How to decide when it’s the right time to buy a house?

Since the Autumn Enable’s IFA’s in Bishop’s Stortford have been following the news like many others about whether or not there will be a fall in house prices.  With Britain's runaway housing market expected to at least take a dip this year as the combination of new mortgage rules and the threat of rising interest rates brings house prices down.  It might seem to many a good reason not to buy but many experts are saying ay the market is more complex than the headline figures may at first suggest.

At the end of last year the Centre for Economics and Business Research (CERB) suggested that the UK housing market was at a "turning point" and the organisation expects 2015 to see 0.8 % decline in house prices.  In London the decline is expected to be even more substantial; according to CEBR, they may fall by as much as 2.6 %.

If there's a chance that house prices are about to fall, it may seem risky to buy at what could be the peak of the market – but many experts advise that waiting in the hope of a serious drop in prices does not always pay off.

One reason for buying a house sooner rather than later is that it might prove to be a sound investment in the longer term even if prices fall next year. By 2019, house prices across the country are expected to grow by 30 per cent, with the greatest boom occurring in the south east of England, where 37% increases are forecast.  Housing market predictions do not always turn out to be correct, but demand is continuing to rise and there is no sign of a dramatic increase in the supply of new home, so house prices are likely to rise in the medium to long term. Enable’s Independent Financial Advisors can help you look at mortgages that work best for you.

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So what’s happening in China...

China held its once-every-five-year state meeting on the direction of its financial markets this week-end and the decisions the country’s leaders take are likely to have a large impact not only on their domestic market, but also the global economy so at Enable our experienced financial advisors will be looking at the financial news to keep track of events.

It has long been the case that many of us within the financial sector  hope China will continues to liberalise its economy, but that it also takes measures to prevent a domestic economic slowdown that would damage any attempt to stabilise the Eurozone.

According to Yao Wei, a Hong Kong-based economist with the French Bank Societe Generale: “The progression of the reforms will determine whether China can avoid a hard landing in this decade.”

At the last Financial Work Conference, held in 2007, China’ Premier Wen Jiabao expanded the management and use of the country’s giant foreign exchange reserves, setting up the China Investment Corporation which has now one of the largest sovereign wealth funds.

For this years conference there are a number of factors we hope the Chinese politicians and regulators will consider. They lack  a strong regulatory framework for local governments and have a shadow banking system, a euphemism for black market lending, that is spiraling out of control, and many businesses need to find alternative financing methods aside from bank credit. Enable reputable IFA’s of Bishop’s Stortford look forward to following events in the Chinese economy for their clients.

Safe as houses...

Recent industry data seems to indicate that buy to let property investment continues to be one of the best ways to invest at the moment.

Statistics from the Halifax reveal house prices increased by 1.2 per cent in October with the average home in the UK now valued at around £163,311 and the rental market has continued to go from strength to strength as first time buyers struggle to get on the property ladder.

Almost four million homes were designated in the Private Rented Sector (PRS) in 2010, providing homes for one in six households and the Countrywide agency says rental properties now take an average of just 12.7 days to be let, with an average of five prospective tenants competing for each property.

Ray Withers, director of buy to let experts Property Frontiers, added: “With demand outstripping supply in the buy to let market, those with enough capital to invest in the growing buy to let arena are benefiting from some of the highest monthly returns on record.”

Perhaps unexpectedly the North West has enjoyed a 20 percent rise in rental rates this year alone and in Liverpool demand is outstripping supply probably due to the reduction in home ownership and the number of new homes being built (well below the Government target of 250,000 per annum). Meanwhile, demand for accommodation in and around the city centre also continues to rise as more students and young professionals enter the area.

Independent Financial Advisors like Enable of Bishop’s Stortford can help you look at your investment portfolio.

House Prices barely changed over 2011

House price averages seem to spike and fall month on month but with all of these things it is best to take a longer view of things, it might looks as if house price jumped 1.2% in October but a more reliable view would be the quarterly figures that showed a downward trend, according to Halifax. The lender said the average price of a UK home had risen for the first time in three months, to £163,311 however, this followed falls of 0.5% in September of 0.5% and 1.1% in August, and over the quarter prices actually dropped by 0.3%.

This is the first time since June that the quarterly figure was negative. But on an annual basis, comparing the three months to October 2011 with the same period in 2010, prices were down by 1.8%.  It might not come as great news if you are trying to sell your house but this is the lowest annual fall since December 2010 and is markedly less than the 4.2% annual drop recorded in May 2011. However there is always a North, South divide and in some places like Bishop’s Stortford house prices have increased in this period.

Halifax's housing economist, Martin Ellis, said that over the course of 2011 prices had barely changed, and the market had been supported by low interest rates and a steady supply of homes coming up for sale." The housing market has proved highly resilient in recent months despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies," he said.

Property is always a valuable part of any portfolio reputable IFA’s like Enable can help you consider how to make the best use of it.

Local Building Society's are doing there bit….

Couple of items I’ve noted recently:  Cambridge Building Society has launched a five-year fixed rate mortgage at 4.19% specifically for large loans of between £500,000 and £2m. The mutual will accept loans of up to £750,000 on an interest-only basis. The five-year fixed is available up to 75% LTV, with an arrangement fee of 0.2% or a minimum of £2,000.

Carole Charter, marketing manager at the Cambridge Building Society, said: "Larger loans are not suitable for everyone, but there are people out there who would benefit from this unique product."
She added: "The Cambridge is committed to offering a range of options for borrowers and the larger loan mortgage is a product that we feel we need to be able to offer our wealthier customers looking to purchase a house in this price range."

Also, the Cambridge Inflation Linked Bond Receives Surge in Interest.  All applications for the five year bond must be received by 15th September 2011*. The Cambridge Inflation Linked Bond pays customers a return, at maturity, that tracks the annual rate of inflation, as measured by the Retail Prices Index (RPI), plus a guaranteed 1.00% gross p.a./AER** fixed for five years.

Andy Lucas, Head of Cambridge Direct at The Cambridge Building Society says: “We have seen surge in customer interest following the recent withdrawal of the NS&I index-linked certificate.
“Customers who want to take the opportunity to invest in a product that offers protection against the effects of inflation need to take advantage of the inflation linked products that are left in the market whilst they are still available.”

Enable Independent, IFA’s of Bishop's Stortford are here to help with savings and mortgages anytime you want to re-think your finances

When to buy a house - Safe as Houses

In the news recently the National Housing Federation’s independently-commissioned Oxford Economics Report predicts:  Home ownership in England will slump to just 63.8% over the next decade - the lowest level since the mid 1980s – locking an entire generation out of the housing market.  According to a new study,  huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline in recent years and the downward trend will continue for the foreseeable future.

The Federation warned the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fueled by a chronic under-supply of homes. 

According to Oxford Economics, who were commissioned to produce the forecasts: 
In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.

In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.

The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.

The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016,

As investors what should you do? If you own a property hold on to it if you have the capital maybe buy to let is not such a bad idea again? Enable IFA's in Bishop Stortford can help you talk through what to do.