Posts Tagged ‘london’

LONDON – IS THE BUBBLE BURSTING?

Bell & Company have previously written posts on the potential property bubble developing in London and the South East of England. In the last week there have been murmurs in the financial press that the bubble could indeed be bursting. London, once deemed one of the most secure property investments, is now looking shaky.

A combination of ultra-low interest rates, investors taking advantage of tax breaks to purchase Buy to Lets and foreign investors encouraged by the stable political environment saw prices reach dizzying heights in the Capital.

Just this week however Halifax revealed prices in London fell by 0.8% which is incredibly unusual, nonetheless this fall links with the additional tax on second homes adding 3% on the purchase price.

Nonetheless other signs (across the entire UK) show signs the market has peaked and may decline. Notable sellers are accepting offers on properties 10% below the asking price with the average UK discount in April being c£25,000 up from £21,560 in January this year.

Henry Pryor, a leading housing analyst, has worked through three property recessions  and sights that the current market conditions has a frighteningly familiar feel to it. Mr Pryror adds the following:

With some indicators sighting a fall could occur see the potential example below.

As mentioned above house prices in London and the South East have been continually rising due to constant demand in the area. With this demand starting to wane we could being to see property prices fall and the start of prevalent negative equity for the younger generation of homeowners.

Should you or anyone you know be effected by Negative Equity please contact Bell & Company today on 02895 217373 to arrange your free initial consultation. Our team achieve regular settlements with a variety of lenders and understand how your lender operates. We look forward to meeting you.

 

IS LONDON NEXT TO GO?

London is an incredibly diverse city and is proving a very desirable place for people to purchase a property. However, prices continue to soar in the city and suburbs which has led to Chancellor George Osbourne being put under pressure to present ideas allowing first-time buyers and those not on a high-end salary to get onto the Property Ladder.

A couple of figures to ponder:

Outer boroughs and commuter towns are now seeing annual price increases in double-digit percentages. Previously unheard of!

400,000 NEW homes?

Despite the incredibly high prices, demand for property in the Capital continues to soar and is outstripping supply despite recent Government pledges to build over 400,000 new homes.

One reason first-time buyers can get on the property ladder is by utilising the Help to Buy scheme and only paying down a 5% deposit. This coupled with cheap mortgages due to historically low-interest rates have allowed people with the average salary of £30,000pa to get onto the ladder.

Although people can buy a house in London, their salaries are not keeping up with prices. Therefore, those still looking to get on the property ladder will increasingly struggle to buy a home. But the gap between earnings and house prices suggest that the London property bubble could burst at any minute if there are any big shifts in interest rates. If these first-time buyers are fuelling the market there is a concern once rates do rise then mortgage payments simply become unsustainable.

UBS’ property price index which measures inflation is reportedly flashing red in London and cites that of all the world’s major cities, London is perhaps the most likely to see a bubble burst. UBS cites low-interest rates and cheap mortgages as fuelling the boom and that historically when prices increase at this rate there has been a correction.