Market sees increases in activity and prices

January saw the average national asking prices fall for the third month in a row by 0.8% (£1,968), however there are signs of an increase in activity and average prices immediately after the New Year.  Property group Rightmove said that much of the monthly fall is due to the final HIPs deadline for smaller homes attracting many cheap properties to the market. The January housing market therefore seems to be showing signs of its usual upturn, after several months of sellers readjusting their prices.

Miles Shipside, Commercial Director of Rightmove comments: “Some homebuyers are now able to find properties that have fallen into their affordability zone, and are tagging what they see as bargains against previous prices. Some properties have had their prices dropped by 10% or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers.”

As well as lower prices, further cuts in interest rates are critical to continued improvements in affordability and the recovery of the housing market from a difficult year end position, Rightmove said. In it’s January report, the average time a property spends on the market peaked at a record high of 98 days in December, though it has declined to 95 days in the first weeks of January. The previous high was 93 days in January 2006.

Average property stock per estate agency branch ended the year at 63, some 20% higher than the 52 properties of a year ago. Continued action is required by the banking sector to improve liquidity, along with further reductions in interest rates, adding pressure to lenders to pass on the benefits to borrowers in terms of lower mortgage rates and greater availability of funds.

Rightmove said a number of estate agents are reporting a positive upturn in new movers and activity levels. The group added that the number of visits to Rightmove.co.uk is up by nearly 20% on the first two weeks of 2007.

HIPS Ripple
Rightmove measured 28,318 properties coming onto the market in the first full week of January, and in addition the final HIPs deadline for two or fewer bedroom properties boosted listings in mid-December.

Rightmove added that this HIP avoiding surge exacerbated the price fall by circa 0.7% as they tended to be cheaper than average properties making up a greater proportion of the new listing mix. Rightmove estimates that the HIPs distortion to average prices will have worked its way out of the system by next month. However, there are some big regional price fluctuations this month due to the combination of local corrections and the aforementioned HIP exaggeration effect.

Miles Shipside adds: “Enough sellers seem to have dropped their prices to encourage potential buyers to look in larger numbers, suggesting we might see a more active market at this lower price level. The key for New Year sellers is to really stand out as the best value and best presented property in your potential buyers’ catchment area; thereby building on this level of increased interest. Some sellers will no doubt be tempted to test the market at a higher price with the onset of spring, so now is a good time for bargain hunters to press those committed winter sellers for a deal.”

Irish rents are rising, house prices are falling

Average rents in the Republic of Ireland have increased 6.6% in the past 12 months, with the nationwide average rent at an all time high of over €1,400.

Across the country many areas have been experiencing falling house prices, while at the same time rents have been generally rising, property website Daft.ie found.Falling house prices have lead to a scenario in certain areas in Dublin and Limerick, where you can now buy a property for the same price as it costs to rent.

Commenting on the report, Ronan Lyons, Economist with Daft.ie said “Due to the increase in rents and fall in house prices, we are now seeing a situation where in certain areas it has become more attractive to buy, since the costs of renting and buying are almost equal.

However this trend of increasing rents may not continue, as the rate of growth in rent has slowed to single digits and the supply of rental property has never been higher”

The average increase in rents across Ireland over the past 12 months is 6.6%. In Dublin rents have increased between 8% and 13% compared with the same period last year, while Dublin’s commuter towns have been experiencing a slight fall-off in rents – down 3% on this time last year.

In his commentary, Head of Research at Lisney, Dr. John McCartney said “Generally, households have two choices – to rent or buy. Over the course of this year, renting has become less attractive due to rising rents.

Meanwhile buying has become more appealing due to improving affordability. If this continues, some households will inevitably switch from renting to buying. It is difficult to predict exactly when this switch-back might occur, but two conditions would probably have to be in place – the absolute gap between mortgage repayments and rent levels would need to become reasonably narrow, and expectations about future house price growth would need to be positive.

The first of these conditions already appears to be met. Daft figures show that, while loan repayments remain higher than rents on average, the gap has become quite narrow. However, it is too early to say that the second condition – a public perception that house prices have bottomed out – has been met.”

Rents in the cities and around the country
In Galway rent inflation has dropped to 6% leaving the average rent just above €1,000. Cork average rents in the city stand at €1,166, with year on year inflation of 8.2%.

For Limerick the rate remains static with an average rent of €889. A notable exception to the general trend is Waterford city, where the rate of inflation has increased over the past quarter and now stands at 7.3% compared with the same period last year.

It is also the most affordable city to live in with an average rent of €821. Outside the main cities, growth in rents has cooled from about 6% three months ago to less than 5%. In South-East Leinster, Connacht and Ulster, inflation in rents is now below 3%.

Irish house prices expected to pick up later in 08

House prices in the Republic of Ireland should pick up during the second half of the year according to Permanent TSB and the ESRI.

However, the Permanent TSB and the ESRI house price index reported average house prices across the country falling by 7.3% in 2007, with Dublin being impacted the most. House prices there fell by 1.4%, compared with those outside the capital which declined by 1%.House prices for first-time buyer homes fell by 6.5% while the price falls for second-time buyers was sharper at 7.9%. In value, the average cost of a first-time buyer home was €260,784 at the end of 2007, approximately €18,000 less than in 2006.

The survey also reported that by the end of 2007, the average national house price €287,887.

Niall O’Grady, Head of Marketing at permanent tsb said the housing market was now “pretty close to where they were at the start of 2006″ and claimed that rising rents were evidence that the “fundamentals” in the market were strong.

Second home owners ”affect buyers”

People who own more than one property are having an impact on buyer’’s chances of being able to snap up a home of their own, it has been suggested.

The market for second-homes is strong, with research from home insurance provider Direct Line revealing that there are currently 328,000 second-homeowners in the UK.

While the idea of owning another property, either for investment purposes or for use as a holiday home, is attractive to many people, a spokesman for the National Housing Federation explained that second-home owners are “definitely having an impact on house prices generally”, particularly as the supply of housing in the UK is already restricted.

Changes To UK Tax Residency Rules

HM Revenue & Customs (HMRC) has published its draft legislation covering changes to the taxation of non-domiciles (see below) and the counting system for determining tax residency. This counting issue could affect those expatriates living in Spain who spend much time in the UK.

An individual will be treated as tax resident in the UK for a tax year if they either spend 183 days or more in Britain for the tax year, or if they are spend an average of 91 days or more there per annum measured over a period of four tax years.

For any expatriate who spends close to these numbers of days in the UK and wishes to remain a non-UK tax resident, keeping track of the exact days you fly in and out of the UK is very important. Until now, HMRC did not count a day of arrival or departure as a day in the UK. This would mean, for example, that if you landed Britain on a Monday morning and flew out again on a Friday evening, you would only have spent three days there.

Under the new proposals, both the day of arrival and departure will count. In the above example, therefore, you would now be counted as spending five days in the UK.

The draft legislation says:

“Treat as a day spent by the individual in the United Kingdom any day on which the individual arrives or departs from (or both arrives in and departs from) the United Kingdom.

“But in determining that issue do not treat as a day spent by the individual in the United Kingdom any day on which the individual’s presence in the United Kingdom is solely that as a passenger in a part of an airport or port not accessible to members of the public”.

In simple terms, this means:

• Any day arriving or departing the UK will now be treated as a day in the UK, regardless of the time you arrive/depart.

• If you take a connecting flight through a UK airport and remain in the transit area/departure lounge, that day will not count.

• However, if you arrive at Heathrow and travel to Gatwick leaving that same day, it WILL count.

• If you (for example) arrive at Heathrow and have a meeting at Heathrow Hilton, leaving that same day, it WILL count.

The draft legislation will be put to parliament in the 2008 Finance Bill. Subject to the Bill becoming law it will take affect from 6th April this year. However, the legislation is at the consultation stage and so these rules may be amended before it is put to parliament. We will advise on the final new regulations once they are confirmed.

The legislation also includes proposed changes to the taxation of non-domiciles, which refers to foreign nationals working in the UK.

Under the proposed new rules, non-doms who have been in the UK for over seven years will need to pay an annual charge of £30,000 to be able to continue to access the beneficial remittance basis of taxation.

Story from www.blevinsfranksinternational.com

Reasons to be cheerful for UK property investors?

The UK property market is in much upheaval and with so many doom and gloom articles, what are the facts? Truth is house prices have dropped for the fourth consecutive month this January, interest rates have been cut and mortgage providers are stricter than ever. For the average boffin, the property market is not looking great, but for shrewd investors – and even first time buyers – it might not be so bad after all.

Increased demand pushes rent prices up 10%

First things first, what are the experts saying about buy-to-let? Well nothing is for certain, however there are a few facts we can rely on. 86% of current investors intend to either expand or keep their portfolios the same. The majority are in no rush to sell and although money may be tight, long term prospects remain strong.

Halifax figures show that there are fewer potential first time buyers in the marketplace, and those who are seeking mortgages are finding it increasingly difficult (providers have tightened their criteria and most have now stopped 100% mortgage deals). This has led to an increasing demand for rental properties and, most interesting to investors, average rents in the UK increased by 10% in October 2007 compared with the previous year. As the Independent reports – the buy-to-let market may just ‘defy gloom’ yet.

Repossession woes mean opportunities for first time buyers

Secondly, although buying property is increasingly difficult, there is hope that falling prices will attract people who have until now being priced out of the market. It won’t be easy though, as mortgage providers are now asking struggling first time buyers for a 10% deposit on all properties.

Still, despite rising rates the Guardian has reported that there has already been some interest from first time buyers at auctions. ‘One man’s loss is another man’s gain’ seems to be an apt description for the UK property market at present – as more people with 100% mortgage deals will struggle to find replacements for their current term when it runs out. Increasing repossessions mean more auction properties and it’s great news for first time buyers as this number is set to increase still further.

Property market clouds with a silver lining

Admittedly it is a difficult time for the UK property market: The Royal Institution of Chartered Surveyors (RICS) has reported the fastest falling house prices since 1992, and Instant Access Group suggests that prices won’t pick up until 2009 (as reported on Bloomberg).

With the housing market in tatters, buying property now is not for the faint-hearted. However, where there’s a will, there’s a way – this so-called crash could just work out for serious investors with money to burn, or for the braver of first time buyers with the cash for that dreaded 10% deposit.

Homebuyers confident, internet leading the way

The majority of UK homebuyers and property investors remain confident about the future prospects of the housing market.

The majority of UK homebuyers and property investors remain confident about the future prospects of the housing market.

That is according to a major new survey conducted by Rightmove, which revealed that three quarters of landlords remain confident that property is a safe investment.

Further to this, first-time buyers (FTBs) also remain confident, with a quarter claiming to have saved for a deposit without any help from others.

The survey also looked at ways in which home sellers market their properties, with 95 per cent saying that it is vital that a property is advertised online.

In addition, 83 per cent of homebuyers said that they prefer to use the internet over traditional sources when searching for a property.

“Over the last few years, the use of the internet has become more accessible and widespread; not only within the home, but on mobile phones and various other channels,” said Miles Shipside, commercial director at Rightmove.

“Researching the local property market has become a national obsession and form of entertainment. As well as potential buyers seeing what they can buy with their budget, homeowners like to see what similar properties to theirs are selling for.

“The internet has revolutionised the home-buying process dramatically as everyone now knows that they can easily view thousands of property details from a range of agents, with maps and additional images in seconds,” he added.