The property market is something that affects us all, be it buying and selling a house, to property investment. This blog is our take on the property market in Scotland in general, and Dundee and Angus in particular. To get in touch with us, please visit www.blackadders.co.uk.
I was very interested to read a report carried out by Savills which provided analysis of the last 15 years of land registry data. The conclusion of this report is that the UK property market is very much following previous trends in that the property market recovery is being led by the top end properties i.e. the least affordable properties in the most affluent areas. As Lucian Cook, Director of Research at Savills stated: “The bottom end of the market does not appear to have the potential to bounce in line with the top end, now or in the foreseeable future. Its recovery may only be possible if and when mortgage lending frees up or as investors start to see potential in the local private rental sector.”
This report very much coincides with my feelings in respect of the Scottish property market in general and the Dundee market in particular. We are seeing good activity in the middle to top end of the market with listings being ahead of targets. I am anticipating that sales will follow this trend, however, the lack of first time buyers is holding back the bottom end of the market with again the lack of first time buyers causing the major problems. Readers of previous blogs will know my thoughts regarding the problems that first time buyers face and the knock on effect this has on the market. Interestingly, I was reading a report regarding the Welsh property market which has now seen first time buyers dropping below 20%. This is the area that must be tackled. A recent ARLA report predicts a trend away from owner occupier from 70% to 60% and is also predicting a drop in the registered social landlord i.e. council housing and housing association with the big growth coming in the private rental market. This would certainly be a big social and economic shift and I will issue a blog on this topic shortly.
In the meantime prices for medium to top end properties are starting to slowly increase with prices for traditional first time buyer properties at best holding value.
I am delighted to advise that our 3rd Annual Property Sale is now bigger and better than ever with 57 properties taking part and with savings of up to £50,000 from Home Report valuations.
I think this initiative shows prospective purchasers the possible bargains that are out there and the fact that it is a great time to be buying. It also shows our innovative and pro-active approach to selling properties.
I was delighted to read in the Dundee Courier about the £4.8 million pledge received from the Scottish Government. This would appear to be a key piece of the jigsaw and a catalyst for taking the V & A in Dundee to the next stage.
As readers of previous posts will know (14 October 2010), I think the importance of the V & A to the Scottish economy in general and Dundee economy in particular will be huge, and that the venue will go a long way to enhancing Dundee’s reputation as a leading UK city. The knock-on effect for the property market will be more visitors, more purchasers, more people realising the huge untapped potential of Dundee.
I would urge everyone to support the V & A project and work together to ensure that it happens.
Readers of previous blogs will know that I have been closely monitoring the increase in rental returns across Scotland, in particular Dundee, and I would advise that this trend shows no sign of abating.
With the property market currently showing subdued activity levels due to mortgage pressures (and also the weather), there has never been a better time for someone interested in property to invest in the property market.
The caveat to this is that it is very important that you take advice from solicitors experienced in property investment. I would be more than happy to have an initial no cost meeting with you to discuss the various options available to you.
The Council of Mortgage Lenders (CML) have reported that there were 8,900 homes repossessed in the three months to October, which was a drop of 5% compared with the previous quarter. This is the fourth quarter in a row that numbers have dropped since they reached a peak of 12,200. The CML have warned that the trend of falling repossessions could reverse.
I was recently at an insolvency conference and one of the topics discussed was that there had not been the explosion of repossessions in either residential or development property that was initially expected. I think this is down to a number of reasons but the main one is that the historic low levels of interest rates means that borrowing for both individuals and businesses is affordable. From my discussions with various lenders, I think they are taking a more pragmatic view of what is the point of repossessing or taking over a development site if there is little or no chance of selling this on in the open market?
I think this flags potential problems when the economy starts to improve. As interest rates rise, this could make mortgage payment unaffordable, increasing the number of people who fall into arrears. As the property market picks up, I think lenders will be more inclined to repossess or take over development sites as they realise they have more of a chance of selling them on. I also know that a number of the large banks have set up their own holding companies and have transferred ownership of a number of development sites to these holding companies waiting for market recovery. This is something that I will continue to monitor as it is likely to have a knock-on effect to at least the short to medium term house prices.
Readers of previous blogs will know of my interest in property investment and the buy to let market. There has recently been a report from ARLA indicating that tenant demand is at its highest level ever throughout the UK with landlords reporting rental voids at a new low-level. This surge has been caused by ever-increasing student numbers, a lack of opportunity for first time buyers and the ever-present shortfall of houses in the UK.
With current housing prices at comparatively low levels and tenant demand being so high there has never been a better time to invest in property and in Dundee in particular. Past experiences tell us, however, that it is important before you embark upon this type of venture to take the correct advice from a property specialist, and with recent proposals to further regulate the relationship between landlord and tenant it is now very important to take legal advice in terms of preparing the Tenancy Agreement.
P.S. For your interest I have been recently involved in discussions in respect of the possibility of creating a ‘property investment trust’ which I think is a very interesting development and I will let you know when more details become available.
It was interesting to hear that Paragon, which was one of the largest buy to let lenders during the housing boom, is returning to the market for the first time in 18 months.
Paragon has arranged a £200m facility provided by Macquarie Bank which gives Paragon the money it needs to write new loans up front. Paragon is being more cautious than it was in the past and is aiming for investors with a minimum deposit of 25%.
I think this is very good news as buy to let is such an important part of the Scottish housing market, and Dundee in particular, and competition is always welcome.
Should you require further information on the products offered then please do not hesitate to contact me or Blackadders Mortgages.