NATIONAL, UK, October 12. 2009 — House sales remain 50 per cent down on the pre-credit crunch levels, according to latest figures from the Council of Mortgage Lenders. 

Just 53,000 loans were taken up in August compared to the month’s average (100,000) in the decade before the downturn.

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But the lenders’ group stressed that the latest figure was more than twice the level of monthly activity at the start of the year, and 29% higher than August, 2008. 

CML economist Paul Samter said: “House purchase activity has revived from its moribund state at the beginning of the year. 

“It will be a drawn out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing.”

The CML data showed 19,200 loans to first-time buyers and 33,400 loans to home movers.

First time buyers typically had a 25% deposit and borrowed three times their income.

Much of the cash for deposits among young people came from parents borrowing against their own homes, although the overall remortgage market is well down on previous years.

There were 32,000 remortgage loans advanced in August, a 22% decrease on July, and a 57% decrease on August last year.

The CML said overall remortgaging activity fell away due to the low interest rates and restrictive lending criteria for the most attractive deals.
 
Despite the gloomy figures, house purchases worth £7.2 billion in August, accounted for the largest share of total mortgage activity since 2002. 

At £12.3 billion, gross mortgage lending – which encapsulates all mortgage lending activity including house purchase, remortgages, and buy-to-let lending – declined 36% from August 2008.

Mr Samter added: “Remortgaging demand has fallen away in the low interest rate environment and this is dragging down gross lending levels overall.”

Home movers typically borrowed 66% of the property’s value and 2.74 times their income.

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LONDON, UK, Oct 8. 2009 – Lenders must do more to help the housing market recovery, the National Association of Estate Agents (NAEA) said today.

The NAEA’s monthly market report showed that demand for property has returned to the housing market, particularly among first time buyers.

NAEA President Gary Smith said: “NAEA figures show that the housing market is well into the first phase of recovery, but more needs to be done before we can enter the second phase.”

Mr Smith called on the Government to consider extending the stamp duty holiday in the same way as it has done with the car scrappage allowance scheme. He said that first time buyers are usually the foundation of sales chains – so any cost of extending the holiday will be heavily outweighed by additional stamp duty and VAT revenues generated further up the chains.

The NAEA’s monthly trends report revealed how the market bounced back in September after a slight seasonal dip. The number of people registered to look for property increased from 238 per branch in August to 294 in September, while the number of sales made increased from eight to nine.

The number of first time buyers remained strong – making up 26 per cent of new sales, while the level of housing stock dipped slightly from 62 houses on sale per branch in September, dropping from 64 in August.

Mr Smith said: “The state of the market in September should be a real source of optimism. The NAEA predicted that the first positive indicators were strong enough to survive a seasonal dip and we are thankful to have been proved correct.”

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LONDON, UK – Prime rents in both the City and West End office markets will return to growth again in 2010, according to Knight Frank.

The company said its prediction reflected less than expected distress in the market in 2009, a significant recovery in demand recorded in the summer, the recent rally seen in the global capital markets, and the drop off in speculative development completions expected between 2010 and 2012.

Knight Frank forecasted:

·         City prime rents to rise by 4% in 2010 to £44.00 per sq ft having fallen 21% in 2009 to £42.50 per sq ft
·         Between now and the end of 2013 City rents to increase by 37% to £58.00 per sq ft
·         West End prime rents to rise by 3% in 2010 to £67.00 per sq ft having fallen 30% in 2009 to £65.00 per sq ft
·         Between now and the end of 2013 West End rents to increase by 42% to £92.50 per sq ft

In a statement the firm said the market had not seen as great a level of sub-let space return to the market from tenants as had been widely anticipated earlier in the year. 

It read: “There has been a significant revival in the level of active requirements, particularly large unit searches, which are converting into deals. Examples of this are the lettings by Nomura (Watermark Place), Bank of Tokyo-Mitsubishi (Ropemaker), and Orrick Herrington & Sutcliffe (107 Cheapside).

“The rapid correction in prime rents has succeeded in drawing occupiers back to the market, as they have moved to take advantage of the tenant-friendly environment. In real terms, City rents are currently at their lowest level for more than 20 years, while West End rents are at a 13 year low.”

Knight Frank forecast a combination of a global economic recovery and diminishing choice of new build options to stabilise prime rents at their current levels for the next twelve months, before rental growth returns in Q4 2010. This, Knight Frank has predicted, will mark the beginning of a new cycle for prime rents.

James Roberts, head of Central London research, Knight said: “Rents corrected very sharply in 2008 and early 2009 in anticipation of tenants sub-letting large volumes of space. While availability has increased this year, it has not been to the extent priced into the rents and consequently rent levels have found the floor. With global capital markets and world trade, the key drivers behind Central London’s economy, now rallying I see demand increasing gradually going forward, with a knock-on effect for rents from late 2010 onwards.”

Will Beardmore-Gray, head of City leasing, Knight Frank said: “The City has seen a marked increase in activity since its low point in quarter one. Even if you set aside the 540,000 sq ft Nomura deal, Q3 take-up looks set to top that of Q2, which was up by a third on Q1. There is a definite upwards trend in activity emerging – it is certainly not a fresh boom, but it is a steady return to normality. The current wave of demand is partly driven by Asia-Pacific financial firms, like Bank of China, Daiwa Securities, Bank of Tokyo Mitsubishi, Macquarie Group and Nomura. I see the City as benefiting from its status as a hub in the system of global trade.” 

Tim Robinson, head of West End leasing, Knight Frank said: “Earlier this year there was a great deal of concern that there would be a post-Lehman implosion of the hedge fund world, leaving the West End core over-supplied. While availability has risen significantly, the increase has been of a manageable level, and not greatly different in size to that seen in the 2001-2003 downturn. A major issue now will be the lack of development starts for delivery in 2011/12, particularly in Mayfair and St James’s, which I see pushing demand into out of core locations.”

Bradley Baker, head of central London tenant representation, Knight Frank said: “Large Central London tenants from a range of industries are viewing this as the ideal time to act to secure the best deal. Rents are low by historic standards, and are landlords willing to offer generous incentive packages. Consequently, in the large unit market I see the number of very good quality building options diminishing in the next six months.”

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LONDON, UK – The National Housing Federation has responded to a raft of proposals by Shadow Housing Minister Grant Shapps, at the Conservative party conference in Manchester.

Commenting on the proposal to enable tenants to demand that their housing association sell their current property and use the proceeds, minus transaction costs, to buy another property of their choice, Federation chief executive David Orr said: “Mobility is a critical issue for many people living in social housing, but this is the wrong way to achieve it.

“A far more effective way to achieve mobility would be to overhaul the allocations system for social housing, so that tenants needing to move for employment purposes will find it easier to get a home in the area they want to move to.

“The Conservatives’ proposals on the ‘right to move’ are unworkable. It would mean that housing associations could end up with properties dotted all over the country, with their maintenance staff having to spend entire days travelling across the country, and emitting huge amounts of carbon, just to get to one property.

“It could also lead to local housing associations managing a wide range of one-off properties for other associations with considerable additional costs and a large VAT bill.

“This scheme could not be implemented without adding massively to the costs of housing associations – which would inevitably hamper their ability to provide badly needed new homes and vital community services.”

Mr Orr said: “The Conservatives’ commitment to building more affordable homes to meet local needs is very welcome. Whatever process or system we use to achieve this aspiration is, in many ways, irrelevant – because the bottom line will always come down to how many families we’ve housed and helped off the waiting list.

“We welcome the principle of encouraging councils to build more new homes. This is a clear and specific proposal to use the incentive of additional council tax receipts to ensure that the delivery of affordable housing continues. However, this needs to be backed up with a central government presumption in favour of new homes.”

“This proposal rightly focuses on the essential need to improve the energy efficiency of our existing housing stock. This investment will be helpful but the challenge of slashing carbon emission from every home in the country is considerable. Further work would need to be undertaken to look at how this would be paid for.

“Housing associations are already at the forefront of exploring how to make our homes greener and more energy efficient. But it’s essential that a Conservative government has a clear strategy for rented housing as well as owner occupied homes.”

Commenting on the proposal to enable tenants to demand that their housing association sell their current property and use the proceeds, minus transaction costs, to buy another property of their choice, Federation chief executive David Orr said: “Mobility is a critical issue for many people living in social housing, but this is the wrong way to achieve it.

“A far more effective way to achieve mobility would be to overhaul the allocations system for social housing, so that tenants needing to move for employment purposes will find it easier to get a home in the area they want to move to.

“The Conservatives’ proposals on the ‘right to move’ are unworkable. It would mean that housing associations could end up with properties dotted all over the country, with their maintenance staff having to spend entire days travelling across the country, and emitting huge amounts of carbon, just to get to one property.

“It could also lead to local housing associations managing a wide range of one-off properties for other associations with considerable additional costs and a large VAT bill.

“This scheme could not be implemented without adding massively to the costs of housing associations – which would inevitably hamper their ability to provide badly needed new homes and vital community services.”

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