House prices up more than 5 per cent

TheIndependent

“The gulf in property prices across the UK grows ever bigger with London house prices hitting a new all-time high. There are growing fears that if we are not in bubble territory yet it won’t be long before we are, with the Bank of England raising the alarm about borrowers over-extending themselves.

“The problem mortgage borrowers have is that they are competing against cash buyers who don’t have the same affordability constraints.”

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London house price gap continues to grow: Land Registry

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“The gulf in property prices across the UK grows ever bigger with London house prices hitting a new all-time high in February, up 13.8% in a year. Transaction volumes are rising but are still some way off the peak of the market and the lack of supply is helping fuel soaring house prices in parts of the country. There are growing fears that if we are not in bubble territory yet it won’t be long before we are, with the Bank of England raising the alarm about borrowers over-extending themselves.

“The problem mortgage borrowers have is that they are competing against cash buyers who don’t have the same affordability constraints. Governor Mark Carney has commented that he can’t control house prices because he has no sway over those cash buyers who aren’t affected by interest rate rises. While buyers from overseas are playing a part, it is not just international purchasers who are in the fortunate position of buying for cash: many of my clients who do so are from the UK, and are downsizing from larger homes.

“Lenders are stricter and the bad old days where it was possible to borrow up to seven times income are long gone. However, borrowers still need to do a reality check and consider whether they could afford the mortgage if there was a 1% rise in interest rates – or more. If not, it’s important to be realistic and rein in the borrowing.

“Supply constraints are not going to be resolved anytime soon. The government has made the right noises about building more homes but this takes time. In the meantime, prices are likely to rise higher and we could well find that the illusory bubble becomes a dangerous reality.”

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London property: Will a housing bubble

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“The main downside is that if you buy a 70 per cent stake in a property, you will owe 30 per cent of what you sell for - not what you bought for.

“You may decide that a share of something is better than nothing if you can’t afford to buy otherwise, as the stake you do own will be worth that much more.”

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Osborne extends Help to Buy 1

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“The extension of the first phase of Help to Buy until 2020 will be welcomed by house builders who have received a significant boost since the scheme was introduced last April.

“It is telling that the Chancellor has not made the same commitment to extend the mortgage guarantee element of Help to Buy: this may be because it has not been long introduced so it’s too early to judge its full impact.”

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The prime property industry’s wishlists and forecasts for the budget 2014

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“George Osborne should resist any temptation to restrict the sale of London property to overseas buyers. There are criticisms that foreigners leave their apartments and houses empty, creating a ghost town. But super prime developments such as Number One Hyde Park are not representative of the market as a whole. The overseas buyers I deal with want a return on their investment here and if they aren’t going to live in it themselves, they will rent it out.

“It is worth remembering that many of the big developments in London would never have been built without demand from overseas buyers with the areas around Vauxhall and Battersea, for example, funded mainly by foreign investors. All this has an important trickle-down effect – the workman who digs the foundations for these buildings has to spend his money somewhere, for example, and it all goes back into the economy. Handled properly, the UK will continue to be a safe haven for investors from overseas, which will boost the economy.”

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House prices rising at ‘fastest annual pace since 2007″, Halifax reports

TheIndependent

“Prices continue to rise, mainly owing to a lack of stock coming to market, but the average value remains 10 per cent below the August 2007 peak. The question is what does this mean for Mark Carney? Does he leave things as they are or seek to put some limitations on schemes such as Help to Buy in order to stop prices running away with themselves?

“The housing market is off the ventilator and is breathing unassisted but it still needs oxygen. The market is not functioning normally because interest rates have had to remain at 0.5 per cent for five years. It is clear that this has been a long recovery and it is not over yet. When interest rates do start to rise, it will cause a real problem for those heavily indebted homeowners, and will need to be handled with care.”

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House price rise by 7.9% in a year

Moneywiselogo

“The question is what does this mean for [Bank of England governor] Mark Carney: does he leave things as they are or seek to put some limitations on schemes such as Help to Buy in order to stop prices running away with themselves?

“The market is not functioning normally because interest rates have had to remain at 0.5% for five years. It is clear that this has been a long recovery and it is not over yet. When interest rates do start to rise, it will cause a real problem for those heavily indebted
homeowners, and will need to be handled with care.”

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House prices start year 7.9% up – Halifax

MortgageSolutions

“Prices continue to rise, mainly owing to a lack of stock coming to market, but the average value remains 10% below the August 2007 peak. The question is what does this mean for Mark Carney: does he leave things as they are or seek to put some limitations on schemes such as Help to Buy in order to stop prices running away with themselves?

“There are some concerns about buyers paying anything for a property owing to the lack of stock and a certain desperation. But the market as a whole is not running away with itself.”

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