KFH's Blog

Bottoms up?

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Wednesday, September 09, 2009

There is no doubt that the market ‘bottomed-out' during the final months of 2008 and although property supply remained scarce, an upward trend in new buyer registrations was recorded from the very beginning of 2009.

The level of buyer demand increased significantly from the beginning of Quarter 2 and has continued through the spring and, perhaps surprisingly, the summer months.

This has led to a very quick correction in property selling prices, which have increased by 10-15% over the past six months, recouping almost half of the fall in selling prices seen between mid 2007 and the end of 2008.

In June 2009 we saw a marked improvement in new instructions coming to the market, which has continued through the summer months, and created a more healthy balance between supply and demand. We believe this will now stabilise prices for the remainder of the year, while maintaining a similar level of sales transactions as achieved between April and August.

Putting this into perspective, sales agreed during the current quarter are over double that for the same period last year, but still 20% less than 2007.

The general economy, unemployment, and the relatively still difficult mortgage market, particularly for the first time buyers, is undoubtedly still suppressing and maintaining an air of caution in the market place.

However, we believe this is being compensated by the substantial pent-up demand of both buyers and sellers that has built up over the past two years, who are now gaining confidence and drip feeding, presently on a gradual and measured basis, into the market.

This is positive news for the sales market in London and there is no reason why this trend should not continue.

However, if lenders start competing for business again by easing and extending lending criteria to the unsustainable levels seen in 2005 to 2007, then this recovery in the property market could come to an abrupt halt.

Hopefully the Government will control and prevent such circumstances arising and, subject to this, we anticipate a very positive and continuing healthy market for the rest of the years and through 2010.

We hope so - we're expanding.

Market improvement?

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Tuesday, May 12, 2009

Kinleigh Folkard & Hayward's Managing Director, Lee Watts, talks about what he is seeing in the London market

During the first quarter of 2009, we have witnessed the first positive signs of a stabilising and improving London property market. Although sales agreed were still 20% less than the same period in 2008, they are the best results recorded for over 12 months.

In London, selling prices bottomed out at the end of the last year, falling on average by 25 to 30% from their peak in mid 2007.

Encouragingly, April brought a significant increase in new buyer registrations - over 20% higher when compared with April 2008 - and this included the Easter holiday fortnight. April also saw an increase in first time buyers, representing 45% of all new registrations.

This has resulted in a 30% increase in the number of sales agreed over April 2008 and, due to the relatively short supply of new properties coming to the market, there is now upward pressure on selling prices.

We are already starting to see an increase in both asking and selling prices and, based on supply and demand continuing at similar levels as seen during April, I believe we will see actual selling prices increase between 5 and 10% over the next six months.

This will release many home owners from negative equity, increase the level of new properties coming to the market and ease the present imbalance between supply and demand.

At the beginning of this year we predicted an increase of 10 to 15% in overall sales transactions during 2009. We now predict that this will be between 15 to 20%, although still almost half the number of transactions in 2007.

These forecasts are converse to many institutions and market commentators' predictions, and are supported by current activity levels across our network of London offices.

Kickstarting the economy - What Brown should do next

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Monday, March 09, 2009

Lee Watts, Managing Director of Kinleigh Folkard & Hayward thinks Gordon Brown should be putting on his boxing gloves and tackling the economy head-on...

"We are now seeing, first hand, the problems that first time buyers are having getting onto the property ladder. As a result, I feel that Gordon Brown needs to be much more aggressive in taking steps to kick the economy into shape.

"Firstly, the Government should look to control lending to a maximum of 95% loan-to-value, and in addition, introduce government backed Mortgage Insurance Guarantees for the top 15% of lending over 80%. This will encourage lenders to improve the range of products and rates available.

"I believe that back in his Chancellor days, Gordon Brown made a huge mistake when he scrapped the "middle class perk" of MIRAS in 2000. In the current market, the re-introduction of Mortgage Interest Relief at Source, for first time buyers only, would go a long way to relieving the difficulties faced by those trying to buy their first home. Combine this with the introduction of regulation to control irresponsible lending, specifically in relation to the criteria laid down for the multiples of salary levels that lenders are willing to impart, and we might see first time buyers get an affordable foot on the elusive first rung, with a sensible control to prevent property values spiralling upwards again.

"If the Prime Minister really wants to make the housing market move a little bit quicker, then he might like to consider putting the final nail in the coffin of the ill-advised Home Information Pack (HIP). These are of no benefit to the sales process and just slow the whole thing down. Buyers are not interested in them while they are looking for a new home, and they are an unnecessary expense for vendors wishing and trying to sell their home."

Not in the interests of the market

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Friday, December 05, 2008

John Phillips, Financial Services Director at Kinleigh Folkard & Hayward thinks that the interest rate cut isn't all it's cracked up to be - not for the property market, anyway...

"Of course, we've welcomed the decision of the Bank of England to cut interest rates to 2% for the sake of borrowers with existing mortgages. Anything that saves the mortgage payer any amount of money has to be a good thing for the marketplace, right?

Well, actually, no.

Cutting interest rates may deter people from putting money into savings, it may even entice them out to the shops, but what it won't do is free up the market. The current difficulties within the market will not cease until lenders address the Loans to Value problem.

New entrants to the market place currently need to save a deposit of 15% to even have a hope of getting onto the property ladder. For a property in London, that would probably equate to roughly £37,500. Now, how many first time buyers can raise that kind of deposit? The answer is very few, and probably even fewer now that the interest awarded to their savings has just been cut by another percentage point.

If lenders were to start offering mortgages of 95% at a reasonable rate, this would kick start the market. As soon as a couple of lenders raised LTVs, the market would ease and would start to flow freely again. However, lenders are afraid of property prices dropping further and will not take the risk of negative equity."

KFH

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Bottoms up?

Market improvement?

Kickstarting the economy - What Brown should do next

Not in the interests of the market

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