Property and economic update
October saw another month of property price stagnation in the UK property market. The Halifax house price survey reports a monthly change in prices of 0%, completely unchanged on last month. Commenting on the report, Martin Ellis, HBOS chief economist said: "House prices were unchanged in October following increases of over 1% in both August and September. The overall pattern of price movements over the past few months shows that the market has strengthened compared with earlier in the year, but the static level of prices in October suggests that we are not poised for another sustained period of sharply rising property values".
The Hometrack house price survey paints a broadly similar picture for October. Prices are reported to have fallen by 0.1% during the month, but interestingly the number of buyers registering with estate agents increased by 2.1% and overall activity increased by 5.9%, although supply still exceeds demand with a 1.9% increase in the number of properties listed for sale. Of the 57 Hometrack regions only Lancashire saw an increase in prices (0.1%) during October while 24 remained static and 32 have seen prices fall. Wiltshire saw the worst price falls at -0.5%.
However, could it be that an upturn is just around the corner? The Nationwide have released figures for October showing a 1.3% rise in property prices overall. Commenting on the figures, Fionnuala Earley, Nationwide's group economist said: "The questions for the market now are whether we are at a turning point and whether we should expect to see house prices beginning to pick up after the steady slowdown during 2005. Certainly recent indicators have suggested that there has been increased interest in the market".
So will 2006 bring an upturn in the housing market? The simple answer is that no-one really knows, but our advice is to buy property now before an increasing market takes hold because it's looking increasingly likely that the next significant move may be upwards.
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More house building needed
Only one in three people in their 30s will be able to afford to buy their own home by 2026 unless more houses are built, the Government has warned.
The proportion of couples able to buy a property will fall to a third in twenty years time, down from half today and two-thirds in the late 1980s if current building rates continue, the Office of the Deputy Prime Minister (ODPM) said. It warned that unless more homes were built the next generation would be denied the opportunities that their parents and grandparents had of owning their own home.
It said its analysis showed that building more homes would reduce pressure on house prices and help more people afford their own property. Currently around 71% of households are homeowners, although 90% say they would like to be at some point. 23% of first-time buyers are relying on gifts and loans from family to be able to afford a deposit, compared with just 4% 25 years ago.
In the recent Barker Review it was found that Britain had not been building enough homes to meet rising demand for several decades, leading to rising house prices and growing problems of affordability. Over the past 30 years the number of households has increased by more than 30%, but at the same time the level of new homes built has dropped by 50%. In the South and East of England there are now only four new properties built for every seven new households.
The Government has already set out proposals to increase house building over the next 10 years as part of the Sustainable Communities Plan. It is also developing new shared equity schemes to help first-time buyers get on to the property ladder.
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Life is art by Jim Rohn
In my years teaching people to be successful, I have seen that basically people break their lives down into two major parts: Wealth-building and the rest of their lives. Having done a lot of reflection on these two topics - wealth and life - I am coming to some new conclusions about how to perceive the two.
Until recently I thought that there was a significant difference in how we should tackle the two areas. In fact, I thought that the two topics should be addressed in almost opposite fashion. You see, wealth-building is just maths. While life -- Life is art.
Think back with me to secondary school. Most of us were required to take maths and most of us probably took art as well. Now, think about your final exams in the two areas. Your maths paper was graded on hard facts:
Ten times ten is always one-hundred
Thirty divided by three is always ten
Seven plus seven is always fourteen
Fifty minus twenty-five is always twenty-five
There is always just one answer in maths. The answers are hard fact, set in stone. Maths is a science. It is formulaic. You can know the outcome before it happens, every time. But what about your final art project? Art is much more subjective. "Beauty," they say, "is in the eye of the beholder." There is no one right answer.
Think of the different styles of the famous artists:
Renoir. Monet. Picasso. Rockwell. Warhol.
Different people find different styles beautiful, and that is what makes art, art. So how does this fit with wealth-building and life? Wealth-building is like maths. If you add £1000 to your retirement account each month and gain seven percent interest over twenty years, you can know now how much you will have then. It is maths. If you buy a rental property for £200,000 now and it increases in value by three percent a year, you know exactly how much you will be able to sell it for in ten years. The beauty of maths is in the knowing. You can work the system, set it on auto-pilot and the maths does the work for you, and you know the outcome.
But life? Life is art, and that is the beauty of life. You do not know how it is going to turn out. Life, like art, is always changing. Different people provide different colours. When you make a mistake you can go back, erase it or even paint right over it. You can change the scenery. Life, like art, is ever evolving, and what looks good to one person is of no interest to another. That is what makes life beautiful.
Another lesson I think we can draw is that in life we should do our maths, of course, but life isn't made up of just wealth-building. Wealth-building should serve our ability to live our lives. So let me ask you: Are you spending more time on your maths or your art? Do your maths. Everybody should do their very best at their wealth-building plan so they can take care of themselves and their families.
But life is about the art. What does your canvas look like? What kind of picture are you painting? What kind of pot are you creating? What kind of statue are you sculpting? Take your time, make bold strokes, use brilliant colours, and make of your life the most beautiful masterpiece that you can.
In other words do your maths well, very well, so you can focus on your art.
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"Concentrate all your thoughts upon the work at hand. The sun's rays do not burn until brought to focus." - Alexander Graham Bell 1847-1922, Inventor
"It is our attitude at the beginning of a difficult task which, more than anything else, will affect its successful outcome." - William James 1842-1910, Psychologist, Professor and Author
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Do you really need a property manager?
We know that many first time property investors wonder why they should use a property manager. "After all, all they do is collect the rent don't they?" one said recently. But there is a very good reason for using one.
While the majority of residential tenancies run smoothly, others are fraught with arrears, complaints and lack of care from both the owner and tenant. Many often end in dispute and, therefore, it is necessary to establish an appropriate professional relationship; one combined with a sound working knowledge of the law, leases, and timely response to requests.
The true cost benefit to the investor of engaging a property manager is simply covered by the following:
- 24 hours - 7 days a week response - Particularly helpful at 3.00am in the morning when the tenant, police or fire brigade are trying to contact you.
- The ability to source an appropriately qualified contractor in a timely manner. This service alone ensures that any damage to your property and tenant's contents is minimised.
- Being up-to-date with constantly changing legislation; changes that often can make the landlord liable.
- Specialised skills - the fact that they deal daily with a variety of properties, tenants and their demands ensures that they have a solid understanding of the marketplace. This together with a professional business like approach removes bias from negotiations which facilitates optimum outcomes for all, whether it be in the negotiation of rental or protecting your position as the owner from a tenant's unrealistic expectations.
Astute owners have long realised that the benefits of a property manager far exceed the costs of not having one - and always will. So go easy on yourself and employ the services of a good property manager, you'll be glad you did.
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"Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude." - Thomas Jefferson 1743-1826, Third President of the United States
"If you have a positive attitude and constantly strive to give your best effort, eventually you will overcome your immediate problems and find you are ready for greater challenges." - Pat Riley Professional Basketball Coach
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Landlords look to double buy-to-let portfolios
The Money Centre has revealed the results of its landlord survey for Q3 of 2005, which show a positive outlook for the buy-to-let market as landlords look to double the amount of properties in their portfolios over the coming year.
On average, landlords are planning to purchase three properties in the next 12 months, compared to just two in the same survey last year. And their outlook for the property market in general is also positive. An overwhelming 84% are confident that property values and rents will increase, compared to 62% last year, while the remaining 16% thought property values and rent would remain the same. Not one of those questioned predicted value or rent decreases this year.
Landlords expect the base rate to hover at around 4.75% until 2010 compared to last year's prediction of 5%. This outlook is influenced by the base rate cut of a few months ago, which has helped landlords to grow their portfolios over recent months. The average number of properties owned is up from seven in 2004 to 11 in Q3 of 2005, which equates to an average 57% increase in portfolio growth.
Those landlords with an average property worth of £101,000 - 200,000 is up from 54% in Q3 of 2004, to 64% this year. And with landlords also borrowing more than last year the average loan value is up from 51% to 53% this quarter. The average yield on rental properties has remained constant at 6%.
Mark Alexander, managing director of The Money Centre, says: "Landlords are upbeat about their buy-to-let portfolios and the property market in general. The market has stabilised and levelled out this year whereas last year there existed an air of uncertainty with landlords looking for security with flexible products.
"Now the market climate has changed, due to the decrease in the Bank of England base rate earlier this year. More competitive products have become available and landlords are now more interested in obtaining the best loan terms possible, allowing them to borrow the maximum available.
"This shows more landlords are pursuing the best strategy for successful investment, borrowing the maximum and investing as little personal finance as possible to make maximum returns in the buy-to-let market."
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Need mortgage advice?
Maybe you're thinking of buying an investment property, or you need to release funds tied up as equity in your house. Perhaps you just want to find the best mortgage rate for your own individual circumstances and cut your mortgage payments. Why not call our mortgage department today? Our resident mortgage advisers will give you the best possible advice to suit your requirements. Call them today on 0870 1670996.
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What's available?
We currently have the following investment opportunities.
Equity Chambers, Bradford
Marco Island, Nottingham
Caicos Beach Club, Caribbean
Mill Hill Gardens, Budapest, Hungary
Sun Palace, Budapest, Hungary
Please go to www.propertyforlife.com/property/ for full details and look out for more great opportunities coming soon!
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Upcoming events
Over the coming months we will be attending several exhibitions in addition to our ongoing Property Academy programme. If you would like to attend a property academy session please call Laura on our 01252 737575 or email laura@propertyforlife.com stating which session you would like to attend and how many places you require.
November 19th 2005 – PFL Property Investor Academy – The Coppid Beech Hotel, Bracknell.
February 3rd–5th 2006 – The Dublin Property Expo – RDS centre, Dublin.
February 18th 2006 – PFL Property Investment Academy – The Coppid Beech Hotel, Bracknell.
March 17th-19th 2006 – The Homebuyer Show – Excel Exhibition Centre, London
For further information regarding the Property Investor Academy Programme please follow the link www.propertyforlife.com/whyinvest/education.html
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New service - Snagging
We have now introduced a new service in an effort to further increase the already substantial benefits of purchasing property through Property for Life. With immediate effect, each and every property purchased through us will receive a completely free snagging report.
The report – compiled by Inspector Homes – will cover all aspects of the property requiring attention from the developer. Covering everything from potential electrical and plumbing issues to general levels of finish, this service will provide an extra level of confidence to our clients when purchasing through us. Each report has a value of at least £300 but all purchasers will receive this with our compliments.
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Do you fancy a spending spree at one of the UK's leading department stores?
The new look Property for Life referral programme can offer you just that.
All you need to do is tell an interested friend about Property for Life and you could soon have a minimum of £250 in gift vouchers to spend in any John Lewis or Waitrose store.
Quite simply, for each person introduced by you who then purchases a property through us you will receive a cool £250 in John Lewis gift vouchers. If they purchase more than one property you will receive £250 in gift vouchers for each property they purchase. You could soon be well on your way to that spending spree.
Remember, the more people you introduce the more chance you have of grabbing at least £250. So why not tell your friends and family about Property for Life? Make sure they register on-line at www.propertyforlife.com/register/ and select the recommendation option at the end of the form and include your name in the 'other' box.
Please note that the referral programme is on a per property not a per person basis.
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