Fewer properties being put through auction but higher prices achieved!


19th October 2009

The number of lots going to property auctions last month was 3,291 - 20% down on September 2008.

Of these, 2,334 sold - a success rate of 71%, which was up from a success rate of 67% in August.

There were 178 auctions in the UK.

Despite the fall in the number of properties going to auction, the overall amount raised was 11% down, suggesting higher prices being achieved at auction.

The statistics are from Essential Information Group.

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Property investors' confidence picks up


16th October 2009

Investor confidence in the UK and overseas property market has risen significantly, according to research conducted by the Property Investor Show, with investors saying it has increased by 43% in the last three months.

A third of respondents attribute the change in attitude to positive media reports and 20% to the greater availability of different finance options.

While bank finance remains an issue, 17% of investors are still able to secure bank loans to fund investment, having enough liquid assets to cover the current LTV ratio, while 32% have access to savings and are able to use the equity from existing assets.

Nick Clark, managing director of the Property Investor Show, says: "The boost in confidence and renewed hunger in UK and overseas property has been signalled by reports that UK property prices have stabilised and the first signs of permanent job rises being reported."

 

Public start to believe in price rises


14th October 2009

Four out of five home owners expect property values to rise over the next six months, according to the so-called Zoopla quarterly survey of housing market sentiment.

The fact that this survey has now been rebranded from Propertyfinder suggests the site's re-naming.

The RICS has also reported house price rises, driven by lack of stock.

Of the 6,682 home owners surveyed by Zoopla, 79% believe home values will rise, with only one in ten (11%) predicting that values will fall over the next six months.

Those expecting a rise thought average house values in their area will increase by over 5% in the next six months.

But owners' optimism is not shared by renters, 42% of whom think house values in their area will either remain unchanged or decline in the coming six months. Renters are also least hopeful about the availability of mortgage finance, with over three-quarters saying it is no easier to obtain a mortgage now than three months ago. Yet, despite the difficulties in securing a mortgage, over half of renters (53%) indicated that they will try to buy in the next six months.

Alex Chesterman, CEO of Zoopla, said: "Optimism in the property market is climbing back to levels not seen since before the credit crunch began in 2007 and is four times higher than it was in the depths of the decline earlier this year.

"Confidence drives transaction volumes, which in turn drives house prices. But with lending remaining constrained, transaction volume cannot recover as strongly as demand suggests it should, and the inability of first-time buyers to get a toehold on the housing ladder is the biggest single risk to the housing market recovery."

He added: "The record levels of traffic to Zoopla.co.uk, with over one search per second recently, is another strong indicator of the rising interest and confidence in the housing market."

Meanwhile, Badger Holdings, parent company of Townends and Regents estate agents, has reported a 30% increase in instruction numbers in the last three months compared with the second quarter of this year.

Douglas Sleaper, group sales director, said: "Many housing commentators have recognised that a large part of the impetus in rising prices has come from the chronic shortage of new stock coming to the market.

"However, comparing Q3 with Q2 we have seen a 30% increase in instruction numbers as sellers recognise that the market has improved significantly during the year, tempting them to put their home up for sale. Although figures are still of course historically low, this is a definite sign of an improvement in confidence.

"The motivation varies but we are seeing increasing numbers of 'reluctant landlords' selling their buy-to-let properties as well as other sellers who are fortunate to have enough deposit to secure a mortgage that enables them to trade up-market."

 

The Bank of England's rate-setting committee has kept UK interest rates on hold at 0.5% for the seventh successive month, as widely expected.


10 September 2009

The Bank also said it would continue with its programme of pumping £175bn into the economy, which it said would likely take another month to complete.

Interest rates remain on hold as data continues to show that any UK economic recovery remains patchy.

Figures out later this month could show that the UK has exited recession.

'No risks'
The Bank added that it would keep the scale of its programme of expanding the amount of money in the economy, a policy known as quantitative easing (QE), "under review".

Where there is uncertainty is about what happens next month, when the committee has a new set of inflation report forecasts and the Bank of England will have met the current QE target.

Low rates lead to mortgage shift
Back in August it announced that the funds in the scheme would be raised to the current £175bn level from £125bn.

Analysts were in agreement that the key issue was now whether QE does end next next month, or whether the Bank's Monetary Policy Committee announces after its October meeting that it will be extended.

"It is as yet early days in gauging the effect of the QE programme so far, but companies are still facing serious constraints in their financing, so the Bank must take no risks in ending the programme prematurely" said CBI chief economic adviser Ian McCafferty.

Philip Shaw, UK economist at Investec, said the Bank's latest rates decision was "highly predictable".

"Where there is uncertainty is about what happens next month, when the committee has a new set of inflation report forecasts and the Bank of England will have met the current QE target."

Weak industrial output
Many commentators have said that the economy probably expanded during the July-to-September period, citing rising house prices and a big rise in car sales - despite the later being helped by the government's scrappage scheme.

However, official figures showed earlier this month that UK industrial output fell unexpectedly in August, declining 2.5% from July.

This prompted the National Institute of Economic and Social Research think tank to predict that the UK economy failed to grow in the third quarter.

The official figures will be released by the Office for National Statistics on 23 October.

The economy contracted 0.6% between April and June, following a 2.4% decline from January to March.

UK interest rates remain on hold
The Bank of England has held interest rates at the record low of 0.5% for the sixth consecutive month.

It has also said it would continue to pump up to £175bn into the economy - so-called quantitative easing - but that it would not extend the programme.

Recent data has suggested that the UK has begun to climb out of recession.

But the Bank has warned recovery will be "slow and protracted" and that it will take months for the full impact of its policies to be felt.

'Rhetoric and reality'
Most commentators said the decision to leave rates, and the approach to quantitative easing, unchanged was sensible.

"If you look at survey data, you see the signs of green shoots, but if you look at hard numbers on the real economy, green shoots are much more difficult to see" said Graeme Leach, Chief Economist at the Institute of Directors business group.

"There is a clear divergence at present between the rhetoric and reality of recovery. This situation will change, recovery will come, but just as the private sector recession ends, the public sector recession will be only just beginning."

No changes in policy were expected until at least November, said Hetal Mehta, senior economic adviser to the Ernst & Young Item Club.

"With the economy still weak and inflation projected to remain well below target for a prolonged period of time, interest rates are not heading up any time soon" she added.

Stagnation
Optimism about the outlook for the UK economy has pushed the FTSE 100 index above 5,000 points for the first time since October 2008.

Official data this week showed that UK manufacturing output rose at its fastest rate in 18 months in July.

Respected researchers the National Institute of Economic and Social Research also said the UK economy grew 0.2% in the three months to August.

But it said that a return to growth should not be confused with a "return to normal economic conditions".

"There may well be a period of stagnation now, with output rising in some months and falling in others" the institute said.

Economy boost
The aim of quantitative easing is to encourage individual banks to expand their balance sheets - moving their reserves into something that offers a higher return, such as making new loans - and so increasing the supply of money in the economy.

The BoE extended its stimulus programme to £175bn last month
The Bank's Monetary Policy Committee (MPC) last month increased the size of the the programme by £50bn to create up to £175bn on the UK's balance sheet by, in effect, printing money.

The bank cut interest rates to a record low of 0.5% in March in an attempt to boost lending in the economy.

But there have now been calls for the rates to be cut to less than zero in order to dissuade banks from holding onto the cash being pumped into the economy and lend it to individuals and companies instead.

"One must now question the conventional view that cutting rates below 0.5% will not help" said BCC chief economist David Kern.

"Persistent weakness in lending to businesses, particularly to small firms, poses serious risks to the early signs of economic recovery."

He added that "positive signs of recovery cannot obscure the risks of a relapse", and urged the rate-setters to raise the quantitative easing programme to £200bn to purchase more company debt."

 

No ruling on auctions, declares Ombudsman


Wednesday 5th August 2009

Property Ombudsman Christopher Hamer has reacted strongly to a story in Property Week suggesting he had ruled in May that all UK estate agents had a duty to offer clients the choice of putting their property to auction.

In his annual report, a case was reported where an unnamed agent had the highest-ever award (£23,880) made by the Ombudsman against a firm.

Hamer said: "This award arose because the agent concerned had not explained to the client, who had a property in an area prone to mining activities, that auction might be an option. Instead, the client sold at a low price only to see the house auctioned twice in quick succession, netting substantial profits for the first buyer and more profit for the second.

"It is against this background that agents should consider whether or not the auction route is appropriate and advise their clients accordingly.

"I have never made a blanket ruling that this course of action should be followed for every property, and nor would I. Every case is considered on the circumstances of # the specific event.

"For the majority of sales, the usual methods will be suitable, but in keeping the marketing strategy under review it may be that an auction is appropriate if the seller is keen to sell and the property has been on the market for some time (the record award involved a property on the market for 12 months at least with no viewings and the client wanting to sell). Of course, an agent suggesting an auction option must make the client aware of the potential downsides as well.

"I would also point out that I do not 'fine' firms. I make awards of compensation, and there is an important distinction. Fines are imposed by a regulator, which I am not, and do not go to the complainant.

"I order payments by way of redress for aggravation, distress or inconvenience and also in respect of financial loss. These go to the complainant. In the case of the record award, I ordered a payment of £22,880 in financial recompense and a further £1,000 for the distress caused.

"The circumstances of this award were unique and could not be regarded as a general ruling and should not be taken out of their individual context. My decision does not necessarily apply to the industry as a whole.

"It is not for me to comment as to whether agents wish to join an auction co-operative, but I emphasise that I have not made a ruling that states they should or must offer auctions to their clients."