bulgaria remains stalled, Greek real estate agents say.

Industry experts explain that the range of available properties - from extravagant new villas to bargain plots - has been attracting foreign buyers, some of whom say their investments have doubled or even tripled in value in just a few years.

"The islands have something for everyone, and they are close to home for Europeans, so foreign interest is strong," said Yannis Perrotis, (Head of real estate consultants in Athens).

« Source - International Herald Tribune (Global Edition of the New York Times) »

15/08/2008 : UK Inflation Tipped to Fall

Following weeks of scaremongering in the press and dire forecasts from industry experts, could this week's inflation figures hint at better times to come?

The figures showing that the Consumer Prices Index (CPI) rate has hit 4.4%, may not be as bad an indicator as may have been thought.

As this is the highest level since records began in 1997, some experts are suggesting that inflation is close to its peak and will begin to fall back in the months ahead.

Major factors behind the record high are food, oil and domestic energy.

According to the Office for National Statistics, food, thanks to the growing cost of meat, was the largest contributor to inflation, up a whopping 13.7% in the last year.

Charles Davis, an economist at the Centre for Economic and Business Research, is one expert who believes that the inflation figures may signal healthier times ahead. "If you look at the actual month on month figures, prices were flat in July, and there was a 0% growth in the CPI for June and July."

"The reason for the rise in CPI was that in those same months in 2007, prices actually fell," Mr Davis added.

If some industry experts are proved right and inflation does start to tail off, this in turn could boost the mortgage market, as the Bank of England may be able to start cutting back interest rates again, which could lead to cheaper mortgages.

Nevertheless, the question remains over what is going to make inflation come down, and there is a widespread view that that slower growth will do the trick.

« Source - The Move Channel »

16/04/2008 : Think like the rich & avoid the 'crunch!'

Everyone is worried about the impact of the Credit crunch, but Nick Hopkinson of specialist firm, Fruitful Property is not wallowing in the negativity, preferring instead to find solutions and ways to profit amid the gloom. To that end, he poses the question: What are rich and successful investors doing and can you learn from them to overcome your fear and beat the crunch?

Mr Hopkinson explained: "No one seems to know the true extent of the bad debt that global banks have taken on. As a result, UK Mortgage availability has dropped sharply this year. First time buyers and anyone without a clean credit rating is struggling to pay higher interest rates and can't raise the much larger deposits required in today's property market. Mortgage and property affordability has worsened significantly for many. Repossessions and distressed seller numbers are also on the increase".

Gerald Ronson, successful boss of property firm, Heron recently said that he was ‘excited by the current market’ at lunch last week, adding: "Everyone knows that property is a long term game and you need to take a 7 to 10 year view. You can never guess the bottom, but you'll always get a better deal when prices are falling than when they are on the way up!".

Liz Peace, Director of British Property Federation, summarised the winning attitude and strategy of successful investors for Fruitful’s Hopkinson at a recent breakfast meeting "The Vultures are circling, as (property) prices drop they are starting to get some real bargains. The Rich will be the real winners from the current credit crunch. They always are!"

Right time to step into the market?

Mr Hopkinson further observed: "UK inflation is still stable and well within the government target range of 1-3%. Interest rates are probably on a downward trend; nobody is suggesting interest rates are likely to rise significantly in the next couple of years. Latest employment figures are still very healthy; suggesting most people will continue to be able to afford their mortgages".

"UK Population growth and the chronic housing shortage continue unabated. In fact, new build starts are down 30 percent on last year which will make the housing shortage even worse than currently predicted in a few years time. Rising rents across England and Wales is further evidence of continued strong demand for housing".

"Everyone's "bearish" on property at the moment, markets have very short memories and ordinary people are always driven by fear of losing out if prices fall further. This is exactly the time that savvy investors are stepping into the market and cementing their place on the future rich list. The fundamentals of long term growth in property are still the same as ever, but it is now a buyer's market if you have the money for deposits and can overcome your natural fear".

Savvy investors still profiting

Mr Hopkinson revealed how his clients are making their money: "Fruitful clients are currently buying pre-Repossession property, pre-Auction and post-Auction property at below market value (BMV) prices by moving fast to help these distressed sellers".

"Today's high rent yields mean 14 percent plus return on capital invested is common on these properties this year alone; regardless of any short term price movements. This is far better than any bank savings!"

"UK residential property consistently outperforms most other investments and the fundamentals have not changed".

« Source - The Move Channel »

25/03/2008 : Time to drop the doom & gloom

A panel of leading economists at the annual Wriglesworth Housing Debate in Whitehall last week delivered the following confidence boosting verdict: despite the immediate uncertainty in the financial markets there will not be a recession in the UK this year or next.

Evan Davis, BBC Economics Editor said “unlike in the early 90’s there is no need for a (UK) recession due to inflation. The short term inflation spike we are experiencing due to commodity prices will soon be over…the real challenge is whether we can manage the coming slowdown, but I believe we will continue to see growth”.

David Miles, Chief Economist at Morgan Stanley broadly agreed, adding that the Bank of England had scope to cut interest rates which would ease money supply and fuel economic growth if necessary.

Time to drop the ‘doom and gloom’?

When presenting the latest BoE inflation report, Mervyn King agreed with the Wriglesworth expert panel and said “the “Doom and Gloom” headlines touted by the press recently about the UK economy and the property market are not reflected in the latest data.

He said the “lurid headlines are not correct” and urged the London based media to get away from the financial markets and test the more positive “mood music” outside of the City. In fact, as the BoE report highlighted, latest figures from The Office of national Statistics (ONS), show jobless claimants at their lowest level for over 30 years.

Discussing property market trends for 2008 at the Wriglesworth conference, Richard Donnell, Director of Research at Hometrack forecast “low property transaction levels and +1% growth in house prices in 2008, +2% house price growth in 2009”.

Fionnuala Earley, Chief Economist at Nationwide said “short term trends are very difficult to predict due to mortgage market uncertainties but our projection is for flat growth by end of 2008, possibly a small fall”.

Michael Coogan, Director General, Council of Mortgage Lenders predicted “stable growth of around +1% this year with mortgage activity focused on the re-mortgage side rather than for new loans with lenders having to better manage risks”. Despite the recent negative media headlines, there was a clear consensus that the UK housing market would remain broadly stable over 2008 amongst the economic experts.

« Source - The Move Channel »

25/03/2008 : BARBies - The New Property Investor

BARBies - investors who Buy Abroad but Rent in Britain - are latest trend to hit the property market. Barbies are typically young FTBs who struggle to get on to the first rung of the UK property ladder and are forced to turn to another country, where they can take advantage of significantly lower property prices.

The rising BARBie trend is backed up by a recent survey by the insurer Hiscox, which revealed that:

• 40% of young people would consider buying abroad to get on to the property ladder.
• 37 per cent of under-35s surveyed feared that they would never be able to own a home in the UK.

Things appear to be changing though – years of huge price growth is creating a generational shift, with older, wealthier investors jumping on the BARBie bandwagon, not through financial necessity but as a deliberate investment decision.

Mark O'Sullivan, head of trading for foreign exchange broker Currencies Direct, comented: “We have noticed a rise in the number of older BARBies, lured either by the potential of making more money by investing in emerging markets abroad rather than in the UK, or by the chance to enhance their quality of life by selling up, downsizing to a rental property at home and buying outright abroad”.

« Source - The Move Channel »

20/03/2008 : UK house prices will ‘fight back’

According to their latest monthly index, average UK house price grew 0.7% in February, the first positive monthly increase in price since October 2007. The company believes that this represents a turning point in the current market, providing a clear indication that there will be an upturn in house price growth as soon as next month.

Stuart Law, Chief Executive of Assetz, believes that this result indicates a ‘return to strength across the UK residential market’ and ‘provides further evidence that the downturn seen in recent months is simply part of a stabilisation process and not a market crash’.

“Have we witnessed an end to the reducing rate of house price growth? With annual house price growth stabilised at 5.4% for the second consecutive month, and monthly house prices up 0.7% in February - quite possibly.

Continued stabilisation

Mr Law continued: “The Rightmove house price index, which proves a good indicator of the property market (due to it recording initial asking prices rather than final sale prices), jumped 3.2% (£7,500) in February. Rightmove is also a leading indicator of what may happen in other indices later in the year, as mortgages get approved and the land registry records sales.

“I anticipate that we’ll see a continued stabilisation and even an upturn in monthly house price growth over the following months, with annual growth still likely to stabilise at around 5% for the year.

“The supply/demand imbalance is simply not going away, and is showing very strong signs of worsening in the short to medium term, with huge (40%) falls in new development making prolonged price falls a very unrealistic outcome due to the normal laws of economics.

“I strongly suspect that many will be surprised by a return to house price growth sooner rather than later but the remaining risk to stability is the credit crunch, as the result of banks’ greed continues to unwind. This remains the greatest risk to the housing market and the economy as a whole at present.”

« Source - The Move Channel »

15/02/2008 : Greece has long been overlooked by investors, but that may be about to change...

It's easy to believe that the success of one nation's tourism market goes hand in hand with the subsequent successes of its property market, and that where there is a strong desire for a summer holiday it follows that there is almost equally as strong a desire for a summer holiday home.

This is particularly easy to accept in the Mediterranean region where so many British, Irish and Northern European citizens dream of spending their summer evenings and an almost equal number seemingly dream of owning a holiday bolt-hole or retirement retreat. However, in reality not every Mediterranean market does have as popular a property market as it does a holiday market.

The Greek mainland and the Greek islands are almost the epitome of 'destination perfection' for those who long for star sprinkled, sultry summer nights and lazy days played out against a backdrop of silvery barked olive trees, beautifully bright bougainvillea, azure skies and the sparkling crystal clear waters of the sea.

And yet Greece is not famous as a second home nation, it is not even in the top twenty countries in which British, Irish or Northern European buyers invest in holiday homes, retirement property or even buy to let real estate.

Why is Greece ignored by investors?

Why is it that Greece, beautiful, romantic, historic, accessible, welcoming and desirable Greece - is not where we're all dreaming of buying that seaside villa or investing in that jet-to-let apartment? Well, the truth lies somewhere in a complex web of bureaucracy, rather socialistic politics, old fashioned laws, lack of financing and high taxes.

However, all that is beginning to change as Greece is keen to attract overseas buyers to its shores and willing to listen and learn from the mistakes made in other Mediterranean destinations.

In its latest special report on the travel and tourism economy in Greece, the World Travel and Tourism Council (WTTC) took specific time out to praise the previous Minister of Tourism, Fanny Palli-Petralia, for bringing strong leadership and sound strategy to Greece?s previously under performing tourism market.

According to the WTTC, whilst Greece is already doing well in terms of the amount of market share it commands, (Greece has a 10% share of the Mediterranean tourism market), it could do far better given its natural assets and attributes.

The WTTC cite issues such as governmental under-spending on the sector, bureaucracy, sub-standard facilities and restrictions on capital investment as having held the market back and interestingly, these are exactly the same sort of issues that had held the property market back in Greece as well.

Steady change of direction

Fortunately, in 2004 a change of government and a total change in political direction in Greece has resulted in a steady change in direction - for the economy and for certain specific economic sectors in particular, such as tourism and real estate. Everything from the high unemployment rates, heavy taxation levels and endless red tape are now changing for the better.

The current Minister of Tourism, Aris Spiliotopoulos sees the promotion of Greece as an obligation, not a privilege. In his speech at the official presentation of the new promotion campaign of Greece Abroad, he said that his intention is to show the world that Greece has the same capacities, services and infrastructures as the rest of the developed countries in the European Union.

« Source - The Move Channel »

04/02/2008 : Big boost to prices

The new rate, which will come into force on the 6 April, will make property investment one of the most tax efficient investment vehicles in the UK, especially if a property is bought by a couple and sold with each using their CGT allowance of £9,200, and all tax deductions are maximised during the ownership of the property.

Mr Thomas continued: This change in legislation will help to put the UK more in line with other European countries and in fact I believe the amount of funds raised by CGT will actually increase because the need to delay paying the tax will no longer be such an issue for individuals.

Second home owners will also benefit from this change in legislation. David Lawrenson believes that this new lower rate could even see an increase in the number of second home buyers especially in rural and coastal areas, but also in city centres as people look for a week day pied a terre.

Lawrenson commented: This new flat CGT rate will be a reduction for most people and will act as a big boost to prices in both the buy-to-let and the second homes market. At the moment, everyone is focusing on the impact of the credit crunch but property investment is still attractive to investors and this change to the CGT rate will only help to relight interest in the buy-to-let market, which will help keep property prices high.

« Source - Weekend News »

01/02/2008 : 'BTL Not as Gloomy as made out!'

This news may not be much of a revelation to those who have seen the optimistic outlooks presented by the recent surveys from Bradford and Bingley, Alliance & Leicester and the Association of Residential Lettings Agents (Arla), all of which have shown high levels of investor optimism.

Arla's survey showed that the average investment lasts 16.7 years. Alliance & Leicester came up with the even longer figure of 18 years for the nine out of ten who wanted to keep their portfolio for longer than a decade.

Now, however, it is not just the investors themselves who have revealed their optimism. In the announcement by Nationwide of its latest monthly house price index, which showed a 0.1 per cent drop in January, senior economist Martin Gahbaur said: "We do not believe that the long-term fundamentals of buy-to-let are necessarily as poor as recent commentary may suggest."

BTL still healthy

The phrase long-term, of course, is instructive. The theme has been repeated time and again by those who carried out the surveys, with examples such as the comments by Alliance & Leicester head of specialist mortgages Jeremy Claridge, who, responding to last month's survey, said: "It is clear the buy-to-let property market is still healthy for longstanding landlords, especially for those in the south-east of the country."

What Mr Ghabauer did was back up this theme with an economist's analysis that confirmed what so many had already concluded - that the market was not so good for short-term investors, but sound for those with a long-term plan.

Speaking of the lower yields that the present market may offer, he said: "While such concerns are certainly relevant, they are much more of a factor for those with a short investment horizon rather than for those in it for the long term. A property investor planning to hold the investment over a long period will benefit from future rental growth and is in a better position to ride out temporary periods of weak capital gains."

Long term expectations

Just as importantly, Mr Gahbauer recognised the trend for the average investor to be in the latter group rather than the former. Noting the rise of alternative investment strategies after a series of blows to confidence in traditional pension funds between 2001 and 2003, he concluded: "Many investors are motivated by longer-term retirement planning rather than the expectation of making a quick gain. If true, there are reasons to be more sanguine about buy-to-let than suggested by recent headlines."

What Mr Gahbauer is saying may simply be adding flesh to the bones of what is already known. But as well as this, there are indications that there is still growth in buy-to-let in many locations. For instance, Irene Thomas, operations manager at Auction Finance in Manchester, told the Manchester Evening News: "In the rental market we continue to see a steady increase in the number of buy-to-let investors." Such a trend suggests sanguine is the least one might be about the prospects for buy-to-let.

« Source - The Move Channel »

07/01/2008 : Overseas Investors 'Full of Confidence!

It seems that for UK buyers, our love for overseas property remains strong, according to experts at the NAEA International incorporating FOPDAC. While the outlook varies as one drills down into the established and emerging markets, it seems that the diversity of the UK buyer is one factor helping to keep overseas property demand strong in 2008.

Robin Haynes of Foreign Currency Direct is particularly optimistic following a pick up in enquiries at the end of last year. We're experiencing a good level of interest at the moment. Overall we saw an 8.2% increase in the number of overseas property transactions in the fourth quarter of 2007 compared with 2006.

Buyer diversity keeps established markets strong. The world's established property markets have maintained a consistent level of interest over the last 12 months and, despite speculation to the contrary, many are expected to continue being popular. Countries such as France, Portugal, Italy and Greece will do particularly well in 2008 according to Vanessa Bird, of financial services company Baydonhill: There has been considerable nervousness over the economy recently, but we believe that the majority of the established markets will remain robust over the next 12 months. The key is the diverse selection of buyers who look to purchase in these destinations, from second home owners to those relocating for retirement. The huge variety present here in terms of age, financial circumstances and motivation for buying - is the driver behind the constant supply of purchasers.

Pound Strengthens

More For Your Money!!!!

« Source - The Move Channel »

07/01/2008 : UK Market Still Strongest In The World

Despite the doom and gloom, the UK market is still full of positives, claims Assetz. The five major UK house price indices show an average of 8.3% annualised growth for the twelve months prior to November 2007. This shows a 1.6% decrease in the rate of growth from the previous month (9.9%) and a 1.4% decrease since November 2006 (9.7%).

As predicted, annual growth is poised to end 2007 at a level of between 7-8% with price growth recording a 14 month low in November, falling back to 8.3%. While this represents a decrease on October's figure, average house prices remained strong, with just a marginal fall.The average house price in November 2007, taken from the average price provided by all five major indices is £213,936, down from £214,893 in October. This shows a decrease of £957 in the value of the average property and an increase of £15,367 in the twelve months from November 2006, when the average price of a home was £198,569.

Stuart Law, Chief Executive of Assetz comments: While there has been much suggestion of a problematic era for the property market, there are many more positive signs for the year ahead, with latest buy-to-let figures outweighing any negative outlook, as well as reflecting a hugely successful year for the property investor in 2007. On balance, the UK buy-to-let market is just about the strongest in the world and investors can look back on a successful 2007 with surveys showing excellent returns across the board. While London obviously continues to lead the way, with rents up by almost 20% on average for the year, this positivist is not restricted to the Capital, with excellent figures in areas such as the North West keeping overall annual figures high.

While the rate of house price appreciation has slowed significantly in November, little can be read into the volatility of recent figures other than to suggest growth is currently between 0% and 5% following buyer caution under a barrage of negative press headlines. This is the result of a widely anticipated period of stabilisation, and is hitting our predicted figure of between 8 - 9% for the end of 2007. Although November shows the average house price to be down slightly on the previous month, this does not signal the beginning of a housing market crash, as is being touted by some in the industry.

The market will be robust, if a little volatile in 2008, buoyed by immigration, lower interest rates and continued lack of supply. Reductions in new build supply by developers will increase demand for rented property, leading to raised rents and continued strength in the buy-to-let market, with growth across the major indices expected to level at an average 5% for the year.

« Source - The Move Channel »

07/01/2008 : UK 'stuttering' to a soft landing

The period had a seasonally-adjusted figure of 1% house price growth, not the decline that some might have expected but a fall on the 1.6% from the third quarter. Such a number might be regarded as entirely in line with the Nationwide's predictions for zero growth in 2008, with a fairly soft landing rather than a crash after the years of boom. Perhaps more telling data was released alongside the quarterly figures. This showed the annual trends by region and by city, which indicated that there was a clear and growing geographical variation, perhaps as significant as the national trend and maybe of greater significance in 2008, when lower overall growth means investors will look at which regions are still enjoying good growth. Double figure growth.

Three regions had double-figure growth - the usual suspects of Northern Ireland, London and Scotland with increases of 24.2%, 12.8% and 10.1% respectively. In contrast, there were four regions with less than 4% growth - the three northern English regions plus the east Midlands. A survey of prices in cities - often a key area for buy-to-let accommodation shows the same regional trend. Belfast tops the price rise list, followed by Aberdeen and London, with the rest of the top five made up by Oxford and St Albans. In contrast to these hotspots it was cold up north, or at least in the north-east, where the three worst performers - Durham, Newcastle and Sunderland - were located. The east Midlands was represented by Nottingham, while Sheffield was fifth. Of course, focusing on these cities ignores what may be happening in the main centres around Manchester, Leeds and Liverpool, but the pattern appears clear enough. While the data was compiled over the whole year, this week's Land Registry figures for November suggest this was still largely the picture in England at the end of the year.

London remains top dog. London had the highest price increases at 1.1% while the only two areas to see no growth were the east Midlands at zero growth and the north-east with a 0.9% fall. With the Nationwide survey indicating a 0.2% decline in the Yorkshire and Humber region, the three regions represented by the five worst performing cities saw falls in one or other of the most recent surveys. This may be considered to be relevant because if such annual trends remain fairly current they may give an indication of what to expect in the next few months. In such circumstances buy-to-let investors may decide to focus more on those areas where prices remain high and rising fastest, as these are the areas where affordability levels will be lowest and demand consequently highest.

« Source - The Move Channel »