Experts in the mortgage market are still at odds over increased lending many believe there will be no great improvements in bank lending until 2014. The banks have been focused on repairing their balance sheets since the first signs of the credit freeze. What many have missed is the millions of pounds that have been paid back as mortgage terms completions. Recently some lenders have started to slacken lending criteria even if by small margins. This has been enough to relight the debate on the short term future of mortgage lending. It has also given some well thought of experts in the mortgage market the ammunition to make some very positive predictions for the rest of 2011 and 2012. With many buy to let investors starting to flex their muscles and lenders more flexible will this year see a new dawn for the residential property market?
A spoke person for the federation of master builders has repeated their findings that for every pound invested in construction it returns ?2.84. These comments came after a disappointing quarter for the construction industry with the number of new sites started dropping by nearly a third compared with this period last year. The lack of liquidity in the banking sector is still holding up many speculative development and house building projects. Deals are often failing because developers are struggling to make the tighter loan to values. Only those with cash, experience and good property development funding brokers are making it to site and breaking ground.
Whilst official reports may state that house building is not progressing as it once was ; from which one could easily get the impression that such projects have completely come to a standstill in the U.K., it is good to see and note that new housing schemes are currently progressing with examples such as Belper where a previous industrial site is being used with residential properties presently under construction. I am also aware of a large development about an hour and a half?s drive away from Belper at York where 540 new houses have just started to be built within a mile or so of the city centre.
Developments such as the above show that housing schemes are in fact active and whilst nationally they may not be at the level they once were, things have not stopped and where you live, or near to where you live, may be better than you would expect in that new houses are still being built.
The three main statistics that are reported by the Royal Institution of Chartered Surveyors in their monthly reports are House prices, house sales and new interest from potential buyers. The latest report from their surveyors for March showed house prices remaining stable along with the number of transactions. It does show a fall in the number on interested buyers registering their interest in properties for sale. Interestingly the number of properties being listed has also declined, this is good news for prices as decreased supply matches decreased demand. It is however not great news for the property and construction industries.
With rising rents and many properties looking increasingly better value as distressed property vendors head for the door after long sales periods. Many professional landlords and property investors are looking to circle and pick up the best bargains. There is no doubt about the tenant demand so investors have fewer concerns about voids with most landlords reporting voids of less than two weeks. There has been much discussion about buy to let landlords and how to make a fortune in property in the boom times. During this time many of the traditional landlords who have been in the game for years, have been slightly frustrated by those who made a quick buck. It is these canny and steady investors who are now starting to dip their toes back in the water. The question is dare you follow them, or will you leave it until the next boom is in full flow and all the bargains have gone?
Commercial property values have risen in March by 0.7 percent as investment property continues to attract investors looking for inflation busting tangible asset classes. Data for the total investment returns showed commercial property returning a total of 1.2 percent in March with retail showing the best returns. However much of this growth is attributed to prime and top end commercial property investments. The bottom end and sub prime commercial properties continue to underperform and the market is starting to operate at two tiers.
The low levels of house building and the current usual economic circumstances have lead to this recent relaxation of the use class order. This will allow property developers and owners to bring office buildings into residential use without applying for planning permission. In many areas it will make little difference to the vacant office stock, but in certain town and city locations it will undoubtedly add to the capital values of some properties. There will already be wealthy developers and speculators looking to cash in on this new planning president. It is also good news for those who own commercial properties in market towns. There is always a demand for small offices in these market towns but rents are capped by the demand and supply ratios. With some of these upper parts now becoming instantly available for conversion to apartments and residential use. The sensible balance and market forces will keep the rents or leases and office and residential split in line with tenant demand rather than being influenced by planning law.
Rental voids the periods when investment property is vacant and not generating rent has been falling for the last three quarters. Nearly half of all landlords are reporting voids of less than two weeks. It seems with the continued drought in mortgage funding and no rush to get in before house prices climb, many buyers are filling up the private rental sector. This looks to be the trend for the short to medium term with tenants competing to find suitable houses for rent.
Tax and property experts are becoming disheartened by the lack of progress of the scheme. Tax Incremental Funding or TIF as it is known allows councils to raise finance against future revenue increases from property developments. The scheme would make many developments that do not quite stack up for funders go live and work start. At a time when the construction of these large scale projects would be most welcome and a huge boost for local economy?s it is very frustrating. Developments in the use of TIF funding have been followed closely by this blog and many others in the property industry. However progress has been painfully slow which has stalled schemes like a large eco development in Leeds.
Positive comments from the construction purchasing managers index reports from property economists has show an increase in the starting of new commercial property developments. They also reported that the output for the sector had risen in the previous three months. There was also talk of the fear over government cuts being exaggerated and a more positive sentiment with in the construction and property industries.