One in three property sellers cut asking prices, says Zoopla

Website claims 33% of homes on market have been discounted in sign of cooling market and more realistic sellers

Homeowners are becoming more realistic about selling and lowering their asking price, Zoopla says. Photograph: Yui Mok/PA

A third of homeowners trying to sell have cut their asking prices since putting their homes on the market, according to the property website Zoopla, as the slowdown in the housing market forces sellers to be more realistic about their expectations.
The website found that 33% of properties listed as for sale had been discounted at least once, the highest proportion since August 2012. The average price reduction is 6.7% of the original asking price, or £24,429.
Renewed confidence in the economy combined with low mortgage rates and a government scheme to boost homebuying had all buoyed the housing market in the first half of the year, with price growth returning to many parts of the country.
However, affordability constraints have set in in London and the south-east and with the traditional winter lull the market seems to have has started to cool.
 Zoopla said sellers in Preston were most likely to have adjusted their prices downwards, with 44% making cuts, closely followed by Barnsley, Wakefield and Rotherham, where 43% of homes on the market had been reduced.
In Preston, the average price cut was 7.5%, or £16,309.
Sellers in Edinburgh appeared to have the most faith in their original asking price, with 22% of properties reduced since coming on to the market.
In London, where a scramble for homes led to buyers in some areas making sealed bids above the asking price earlier in the year, 29% of prices have been discounted. In February when Zoopla last looked at data on sellers’ behaviour, the figure was 15%.
The biggest discounts have been made by sellers in Mitcham, south London, where prices have been slashed by an average of 9.2%, or £55,606, while the smallest cuts have been in Northampton where the 30% of sellers reducing their asking prices have done so by an average of 5.1%, or £13,473.
Lawrence Hall of Zoopla said: “The property market typically slows in December as buyers postpone their plans until the New Year and become preoccupied with the festive season, but these figures suggest that sellers may be being forced to become more realistic in order to secure a buyer.
“People are well attuned to a bargain at this time of year, so homebuyers may want to capitalise on the latest raft of reductions.”
Among the properties listed on the website with discounts of 50% are a two-bedroom penthouse flat in Manchester which is now up for sale at offers over £1m, and a three-bedroom home in London’s Docklands being sold for £1.375m.
On Monday, the rival website Rightmove said new sellers coming to the market in December were asking 3.3% less for their homes than those who put up the for sale signs in November, and that those in London were asking 5.1% less.

 Zoopla said sellers in Preston were most likely to have adjusted their prices downwards, with 44% making cuts, closely followed by Barnsley, Wakefield and Rotherham, where 43% of homes on the market had been reduced. In Preston, the average price cut was 7.5%, or £16,309.
Sellers in Edinburgh appeared to have the most faith in their original asking price, with 22% of properties reduced since coming on to the market.
In London, where a scramble for homes led to buyers in some areas making sealed bids above the asking price earlier in the year, 29% of prices have been discounted. In February when Zoopla last looked at data on sellers’ behaviour, the figure was 15%.
The biggest discounts have been made by sellers in Mitcham, south London, where prices have been slashed by an average of 9.2%, or £55,606, while the smallest cuts have been in Northampton where the 30% of sellers reducing their asking prices have done so by an average of 5.1%, or £13,473.
Lawrence Hall of Zoopla said: “The property market typically slows in December as buyers postpone their plans until the New Year and become preoccupied with the festive season, but these figures suggest that sellers may be being forced to become more realistic in order to secure a buyer.
“People are well attuned to a bargain at this time of year, so homebuyers may want to capitalise on the latest raft of reductions.”
Among the properties listed on the website with discounts of 50% are a two-bedroom penthouse flat in Manchester which is now up for sale at offers over £1m, and a three-bedroom home in London’s Docklands being sold for £1.375m.
On Monday, the rival website Rightmove said new sellers coming to the market in December were asking 3.3% less for their homes than those who put up the for sale signs in November, and that those in London were asking 5.1% less.

http://www.theguardian.com/business/2014/dec/17/1-in-3-sellers-cut-property-asking-prices-zoopla#start-of-comments

Claus for concern: Would Santa get a mortgage in today's market?

The big questions surrounding the housing market, and with Christmas drawing ever closer we thought we'd look at how everybody's favourite festive character would fare in the current mortgage market.

We all know Santa Claus as the hardworking, jolly old man who brings presents and joy to us all on 25th December - but with ho-ho-homeownership an aspiration for many of us, would he be able to get on the ladder as well as down the chimney?

Firstly, there's his age to take into consideration. Legends about an old man delivering gifts have been around for centuries in many cultures, so it's safe to say he's old enough to collect his free bus pass (although with his trusty reindeer and famous sleigh he might not need one!). IMLA recently published a report that claimed fears of a future clampdown by regulators are preventing mortgage lenders from offering loans that stretch into people’s retirement. Could this be a problem for Saint Nick? Despite this research from IMLA, Brightstar Financial recently noted that, while some lenders are reluctant to lend to older borrowers, there are still options available - so a nice two-sled semi at the North Pole might not necessarily be out of the question.

As with all mortgage applications in the wake of MMR, checking affordability is key to securing a suitable mortgage product. Allowing for grazing space for Rudolph and co, as well as space for his fabled workshop, our jolly housebuyer will need to borrow more than a few chocolate coins to secure his dream home. While we know he's gainfully - and permanently - employed, Mrs Claus isn't so lucky. With a single income and elves to support, lenders might be worried about how Father Christmas would cope with the imminent rate rises we're all anticipating.

And while we're on the topic of Santa's income, it's difficult to say how this would be calculated. As far as we know there aren't many accountants - or even banks - in the North Pole, meaning providing proof of income could be tricky. If he files his tax returns as a self-employed worker, he could be in luck, as Dudley Building Society recently urged the industry to address self employed lending gaps and to end discrimination against the borrowing needs of the self employed when it comes to home ownership. However, we're not entirely sure that sherry and mince pies count as adequate payment methods and certainly wouldn't cut it with any lenders in the post-MMR landscape.
It looks as though it might not be all chestnuts and open fires for our festive hero, as he falls into several categories of borrowers who are struggling with high prices, loan-to-income caps, and self-employment lending gaps in the current UK mortgage market. With mortgage rates set to rise and 91% having worries about selling up  due to high house prices, it looks as though Santa might remain in the North Pole for the foreseeable future. On the other hand, he could always try his luck with Hollyfax, Santa-nder, or Barsleighs...

http://www.propertyreporter.co.uk/property/claus-for-concern-would-santa-get-a-mortgage-in-todays-market.html

Landlords owed more than £800m in unpaid rent - how do Southampton Landlords fare?

A third (32%) of landlords in the UK – approximately 500,000 – say they have experienced rent arrears in the past 12 months, according to research from the National Landlords Association (NLA).

 

The research shows that a typical landlord faces £1,649 of outstanding rent each, totalling £850m worth of rent arrears across the UK.

 

The NLA research also shows that one in five (22%) landlords in the UK – approximately 300,000 – are worried that their tenants won’t be able to keep up rental payments over the next year.

 

The research supports the launch of the NLA’s latest campaign: rent, risk resolve. The campaign aims to highlight four of the biggest risks facing landlords and help them to minimise the impact on their lettings business:

• Rent arrears
• Rising interest rates
• Local landlord licensing and regulation
• The introduction of rent controls

NLA chairman Carolyn Uphill said: “All landlords will be affected by one or more of these issues to some extent somewhere down the line and it’s vital to keep in mind the major threats to the success of your business.

 

“Regardless of the size of your portfolio the potential impact of these risks can be devastating on both the business and personal life. As the largest landlord association in the UK, we have a duty to support and advise on how to plan ahead effectively and manage these risks.”

 

The first focus of the NLA’s campaign will be the risk of rent arrears. The NLA has produced a guide to support landlords to deal with the problem.

 

A landlord’s guide to rent arrears enables landlords to spot potential arrears early and provides strategies to put in place to mitigate the impact. To find out more about the campaign, or to download the free guide, visit www.landlords.org.uk/rentriskresolve.

http://www.landlordtoday.co.uk/news_features/Landlords-owed-more-than-%C2%A3800m-in-unpaid-rent

Is your Southampton property winterproof?

As the icy temperatures of the snowy season approach, it is vital to visit your rental property in order to assess how to protect it from the elements and help freeze potential winter problems in their tracks.

Undiscovered maintenance issues can cause extensive damage and expensive bills during the winter months so here is a simple checklist of potential problem zones, both inside the property and out...

• Firstly visit your property and assess what is needed  
• Brief your tenants on winter warning signs to look out for and ask them to report any maintenance issues they spot immediately
• Ensure the central heating is working correctly and have your boiler serviced - check your gas safety record expiry date.
• Clear out the guttering. Clogged gutters can cause rainwater to cascade down the fabric of the building
• Help limit condensation by resolving ventilation issues
• Act quickly to prevent potential issues becoming bigger problems
• Check fence panels aren't loose and secure if necessary
• Secure loose roof tiles and replace any that are broken
• Unclog storm drains to prevent them from overflowing
• Insulate pipes (including condensate pipes) to prevent them from freezing
• Advise your block management company of any of the above external issues on your apartment as it is their responsibility to fix this.

Acting and reacting quickly to maintenance issues as winter approaches is essential. Even small problems are likely to grow as the temperature falls – and, as a maintenance issue escalates, so does the price to fix it! It will also lead to unhappy tenants, potential loss of rent and voids, So act now and you should get to enjoy your Christmas break.

Southampton buy 2 let close to the Hospital yields 6.6%.

This 2 bedroom semi-detached property is a stone's throw to Southampton General Hospital. It is in good order and benefits from gas central heating, double glazing  and family garden. The property has two good sized bedrooms and excellent space downstairs. It will attract medical staff from the hospital as well as professional tenants. It will rent at £850pcm and is on the market at offers over £155k. Gross yield based on asking price is good at 6.6%. 

Something for Christmas perhaps!!

How has the Southampton buy 2 let market fared in 2014?

A number of Southampton landlords have made contact with me recently asking for my thoughts on the future of the buy to let market in Southampton and indeed on how 2014 has fared. In previous posts, I have talked about Southampton’s history of rents, property values, tenant demand and yields; all important matters for a landlord, but we haven’t discussed the future and taken stock of 2014.

Southampton property values rose by 6% (year to Oct 14) according to the Land Registry. Good news all round, but when you consider property values in the city had previously dropped by 17.7% between December 2007 and June 2009, this is not so good. And some landlords who bought at the peak in late 2007 are only coming out of negative equity now.

It should be no great surprise to hear that Southampton property values are starting to slow up as we head into the New Year (that’s a normal season event). Property values in the city were growing at upwards of 1.9% a month in the early summer months, but in later months they slowed to a mere 0.4% monthly increase and for December I feel they will be negative.

Landlords who were active in the early part of the year clearly have done well but as the year progressed we felt that vendor expectation had started to run ahead of the market. We saw an increasing number of properties failing to complete and these were remarketed some weeks later at reduced prices. There is no doubt the new mortgage rules had an impact and surveyors were not comfortable in following the market and in some cases marked down property values, again which resulted in these properties being remarketed. The lack of differentiation in tenanted properties was quite amazing, earlier in the year any property with a tenant in situ was priced at 6 % irrespective of tenant risk, location, condition etc. This resulted in some properties being overvalued by some £20,000 or £30,000. The back end of the year needed more work to find value as prices had already moved ahead but I am pleased to say we have helped a number of investors find good value in Southampton.

The reality is we have had over a year of decent market conditions in Southampton, but now all that pent up demand is starting to fade. The big question moving forward is whether the Southampton market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Southampton property market.

Looking at the UK as a whole, because we can’t look at Southampton in just its little own bubble, the recent rapid rise in house values in some parts of the UK in the early part of the year (especially in London), along with earnings growth that remains below inflation and the possibility of an interest rate rise in 2015, appear to have tempered housing demand. This weakening in demand has led to a modest easing in both property price growth and sales. A moderation in growth looks likely into next year as supply and demand become increasingly better balanced.

Now with the General Election on the horizon, whichever Government takes power, they, along with the Bank of England, have a difficult job to do in balancing the expected rise in interest rates with the continued resurgence of the housing market. They need to ensure the property market doesn’t drop and drag down the economic recovery which may force people who have just recently bought into selling their property at a loss.

So overall I would say that 2014 has been a good year for the Southampton buy 2 let investor with total returns inexcess of 12%. Next year I think capital growth will be slightly lower than 2014 but yields will hold up and I would expect our landlords to generate total returns in the 10% to 11% region.

Agent boosts 2015 price forecast after stamp duty changes

Hamptons International has revised its forecast for 2015’s housing market on the strength of George Osborne’s stamp duty changes, suggesting prices in England and Wales will grow by up to four per cent next year and 4.5 per cent the year after. 

Over 2015 the east oi England is the region expected to see the greatest rise in prices, at four per cent, along with the south east, south west and north west.

In London, which saw the strongest growth in 2014, house price growth is set to be the most subdued - prices in Greater London are set to rise by 1.5 per cent, by 2 per cent in central London and a meagre 0.5 per cent in Prime Central London in 2015.

Overall transaction growth is expected to be modest over the next two years.  

The stamp duty reforms will have two effects, claims Fionnuala Earley, research director at Hamptons International. 

“First, to give buyers more to spend and second, to make it slightly easier for them to pass affordability tests. Both of these should boost transaction numbers and price growth, but this is likely to be a short term effect as prices adjust, eroding the benefit of the tax cut. The largest effect is likely to be felt in the first half of 2015, mitigating some of the usual slow down we’d expect in the run up to an election” she says.

She says that London is going to be subdued, reflecting affordability concerns and the expectation that recent price growth is unsustainable, especially in the face of low wage inflation. 

“The changes to stamp duty will prove a drag on house prices above £1m as vendors have to adjust their expectations. This will add downward pressure to prices in that bracket” predicts Earley.

http://www.estateagenttoday.co.uk/1748-agent-boosts-2015-price-forecast-after-stamp-duty-changes