BRITISH PROPERTY PRICES HIGHER THAN YEAR AGO

British property values are higher than they were a year ago following six consecutive months of price rises website FindaProperty.com reports. Today, the value of the average home is £218,134 compared to £217,622, twelve months ago, an increase of GBP512.

The small rise in values is due to a surge in demand for large houses.

Prices are rising for larger properties targeted by "home-movers", but falling for smaller homes sought by first-time buyers FindaProperty.com reveals. Prices have risen 6.6 per cent over the past twelve months for homes with three bedrooms or more, but dropped 4.6 per cent for small flats, terraced houses and other properties with two bedrooms or less, the website's research shows.

Rising unemployment and difficulties in raising mortgage finance are keeping first time buyers from the market which is dragging prices down for entry level housing FindaProperty.com says. Home-movers are able to buy homes more easily, because mortgage lenders are more likely to lend to them, so this is keeping the market for larger properties active the website adds.

"Movement into positive annual property price growth is the news homeowners have been waiting for and suggests the housing market is making a sustained recovery," says Michael O'Flynn, director or FindaProperty.com, "There is no doubt that lending criteria still continue to be an issue, but most existing homeowners are still able to access the mortgage market using the equity they have built up over the years."

The British property market has experienced a sharp turnaround in recent months and many forecasters are upgrading their forecasts for this year. The RICS forecasts prices will be slightly higher by the end of this year than at the start, after previously forecasting a big fall.

The market has been particularly strong in prime central London districts like Mayfair where City money and foreign money have driven up prices since the Spring. City buyers are benefitting from the return of bonuses and a surging stock market, and foreign buyers are benefitting from the weak Pound, although it has strengthened marginally in recent weeks.

Many commentators remain sceptical about the recovery in prices. PriceWaterhouseCoopers says prices will fall over the next 18 months and may not recover to 2008 levels for another decade, saying the lack of mortgage finance and a shaky economy will drag the housing market down.

(All The World's a Home : Global Property News)

REPOSSESSIONS RISE IN BRITAIN

The Council of Mortgage Lenders forecasts 65,000 homes will be repossessed in Britain in 2009, a two-thirds increase on 2008 when 40,000 were taken over. These repossessions could provide a rich harvest for investors, because they can be bought relatively cheaply, sometimes at 40 per cent below market value.

A bank or building society will repossess a property if the borrower fails to make mortgage re-payments to them. A home can also be repossessed if its owner fails to repay credit card and other non-mortgage loans secured on the property. Once repossessed, the lender sells the home either through an estate agent or at auction to recoup the money they lent.

The number of homes getting repossessed is rising, because millions of home-owners are struggling to repay their debts. The recession means they are either losing their jobs or having their wages slashed.

Landlords are struggling too, because although they are benefiting from low interest rates, some are struggling to find tenants. According to the Council of Mortgage Lenders (CML) 1,400 buy-to-let homes were repossessed in the second quarter of 2009, about the same as in the previous quarter.

Nick Hopkinson, director of Property Portfolio Rescue, a company which specialises in buying assets from landlords and developers, said the number of homes being repossessed this year would grow.

“We are likely to see a big rush of repossessions later in the year,” he said, “People are losing their jobs, insolvencies are peaking and there is no sign that banks are lending more freely.

Many different types of property get repossessed. Knight Frank is marketing two repossessed country mansions, including GBP.2.75 million Clifton Hall (pictured above) on the outskirts of Nottingham. This Grade I listed mansion boasts 17 bedrooms, eight reception rooms and one hectare of gardens.

Most repossessions are found at the other end of the property spectrum. The bulk are inner city flats or terrace houses offered at low prices. In Bradford, a three bedroom terrace house in need of modernisation is being offered by auctioneer Manning Stainton with a guide price of GBP40,000 to GBP50,000.

Some homes are former investment properties. In London, estate agency and auctioneer, Barnard Marcus, is offering a repossessed terraced house in Fulham which has been divided into four flats. It was unsold at the company's last auction despite receiving an offer of GBP1.35 million. It's guide price is GBP1.5 million.

The company is also offering a flat in Hampstead at a guide price of GBP200,000 at its next auction in September.

In addition to approaching estate agents and auctioneers for repossessions, buyers can find websites dedicated to these types of property. Three thousand repossessed British homes are advertised on http://www.repossessedhousesforsale.co.uk/.

An auction can be the cheapest place to buy a repossession. According to Steve Forshaw, managing director of website www.repossessedhousesforsale.co.uk, properties can be bought for 40 per cent below their market value at auction.

“The vendor wants a quick sale and a quick sale equates to lower price,” he said, “It is not politically correct to say a property is repossessed, but the fact that the property is being sold by a bank is enough to tell you it is.”

However, auction buyers sometimes bid too high Robert Hadfield, managing director of London investment property management company, Pineflat, said.

“Auction rooms can encourage irrational exuberance, so, while there are some bargains to be had, this is not automatically the case,” he warned.

Repossessed properties can be problematic he added.

“It's quite a long time since we've bought a repo, but the last one needed half the kitchen cupboards replacing and also lots of messing about with heating controls, keys and missing bits of pieces,” he said, “And of course sometimes repo properties are trashed deliberately.”

Repossessed homes are sometimes blighted by planning disputes or are in areas with high crime rates or widespread mortgage fraud he warned.

“Check for liabilities like unpaid service charges, title irregularities and the sales history of neighbouring properties,” he advised, “If there are several repossessions in the local area there is probably something amiss.”

Mr Forshaw said investors ought to base their purchases on a property's potential yield. “We are looking to buy property in this office,” he said, “We are interested in nothing less than 10 per cent returns.”

Tim Hyatt, head of lettings at estate agency, Knight Frank, said buyers in London ought to choose properties that were close to transport links to major financial centres, like Canary Wharf. Properties in poor condition needed improving he added.

“The standard of rental accommodation is now really quite high, much higher than three years ago,” he said, “it needs neutral décor and style, and to be high spec.”

Mr Hopkinson advised overseas investors against buying blind.

“You either need to work with a specialist advisor or see the property yourself,” he said, “You need to do spreadsheets, not just look at pretty pictures. You need to go on the Internet and check the prices and rents in the area.”

(All The World's a Home : Global Property News)

BRITAIN'S RENTS UP

British rents have risen 1.2 per cent over the past three months latest figures show, because the demand for houses is strong. The market for flats remains weak however.

According to The FindaProperty.com Rental Index, August 2009, average monthly rents have risen by GBP10 across Britain since April to GBP829, following three consecutive months of increases. This means the year-on-year decline has eased to minus 4.8 per cent, the lowest decline since January 2009.

Rents for houses rose for the fourth month running in August, but the oversupplied flats sector is “languishing” FindaProperty.com reports. Many developers dumped inner city flats they could not sell onto the rental market over the past 18 months, pushing up supply.

Rents for houses rose 2.5 per cent between April and August to GBP868 per month, while asking rents for flats have sunk minus 2.6 per cent since February to GBP749 per month, the website says.

According to Michael O'Flynn, director of FindaProperty.com, demand for houses was boosted by many families opting to rent, because they could not get a mortgage to buy a home.

In prime central London districts like Mayfair, Belgravia and Kensington, the lettings market continues to struggle. According to estate agency, Knight Frank, average rents are down 19.3 per cent on June 2008 after having fallen for five consecutive quarters.

However, Juliet Hill, Lettings partner at Knight Frank's Knightsbridge office, said the downturn had eased in prime central London during August.

“I wouldn't say there was a recovery, but rents are more stable,” she said,” the volume of stock coming onto the market is down 35 per cent compared to this time last year, and at one or two offices we have had competitive bidding.”

Properties most in demand are family houses in the GBP2000 to GBP3500 per week range, because tenants wanted to be ready for the autumn school term which starts in September, and good quality two bedroom flats priced at GBP800 to GBP1500 per week, she said.

She was uncertain how the market would perform over the next twelve months.

“I remain cautious,” she said, “landlords need to be competitive. If they ask ambitious rents then there will be long void periods. Our market is very dependent on the City (financial services sector). There are some reports saying the City firms are recruiting again, and others say they are not. Until we know which where they are going we can't know how rentals will be.”

According to FindaProperty.com, rental yields are 4.75 per cent nationally. In prime central London they are between 3.5 – 4 per cent Knight Frank reports.

(All The World's a Home : Global Property News)