Sunday, June 07, 2009
Real Evidence property prices have turned says LettingFocus.com
Cripes property prices seem to be turning up a bit in our part of London, at least for family type houses in average nick, which is not good news if you, like me were hoping that low prices would be around for a while.
To give you an example of this I had my beedy eyes on a nice two bed house for a first time buyer client in SE London back in January 2009 which was up for sale by a big landowning estate.
All it needed was £3K in basic redecoration. It would have been lettable right away at a rent of at least £900 per month or the guy could have lived in it himself.
Over Xmas, when all around was doom and gloom, it was actually marked down to £200K from £225K but this time around I was just too cheeky and went in too low at £185K. (I blame THE BOSS for the over-cheekiness!)
But the seller wasn’t budging and he put it on at a property auction in late January where the property fetched 195K, just over the £185K reserve price.
Since then the general economy and the state of the property market has started to look at lot rosier so the buyer put it back on the market in late April - in exactly the same condition - and has just sold it through an estate agent at £245K.
The investor probably paid cash at the property auction which will give him a profit of at least £40K after costs and an allowance for the opportunity cost of his own money.
So good luck to that property investor and well done to him.
PROPERTY AUCTIONS – WHY I AM NOT THEIR BIGGEST FAN
Now I have to say that I am not the biggest fan of buying property at auction and this is usually because… 1) Most times I am not a cash buyer and 2) Most of the property I see coming up at auction is rarely freehold property in anything like a decent condition. (I only buy leasehold flats that are self contained, in good condition and with a good management company where the directors are also the leaseholders – these can be pretty rare especially at auction.)
Property auctions always have lots of run down flats with poor management and duff leases. Where freeholds are for sale they are usually “building projects” (which I don’t have the time for right now.)
IF YOU NEED A MORTGAGE YOU ARE AT A DISADVANTGE AT A PROPERTY AUCTION
However, that property (the one that sold at auction at which sold at 195K) was unusual because it was a freehold house that needed not much doing to it.
Trouble is I didn’t want to chuck half a grand on a banks’ mortgage valuation just to be out bid at the auction.
And that is the trouble with auctions because at a property auction it is much better if you are a cash buyer.
So, I lost out on a chance to make £40K (or if it has been me buying, to get a great rental yield and a super investment)
Never mind, it all ended OK for me.
I went on to buy a similar property just down the road in better condition via my old trusted estate agency route for about the same money - £203K – so honours even on that one.
If you see the potential in flats or building projects and you want to go down the auction route and buy property this way take a look at my article Property Auctions.
WHAT DOES YOUR CREDIT FILE SAY ABOUT YOU?
Apparently, record numbers of people are checking their credit files to find out exactly what their credit record file says about them.
No doubt, the prompt for this is the fact they are all of a sudden being turned down for credit by our newly tight fisted banks and building societies.
Read my article; Checking Your Credit Record for more on how to check your file.
HOUSE PRICES
Finally, on the subject of house prices again, it always amuses me how when commentators talk about this it really gets people incredibly worked up.
Even more worked up than a bunch of guys discussing the England football team. Ok, well not quite that bad.
You can see this from all the vitriolic comments the big papers get in their online edition whenever the subject of the direction of house prices comes up.
Well, as you know, I have stated my colours firmly to the mast.
I think prices of family houses in the range £200k – 600K in London and the South East and many other parts of England and Wales have reached the bottom or near enough.
(Of course another Fred Goodwin type cock up or a flu pandemic will put the tin hat on any increase in prices, but these things are impossible to predict and if you don’t like risk you should stick with National Savings index linked certificates instead of property!)
In my work as a Property Finder I am certainly getting a lot of work right now from people who need help buying in the right areas. And that is a sure sign that people think property prices are going up.
LANDLORDS SUFFFERING SAY THE MEDIA
Mmm, I’m not so sure about that one.
Even if rents were down 20% on the year (which they aren’t for the type of property I buy), as most landlords existing mortgages are down about 50% following big cuts in interest rates, unless I’m “Mr. Dim at Maths” that surely means more profit for landlords?
Unless you have to sell now of course and therefore cop a potential capital loss. However most landlords are in it for the long term so won’t be uduly worried by rents that are down a bit.
AM I RIGHT YET RAY?
About 3 years ago I predicted that the proportion of let property could hit 25% by 2025 (unless the regulatory and tax environment facing landlords changed significantly). A leading commentator said I was naive. Well Ray, as the proportion of property that is let continues to increase rapidly to almost 13%, maybe you might still owe me a drink come 2025.
DON’T SHOOT THE PRESIDENT
I don’t normally do politics but Obama is such a breath of fresh air after the previous incumbent especially on foreign policy that I think some credit for the economic recovery must be attributed to him.
Partly, this must be down to the fact that his words, if translated into action, will certainly make the world a much fairer and safer place for us all. I just hope that some nut case “No Surrender” settler in Israel hasn’t got the poor man in his sights.
More on politics... will someone please get rid of that awful BBC political correspondent -the chappie with the glasses. You're not the news, Mister!
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
Find out about some great deals we have arranged at our Property Affiliate page.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries and the bit where it says “Links” and “Subscribe” you will see a button saying “Site Feed.”
Just copy the site feed link into your News Reader or News Aggregator. Even a non techie like me managed to do this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require a link to the blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted.
WANT TO ADD A COMMENT
To add a comment to this post, you just click on “link to this post” then simply add your comment.
To view past comments, again, you’ll need to click “link to this post” and view the comments (which appear at the bottom of the post.) All comments are moderated.
To give you an example of this I had my beedy eyes on a nice two bed house for a first time buyer client in SE London back in January 2009 which was up for sale by a big landowning estate.
All it needed was £3K in basic redecoration. It would have been lettable right away at a rent of at least £900 per month or the guy could have lived in it himself.
Over Xmas, when all around was doom and gloom, it was actually marked down to £200K from £225K but this time around I was just too cheeky and went in too low at £185K. (I blame THE BOSS for the over-cheekiness!)
But the seller wasn’t budging and he put it on at a property auction in late January where the property fetched 195K, just over the £185K reserve price.
Since then the general economy and the state of the property market has started to look at lot rosier so the buyer put it back on the market in late April - in exactly the same condition - and has just sold it through an estate agent at £245K.
The investor probably paid cash at the property auction which will give him a profit of at least £40K after costs and an allowance for the opportunity cost of his own money.
So good luck to that property investor and well done to him.
PROPERTY AUCTIONS – WHY I AM NOT THEIR BIGGEST FAN
Now I have to say that I am not the biggest fan of buying property at auction and this is usually because… 1) Most times I am not a cash buyer and 2) Most of the property I see coming up at auction is rarely freehold property in anything like a decent condition. (I only buy leasehold flats that are self contained, in good condition and with a good management company where the directors are also the leaseholders – these can be pretty rare especially at auction.)
Property auctions always have lots of run down flats with poor management and duff leases. Where freeholds are for sale they are usually “building projects” (which I don’t have the time for right now.)
IF YOU NEED A MORTGAGE YOU ARE AT A DISADVANTGE AT A PROPERTY AUCTION
However, that property (the one that sold at auction at which sold at 195K) was unusual because it was a freehold house that needed not much doing to it.
Trouble is I didn’t want to chuck half a grand on a banks’ mortgage valuation just to be out bid at the auction.
And that is the trouble with auctions because at a property auction it is much better if you are a cash buyer.
So, I lost out on a chance to make £40K (or if it has been me buying, to get a great rental yield and a super investment)
Never mind, it all ended OK for me.
I went on to buy a similar property just down the road in better condition via my old trusted estate agency route for about the same money - £203K – so honours even on that one.
If you see the potential in flats or building projects and you want to go down the auction route and buy property this way take a look at my article Property Auctions.
WHAT DOES YOUR CREDIT FILE SAY ABOUT YOU?
Apparently, record numbers of people are checking their credit files to find out exactly what their credit record file says about them.
No doubt, the prompt for this is the fact they are all of a sudden being turned down for credit by our newly tight fisted banks and building societies.
Read my article; Checking Your Credit Record for more on how to check your file.
HOUSE PRICES
Finally, on the subject of house prices again, it always amuses me how when commentators talk about this it really gets people incredibly worked up.
Even more worked up than a bunch of guys discussing the England football team. Ok, well not quite that bad.
You can see this from all the vitriolic comments the big papers get in their online edition whenever the subject of the direction of house prices comes up.
Well, as you know, I have stated my colours firmly to the mast.
I think prices of family houses in the range £200k – 600K in London and the South East and many other parts of England and Wales have reached the bottom or near enough.
(Of course another Fred Goodwin type cock up or a flu pandemic will put the tin hat on any increase in prices, but these things are impossible to predict and if you don’t like risk you should stick with National Savings index linked certificates instead of property!)
In my work as a Property Finder I am certainly getting a lot of work right now from people who need help buying in the right areas. And that is a sure sign that people think property prices are going up.
LANDLORDS SUFFFERING SAY THE MEDIA
Mmm, I’m not so sure about that one.
Even if rents were down 20% on the year (which they aren’t for the type of property I buy), as most landlords existing mortgages are down about 50% following big cuts in interest rates, unless I’m “Mr. Dim at Maths” that surely means more profit for landlords?
Unless you have to sell now of course and therefore cop a potential capital loss. However most landlords are in it for the long term so won’t be uduly worried by rents that are down a bit.
AM I RIGHT YET RAY?
About 3 years ago I predicted that the proportion of let property could hit 25% by 2025 (unless the regulatory and tax environment facing landlords changed significantly). A leading commentator said I was naive. Well Ray, as the proportion of property that is let continues to increase rapidly to almost 13%, maybe you might still owe me a drink come 2025.
DON’T SHOOT THE PRESIDENT
I don’t normally do politics but Obama is such a breath of fresh air after the previous incumbent especially on foreign policy that I think some credit for the economic recovery must be attributed to him.
Partly, this must be down to the fact that his words, if translated into action, will certainly make the world a much fairer and safer place for us all. I just hope that some nut case “No Surrender” settler in Israel hasn’t got the poor man in his sights.
More on politics... will someone please get rid of that awful BBC political correspondent -the chappie with the glasses. You're not the news, Mister!
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
Find out about some great deals we have arranged at our Property Affiliate page.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries and the bit where it says “Links” and “Subscribe” you will see a button saying “Site Feed.”
Just copy the site feed link into your News Reader or News Aggregator. Even a non techie like me managed to do this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require a link to the blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted.
WANT TO ADD A COMMENT
To add a comment to this post, you just click on “link to this post” then simply add your comment.
To view past comments, again, you’ll need to click “link to this post” and view the comments (which appear at the bottom of the post.) All comments are moderated.
Labels: buy to let mortgages, buying property at auction, checking your credit file, credit check, credit files, credit records, house prices, landlords, property auctions, Ray Boulger
lettingfocus | | link to this post | 
recent comments