Friday, 22 November 2013




It is now evident that the economy in the UK is finally out of the recession with expected growth in the economy of almost 2% before the end of 2013. Statistics show a stable increase in the retail index,  10.2% increase in car sales, less unemployment  etc.

Additionally,  there is now more fluidity as well as relative growth in the property market. Gross UK mortgage lending was £16.2bn in September,  41% compared to September last year. Gross lending for the third quarter of 2013 was £49.3 billion. This represents 17.6% increase on the second quarter of 2013 and 32% increase on the third quarter of last year.  Mortgages are currently at their most affordable level for some time, due to low interest rates (still at historically low levels) and a desire from lenders, having been encouraged by the government,  to appeal to borrowers in a difficult marketplace.

Cheaper mortgage rates mean total payments remain low relative to income, which is encouraging as it means those getting on the property ladder for the first time are not over stretching themselves.
The governor of the Bank of England is now broadly positive about the UK economy suggesting, we can now be sure that the glass is half full and stressing that inflation is now as low as it was since 2009. The economy is growing at its fastest rate for 6 years. He even suggested 2.8% increase in the economy for 2014 (rather conservative I say, as there is strong evidence that the economy will grow beyond 3.0% in 2014) It is very encouraging that every month,  now 60,000 new jobs are created thus reducing the number of unemployed people and the corresponding burden on the government’s finances.

In a recent study by Deloitte it became apparent that high-skill and knowledge-based sectors placed London as the world's leading city in 12 of them, employing 1.5 million people; this placed London ahead of its nearest rival, New York, which has 1.2 million working in these sectors.

London is unique in the breadth and depth of these high value sectors and the research finds that London's economy is finally diversifying, with growth in creative, digital and media businesses more than compensating for the decline in financial services employment.

It is anticipated that there will be a minimum net growth in London employment of over 300,000 by 2020, of which at least 100,000 will be in high-skill sectors. These figures translate into 300,000 additional residential units for the employees and their families, as well additional office space for all these people.

As a result of the above,  a boom in property transactions is imminent, for the year 2014 and onwards.
In fact it is safe to say that the housing market activity will enjoy double digit growth in the next three years, with transactions back above 1m by 2016. Please remember that prior to the financial recession back in 2007 transactions were running at 1.2m per year.

Transactions will soon be over 50% higher than they are today by 2016, assuming no other major and/or drastic economic events push the recovery off course.

First-time buyers are now finding it easier to get a mortgage, as the Government’s  Funding for Lending pushes down rates across the loan-to-value curve. Early data regarding the latest Help to Buy scheme introduced by the government, suggests that first-time buyers are also primarily benefiting with more than 80 per cent of the Halifax's applicants so far being first-time buyers, for example. Expect the scheme to significantly boost the number of first-time buyers in coming months.

Taking all the above into account and notwithstanding the imbalance of short supply and increased demand my forecast for UK House prices in 2014 is that we will witness a rise by 7-8% and by almost 35% over the next five years.

London as the capital will continue to move out ahead of the rest, with prices in central London set to increase by nearly 40% over a five year period. Expect prices to rise by nearly 9% during 2014. House prices in prime central London are anticipated to slow their growth a little bit, as demand is expected to soften with investors searching  for better yielding assets elsewhere. Nevertheless home values will still be going up by approximately 9% in 2014, unlike some conservative forecasts that have seen the light of day which ignore Deloitte’s research about the improvement in high skilled employment.

It is worth noting that house prices both in London and the South of England will continue to outperform the average for England and Wales, while Northern parts of the country will see a more subdued revival.
A liquid and active market is the key to avoiding volatility and to ensuring a stable and sustainable housing market in the UK, More transactions and more homes supply are an absolute must in order to have a sustainable property market.

Therefore it is time now to concentrate on how we move forward into a new era of growth, development and success stories.

This forecast from MARIO APOSTOLOU is amongst the first of many from across the property market, which will appear between now and January 2014.

MARIO APOSTOLOU FRSA                                                          
LEADING PROPERTY EXPERT                        

Monday, 9 September 2013

A dangerous house price bubble or Not? BY MARIO APOSTOLOU

We all heard rumours that the UK property market is again turning into a house price bubble waiting to burst. But is it so? Let us examine this statement deeper.
It is a fact that there has been a surge in mortgage lending today sparked by the government’s initiative Funding for Lending and Help to Buy scheme (I). These are very correct measures aiming to stimulate the property market and assist trapped tenants get onto the property ladder. So much so that in Jan 2014 Help to Buy scheme (II) will be introduced, assisting trapped home owners onto their second move.
Banks and building societies advanced home loans worth £16.6  billion last month, up to 29% on last year and the biggest rise for seven years.
The Council of Mortgage Lenders figures, reveal lending is bouncing rapidly from the depressed levels of around £10 billion to £13 billion a month seen since the banking crisis 5 years ago. Last month’s total was the highest since October 2008.
Pessimists though, are warning that the lending boom could simply “pour petrol” on a market already showing signs of overheating and price more Londoners out of home ownership. They base their worries on the fact that the London market has never really been in the doldrums and therefore the danger here is that affordability of property prices becomes  ever more of a fantasy for more and more people.
Government figures last month showed prices rising at 8% to a record average £425,000 in June compared with 1% outside London and the South-East.
The Treasury’s Funding for Lending scheme, aimed at encouraging bank funding for home buyers and small businesses, and the Help to Buy programme, which has already been taken up by 10,000 new home owners, have contributed to the return of confidence. Borrowers were further encouraged by the Bank of England’s Governor Mark Carney, assuring citizens that its 0.5% lending rate is unlikely to be increased before 2016 and to be more precise until unemployment level drops below 7% from the current 7.8%.
Fixed-rate mortgage deals although at historic lows, started coming back into the market with some lenders offering fixed-rate deals below 2%.  There have even been the first signs of the return of interest-only mortgages with lenders such as Clydesdale and Yorkshire offering amazingly low lending rates for the first 3 years on some deals.
There are those of course who insist that the London property market needs no further stimulus; it’s running too hot already. Lending conditions are so favourable that some experts expected “double digit” rises in property prices next year. This though could be the exception, mainly due to foreign investors trusting and supporting the London property market over the last 5 difficult years with over 37 billion pounds flowing into the market from overseas.
Some journalists and government critics called on George Osborne to scrap the second phase of its Help to Buy mortgage scheme in London, due to come into force January the 1st. However, they seem to be ignoring the Chancellor’s aim, which is to assist trapped first time home owners to move onto their next property thus “freeing” other properties suitable for first time buyers and therefore increasing in a sense the supply of properties onto the First time buyers’ market.
The opposition rightly insists that unless the Government invests in building homes, the country and the capital city in particular badly need,  rapidly rising property prices will put the dream of home ownership beyond the grasp of millions of Londoners. An increase in the supply of New properties is what the UK desperately needs. The country needs around 235,000 new households per year, but only around 100,000 are getting built. This alone creates a tremendous shortage of homes, resulting in a major imbalance on supply and demand of homes and therefore this is having a major effect on pushing property prices upwards.
An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also beginning to emerge in the economy.
The Council of Mortgage Lenders, forward estimate of gross mortgage lending in July, reinforces a growing evidence base of a strengthening in the housing and mortgage markets. The CML’s members account for 95 per cent of residential home loans in the UK. There are 11.3 million mortgages in the UK, with loans outstanding worth more than £1.2  trillion. However, with many borrowers still effectively locked out of the market — such as those with impaired credit ratings or negative equity — there is still a long way to go until  lending recovers to the peaks of £30 billion in 2006 and 2007.
Nevertheless leading property figures welcomed the return to more “normal” conditions after so many barren years. RICS insist “The mortgage market has been the pillar of the economic recovery. The freeze on high loan to value mortgages has thawed, and first-time buyer lending is at its highest since the banking crisis.”
Housing minister Mark Prisk said: “Latest figures show our Funding for Lending Scheme, and Help to Buy schemes, and record low interest rates, have led to the highest level of mortgage lending since 2008. But alongside this, we’re also pulling out all the stops to get Britain building, and the increased availability of mortgage finance is boosting confidence in the housing market, and encouraging house builders. We’ve also been working with the Mayor of London to invest billions of pounds to deliver the fastest rate of affordable house building for two decades.
Property experts admit that low mortgage rates, the Government’s Help to Buy scheme(s) and growing confidence about the economy in general contributed to the increase in lending and consequently property prices.
However is this not what we need? Movement in the property market that will increase the supply of properties will free trapped homeowners  and assist first time buyers in getting onto the property ladder?
Is it not vital to encourage builders and property developers get back into the game, creating more jobs (14 new job per unit built) reducing the government’s spending on benefits and increasing its income through taxes?
This is the desired goal, is it not?

Leading Property Expert        

Friday, 9 August 2013


The property market in the UK has gone through a difficult period in the last few years. The Government has taken some positive measures in order to help boost the economy and stimulate the property market in particular, with the introduction of Funding for Lending and Help to Buy (I) Schemes. It seems that these measures managed to have a positive effect on the property market, which now is well on the road to recovery, showing clear signs of considerable growth in the upcoming years.  London has benefited immensely by foreign investors who bought a large number of properties (approximately 1 billion per quarter) showing their trust in the London market, thus pushing prices up amidst the middle of the crisis.

The Bank of England has indicated that interest rates will remain at 0.5% for a period of time- until unemployment level falls below 7% (it currently stands at 7.8%). Economists believe this may take up to Q3 of 2016, which is a clear sign of the mini boom that the market will enjoy for at least the next 3 years.  The Bank of England has indicated that the economy seems to be doing better now and the growth forecast is 1.4% for 2013 and is expected to be 2.5%.

These are positive prospects and if one takes into account the positive retail index of Q2 together with the 28% increase in mortgage approvals, as well as the increase in property prices for seven consecutive months will be easy to understand where the property market is heading.

The introduction of the Government’s Help to Buy Scheme (II) in Jan 2014 will boost demand for properties up to £600,000 and this coupled up with the shortage of properties in the UK (230,000 properties are needed per year but last year only 95,000 were built) will create an imbalance in supply and demand, which I suspect will result in an increase in
London property prices by about 50% for the next three years.

The supply and demand imbalance coupled with the growth of the economy and the measures the Government has taken to assist first time buyers will mean a 3 year boost of the property market and a very healthy recovery of the construction industry.  

Mario Apostolou
Leading Property Expert

Sunday, 28 July 2013


The UK’s Chancellor George Osborne was rather successful in getting more first-time buyers on the property ladder, with the introduction of Funding for Lending and New Buy Scheme for new properties. This brought a much sought after boost to the property market and the construction industry. So much so, that he decided to extend this by introducing Help to Buy scheme (II) starting from the 1st of January 2014 for all properties under £600,000. First-time buyers and home movers will be able to buy a house (new built or existing) using only a 5% deposit.
Lenders have been issued with the details of the government's Help to buy mortgage guarantee scheme, to enable them to start boosting high loan to value (LTV - 95%) lending by next January 2014.
It is anticipated that Help to Buy will benefit the whole market (even more), particularly existing home owners who want to move up the housing ladder but have been unable to do so in the last few years. The scheme will last for the next three years.
Under the rules, anybody wishing to borrow money must be able to afford the mortgage payments and will be subject to income verification and stress testing, as set out in the Financial Conduct Authority's (FCA) Mortgage Market Review. This is positive news, as it helps avoid a scenario of subprime lending with an official seal. Borrowers will not be able to access guaranteed mortgages if their credit history doesn't meet FCA impaired credit standards.
Borrowers will NOT be able to use this mortgage guarantee scheme to buy second homes. Lenders will be required to collect a declaration stating that the borrower has no interest in a property anywhere else in the world. It will not be possible to use Help to Buy in conjunction with any other government scheme, including the existing New Buy scheme.
Even though the Council of Mortgage Lenders welcomed the scheme, they pointed out that some details remain to be handed out, particularly the commercial fee for participation and how capital relief will work, in order to enable lenders to make an informed choice about their participation.
It is obvious that for the scheme to succeed and meet its full potential will require the active participation and support of plenty of the lenders, who will in turn need to price their products competitively. Over reliance on only a couple of High Street Lenders will not bring the required results. Therefore the Treasury will need to do a lot more work to encourage as many Lenders as possible to participate.
This three year scheme will be subject to review by the Financial Policy Committee. However, none of the parties involved anticipate that the scheme will be in force for much longer than already announced. Albeit the positive effect this will have, it may also backfire by creating an unhealthy increase in demand for homes pushing prices up artificially. The government also needs to consider a smooth exit from this scheme without causing a sudden shock to the market at the end of the three year period.
The Chancellor is right when he says that the aim of the scheme should be to support first time buyers and second time steppers as opposed to landlords and/or property investors.
It is crystal clear that the first phase of the scheme already in existence has already been successful and the government deserves all the credit for this. It came in at the right time and not only it has assisted first-time buyers to get closer to their dream of owning a home, but it also boosted the property market and the construction industry, having created a lot of jobs (it is estimated that for every new unit getting built in this country approximately 10 new jobs are created/or secured). Additionally it made money circulate in the market in general, avoiding stagnant market conditions (not only in property and construction).
I am not entirely convinced that the second phase of this scheme will perform in a similar manner as the first phase of this scheme. It is possible if things get out of hand to witness an overheated property market with extremely negative results. The government must avoid at all costs the unwelcomed effects of overstimulation of demand without the necessary increase of supply of new homes. Therefore the problem that needs to be addressed now is the supply of new housing, something that is absolutely necessary in this country.
This is a unique opportunity for the government to attempt to solve the shortage of housing or at least to reduce it. The supply of credit is important, but if accompanied by an effort to decrease the gap of supply and demand of housing, the existing government will have done this country a considerable service.

Leading Property Expert

Tuesday, 23 July 2013

Rental Market Activity in the UK up 22% year on year
The property rental market in the UK in the last few years has gone from strength to strength as activity now soars 22% above June 2012. It is also important to note that supply of rented homes was significantly boosted by improved Buy to Let mortgage availability (37.242 mortgages were approved in May 2013 from a low of 31.000/month approved in 2009).
New tenancies agreed have increased 22% annually in the UK and 20% in London, according to the latest data from leading letting agents.
The figures also show that UK tenant demand has grown at an average rate of 17% annually as would be buyers remain priced out of the property sales market.
The number of new properties available to rent has risen by 29% annually compared with the previous data as new landlords continue to come into the B to L market. In London, properties available to rent have increased by 13% annually.
This is good news obviously and one will need to view the property market as a whole and will need to consider the impact that governmental decisions and actions (Funding for Lending) will have on the market, especially after 1.1.14.  It is evident that sales will grow further with confidence coming back into the market, especially the financing sector. Expect capital growth of all properties all over the UK and especially London which eventually will see rental growth diminishing slightly.  
Leading Property Expert

Monday, 22 July 2013

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