Tuesday, March 10, 2009
House Prices and Rental Yields by David Lawrenson of LettingFocus.com
Come to Our Next Evening Property Event in London Evening
Good information on what rents are doing - whether they are down or up – can be quite hard to find.
For quite a while I quoted data on rents and rental yields from Paragon Mortgages but they stopped reporting on this some time last year, possibly because the statistical significance of their data became somewhat lacking.
At the top end of the London property market several upmarket estate agencies regularly report on rent levels.
These reports have revealed heavy falls in rents as the corporate tenant market (a key driver of upmarket rentals) has suffered along with London’s financial services dominated economy.
All too often the press have picked up on reports from these upmarket agencies and misquoted these rent reductions as being the situation in all London or even all the UK.
This is clearly not the case as I know from direct experience.
So I am pleased to see that my old pal Michael O Flynn and his pals at FindAProperty.com have just launched a new rental index that really tells you what is happening down at your local level.
It is called the FindaProperty.com Rental Index and I urge you to check it out, especially if you are about to do a rent review.
HOUSE PRICES
Another man with his finger on the pulse of “what’s really going on” is Richard O Donnell, the Director of Research at Hometrack.
Writing in the Sunday Times on 22nd February he points out that the portion of income needed to service the average mortgage is now back at the lows last seen in 1993 - the bottom of the last house price crash in most areas. And this was before the last BOE rate reduction.
He goes on to say that it took 3 more years from 1993 for house prices to start their strong move upwards and adds that this was probably because it took that long for consumer confidence to improve and for the flow of credit to start again.
But he warns that this time is slightly different because unlike in the 1990s new house building has been decimated, so supply issues (few new houses) could possibly squeeze prices up faster than happened in the late 1990s - just as long as the flow of credit resumes again, of course.
I agree with Mr. O’Donnell though it’s worth stressing that this recession will be far worse than the one from 1989-1993 and that could exert a really big drag on house prices, even if property is in short supply.
Come to Our Next Evening Property Event in London Evening of 18th March
PENSION FUND MANAGERS - WHERE WERE THEY?
Why did the big pension fund managers – the only shareholders that really count - not spot what Sir Fred Goodwin and his Merry Men were up to?
Well, back when I was a young MBA graduate in 1988 I worked for a big pension and unit trust manager in the city for 4 months.
The impression I had was that the main pre-requisite for being a fund manager and controlling millions in assets was whether you had been to one of a few top public schools and then either Oxford or (in the case of this particular fund manager) St Andrews University.
Oh, and if you were a girl, your name had to to be posh enough to start and end in the letter “A”
Even my basic knowledge of stock price assessment from my first year of my MBA was more than these guys had.
Come to Our Next Evening Property Event in London Evening of 18th March
HOW LONG DOES IT TAKE A BANK TO CHANGE A LIGHT BULB?
Someone I have consulted with is buying an investment property right now.
Now you’d think that with exceptionally low mortgage volumes, the mortgage lender. Lloyds Bank Group (or whatever they call themselves since they mucked up on HBOS) would be able to turn around a mortgage application pretty fast, right?
Well, it is 2 weeks now since the valuer went in and still no sign of a mortgage offer.
As I say on page 74 of my book, it doesn’t matter how slow the housing market is, most conveyancers and all mortgage lenders will be as slow and inefficient as ever.
Why the delay?
Well, apparently the valuer forgot to do a rental assessment. Der!
I suggested to my client that he asks the bank that is lending the cash for some of the £549 valuation fee back. I’ll let you know how this goes.
TWITTER….. I DON’T GET IT
OK, I admit it. I heard the buzz and signed up to this new networking site that is supposed to be the best thing since sliced bread…but am struggling to see the point of it all.
And I fail to see how it can catch on or be of interest to anyone other than celebrity stalkers. If you think otherwise please enlighten me.
Come to Our Next Evening Property Event in London Evening of 18th March
BECOME AN AFFILIATE OR ADVERTISE ON OUR SITE
We are taking advertising at our site.
If you would like to advertise here or have a product to offer our readers on an affiliate basis, please Contact Us button at our main site http://www.lettingfocus.com/
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property investment blog that you are reading now.
Come to Our Next Evening Property Event in London Evening of 18th March
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors 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 and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
Find out about some great deals we have arranged at our Landlords Resources page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
If you are on the home page of our blog, go to the bottom of any post, and click on “LINK TO THIS POST” to bring up the page for a specific post, then hit END …and on the right you’ll see “Site feed.”
If you are already on a specific post page, just hit END and you will see the site feed.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each 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 to members
Good information on what rents are doing - whether they are down or up – can be quite hard to find.
For quite a while I quoted data on rents and rental yields from Paragon Mortgages but they stopped reporting on this some time last year, possibly because the statistical significance of their data became somewhat lacking.
At the top end of the London property market several upmarket estate agencies regularly report on rent levels.
These reports have revealed heavy falls in rents as the corporate tenant market (a key driver of upmarket rentals) has suffered along with London’s financial services dominated economy.
All too often the press have picked up on reports from these upmarket agencies and misquoted these rent reductions as being the situation in all London or even all the UK.
This is clearly not the case as I know from direct experience.
So I am pleased to see that my old pal Michael O Flynn and his pals at FindAProperty.com have just launched a new rental index that really tells you what is happening down at your local level.
It is called the FindaProperty.com Rental Index and I urge you to check it out, especially if you are about to do a rent review.
HOUSE PRICES
Another man with his finger on the pulse of “what’s really going on” is Richard O Donnell, the Director of Research at Hometrack.
Writing in the Sunday Times on 22nd February he points out that the portion of income needed to service the average mortgage is now back at the lows last seen in 1993 - the bottom of the last house price crash in most areas. And this was before the last BOE rate reduction.
He goes on to say that it took 3 more years from 1993 for house prices to start their strong move upwards and adds that this was probably because it took that long for consumer confidence to improve and for the flow of credit to start again.
But he warns that this time is slightly different because unlike in the 1990s new house building has been decimated, so supply issues (few new houses) could possibly squeeze prices up faster than happened in the late 1990s - just as long as the flow of credit resumes again, of course.
I agree with Mr. O’Donnell though it’s worth stressing that this recession will be far worse than the one from 1989-1993 and that could exert a really big drag on house prices, even if property is in short supply.
Come to Our Next Evening Property Event in London Evening of 18th March
PENSION FUND MANAGERS - WHERE WERE THEY?
Why did the big pension fund managers – the only shareholders that really count - not spot what Sir Fred Goodwin and his Merry Men were up to?
Well, back when I was a young MBA graduate in 1988 I worked for a big pension and unit trust manager in the city for 4 months.
The impression I had was that the main pre-requisite for being a fund manager and controlling millions in assets was whether you had been to one of a few top public schools and then either Oxford or (in the case of this particular fund manager) St Andrews University.
Oh, and if you were a girl, your name had to to be posh enough to start and end in the letter “A”
Even my basic knowledge of stock price assessment from my first year of my MBA was more than these guys had.
Come to Our Next Evening Property Event in London Evening of 18th March
HOW LONG DOES IT TAKE A BANK TO CHANGE A LIGHT BULB?
Someone I have consulted with is buying an investment property right now.
Now you’d think that with exceptionally low mortgage volumes, the mortgage lender. Lloyds Bank Group (or whatever they call themselves since they mucked up on HBOS) would be able to turn around a mortgage application pretty fast, right?
Well, it is 2 weeks now since the valuer went in and still no sign of a mortgage offer.
As I say on page 74 of my book, it doesn’t matter how slow the housing market is, most conveyancers and all mortgage lenders will be as slow and inefficient as ever.
Why the delay?
Well, apparently the valuer forgot to do a rental assessment. Der!
I suggested to my client that he asks the bank that is lending the cash for some of the £549 valuation fee back. I’ll let you know how this goes.
TWITTER….. I DON’T GET IT
OK, I admit it. I heard the buzz and signed up to this new networking site that is supposed to be the best thing since sliced bread…but am struggling to see the point of it all.
And I fail to see how it can catch on or be of interest to anyone other than celebrity stalkers. If you think otherwise please enlighten me.
Come to Our Next Evening Property Event in London Evening of 18th March
BECOME AN AFFILIATE OR ADVERTISE ON OUR SITE
We are taking advertising at our site.
If you would like to advertise here or have a product to offer our readers on an affiliate basis, please Contact Us button at our main site http://www.lettingfocus.com/
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property investment blog that you are reading now.
Come to Our Next Evening Property Event in London Evening of 18th March
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors 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 and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
Find out about some great deals we have arranged at our Landlords Resources page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
If you are on the home page of our blog, go to the bottom of any post, and click on “LINK TO THIS POST” to bring up the page for a specific post, then hit END …and on the right you’ll see “Site feed.”
If you are already on a specific post page, just hit END and you will see the site feed.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each 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 to members
Labels: house prices, house prices to earnings ratio, property blog, rent levels, rental yields
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