Economists verses the general public, who will win? This is the question when we are watching a housing market recovery that defies the economic fundamentals that are required for a sustained level of growth in house prices. Many economists believe that simple supply and demand is responsible for the recent period of growth. This is the difficulty with the British public, they do not always behave as the economist believe they should. So in 2010 will the British public shake off increasing interest rates, challenging lending criteria? I think the answer lies in how much resolve and drive the current wave of first time buyers can muster. This is one of the few things that the public at large and the world?s economists agree on, that the market is driven by that most allusive of commodities the first time buyers.
The house building sector has seen a change of heart from the worlds slightly battered investors, it would be overly optimistic to say that private and intuitional investors see property development and house building as the ideal home for their funds but they are certainly returning to the sector.
The recent interest in some of the large house building firms and bids for their shares from corporate backers shows that the sector is again finding favor amongst some serious players in the investment markets. There are a lot of fund managers with large cash funds at their disposal and a brief to get high returns, which of course has focused their attention on higher risk stocks that they believe have been overlooked or undervalued.
Don?t get too excited but there is a slightly more relaxed approach to mortgage lending according to the latest figures released by the British Banking Association. The figures showed a 20% increase on the previous year?s figures for March. Many in the banking sector now believe that the availability of mortgage funding will be a constraining factor on the recovery of UK housing market.
A planning application has been received by Nottingham City Council for further multi-million pounds of construction works to improve the cities Broadmarsh shopping centre. The redevelopment is thought by some to be a stop gap until a grander scheme of re-development can be justified by the owners.
City of London prime property Drapers Gardens within the City of London is now under offer and will reportedly return 5.1% for its new owner. The property which is currently let to an investment management company is another added to the list of recent deals completed in the city. With a more fluid commercial property sector more owners are considering selling some of their commercial property holdings to give themselves a more attractive balance sheet in readiness for the upward cycle in the property sector.
There is said to be 40 city properties on the market totaling a current value of over 3.3 billion pounds so we can expect another exciting year in the UK commercial property sector.
With the number of rentable properties reducing (see April 6 2010 blog), an interesting survey has been carried out in York which no doubt could be compared with any town or city in the U.K. that has the added pressure of providing rental accommodation for students.
The list shows the top 10 number of (S.H) Student Households for streets in the city. Perhaps surprisingly, a high figure of 88 S.H. (Student Households) is shown for the street at the top of the list, whilst the rest of the top 10 streets show the list from the highest to the lowest of the top 10 as follows :- no.2 ? 65 S.H., no.3 – 57 S.H., no.4 ? 49 S.H., no.5- 45 S.H., no.6 ? 43 S.H., no.7 ? 40 S.H., no.8 – 32 S.H., no.9 ? 29 S.H., and finally no.10 on the list shows 22 Student Households.
It should be noted that the survey does not include any addresses where one person is a student and others were working or claiming benefits.
The gross mortgage lending has increased by 24 per cent despite the property sector being described as ?quiet and subdued?, by the Council of Mortgage Lenders.
There is a great deal of speculation about the short term future of the UK property sector, but interestingly there seems to be a real increase in the number of investors and developers looking at speculative property developments. With land and deals changing hands as many in the sector are simply looking to get back in the saddle. Many in the UK property development sector have simply given up and found other things to do while the market rides out its troubles.
Surveyors are reporting the largest volumes of vendors coming to market since the peak in 2007 just prior to the introduction of the Home information pack, stated the Royal Institute of Chartered Surveyors. The report has also suggested that the rate at which properties values have been increasing has slowed. The up and coming election has undoubtedly had an impact on people?s decisions on putting their properties to market. Many of the housing market key indicators do remain positive but if the market falters there may be areas outside London that do experience a fall in house prices.
Apartments at One Hyde Park, in Knightsbridge, Central London are now on sale for as much as ?6000 per sq ft, which, so far, is a record worldwide.
A starting price of about ?5million will buy you the most exclusive address in the world. According to the selling agents, who have declared a revival of luxury, ?uber-prime? property, an unnamed buyer has purchased one of the apartments for a cool ?28 million and a total of ?100 million in reservation fees has been paid, despite the residences not due to be completed until October.
This could mean that the market is restored, but it would seem that it is the mega rich that have just got richer.
The figures were not only 20percent higher than last year but also above those anticipated by economists. The number of applications for building permits has also seen a healthy increase but interestingly revenues from residential construction now account for less than 2% of the American GDP. It will be another exciting summer for American house builders but for all the wrong reasons.