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May 2009 |
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Global Interest Rates Exchange rates £1 buys:
 Market Update Around the world stock markets are continuing to bounce back led in many cases by banking and finance shares. The FTSE 100 in London is now trading at almost 4400 points, considerably stronger than the low of nearly 3500 at the beginning of March. Is this a sign that the worst of the credit crises in now behind us? The stock markets have historically been a good indicator of the state of economic health. Even currencies have had a surprisingly quite month with very little change month on month. So it certainly appears that the financial markets are enjoying much calmer conditions. Once again the Bank of England has kept the UK base rate on hold at 0.5%. Opinion is divided as to whether we may see another cut in the coming months and follow the lead of the US and Canada but even if it remains as it is many of us will continue to enjoy exceptionally low interest repayments. UK average property prices have continued their downward trend but at a slower pace that previously. This may well be an indicator that the market is now approaching the bottom. Increasing mortgage approvals and higher buyer interest are also positive signs that the worst may well be behind us. In their house price report for April the Halifax have revealed that prices fell by 1.7% during the month. This was the highest recorded drop by any of the major market reports for the month with Nationwide reporting a fall of 0.4% and Hometrack indicating that prices are just 0.3% lower than the previous month. With current low interest rates, affordability is now back at late 2002 levels and continuing to improve. So there are positive signs now starting to appear. The Nationwide house price index now values the average UK property at £151,861. Commenting on the figures Nationwide’s chief economist, Fionnuala Earley said – “The latest data from Nationwide’s Consumer Confidence Survey shows that consumers still think that prices will fall over the next six months. However, there has been a significant moderation in the rate at which they think prices will fall. This, along with the recent pick up in buyer enquiries and the increase in house purchase approvals in February, has encouraged some to suggest that this is the turning point in the market.” The government’s decision to extend the stamp duty holiday is also good news as the average cost of a typical house is now below the £175,000 figure in all regions but London. As a result there is evidence that the first time buyer market – the very foundation of the housing market – is beginning to grow.
In the news Mortgage lenders relax loan terms Mortgage lenders have started to relax slightly the requirements they need for granting a home loan, figures indicate. The total number of mortgage deals has risen by 7% in the past month, with more needing only a 15% or 20% deposit. Darren Cook of Moneyfacts commented, “We are seeing a number of mortgage providers slowing reducing their strict criteria and are increasing the number of products available to those that can raise a 15% deposit, be it at a higher initial interest rate”. Changing times A year ago, with the contraction of the property market gathering pace, more than half the available mortgages still needed a deposit of only 10%, or even less but last autumn, mortgage rationing by the UK’s banks and building societies became much more aggressive. By the end of the year the once-traditional 10% deals were rare and there are now just 96 of them and by last December more than half of all home loans needed at least a 25% deposit. However, this year has seen some relaxation by the lenders. “What we have seen over the past few months is a change in lenders offering their best interest rates at 70-75% loan-to-value rather than 60%,” said Mr Boulger. The number of deals needing a 15% deposit has risen, from 209 at the start of last December to 272 now and the number of 20% deposit loans which are available has gone up from 105 to 143 in the past month. “Banks consider a 75% loan to value as a conservative benchmark and it is generally where they see themselves getting their money back if a property is repossessed,” said Mr Cook. “With more mortgages becoming available at higher loan to values, it can be seen that a number of banks are regaining some confidence within the housing market,” he said.
1 Day training workshop
Over the coming months we will be delivering a series of free 1 day training workshops for our registered members. These events are designed to give attendees an understanding of the business concepts behind property investment.
As an open and ethical company we believe it is essential that our clients have an understanding of these concepts before investing in property, whether they purchase through us or another company. We therefore offer this as a free course to anyone who would like to attend.
These informative sessions receive excellent feedback from all those who attend. They are delivered only to small groups and convey real information; they are in no way a sales pitch.
If you would like to attend one of these sessions please click the following link where you will find available dates and an online booking form. Remember, there is no charge for attending one of our training workshops.
Location – Iberian Peninsula, South Western Europe Capital – Madrid Government – Constitutional monarchy Economy – 9th* by GDP (Nominal) International membership – EU, UN, NATO, OECD, WTO Currency – Euro (€) Population – 44.6m Language – Spanish (Castilian), Catalan, Gallego, Euskera
The second largest country in the European Union by area, Spain occupies an enviable position on the Iberian Peninsula with both Atlantic and Mediterranean coasts, and divided from France by the Pyrenees mountain range. A land of great diversity from lush forests to barren desert, and beautiful sandy beaches to snow capped mountain ranges, Spain really is unique. With an empire that stretched to all four corners of the world Spain was Europe’s leading power throughout the 16th and most of the 17th centuries. Because of its reach it was said that the sun never set in the Spanish empire. As a result of Spanish influence around the planet the Spanish language is widely spoken, particularly in South and Central America as well as the Caribbean and even the United States. The empire is long gone, but today Spain is a major European Union member state. During the 1960’s the country registered unprecedented economic growth in what was called the Spanish miracle. Tourism became a major part of the economy as tiny fishing communities were replaced with huge hotels and resorts, and people started to flood in from across Europe. Why we believe Spain is an excellent place to invest During the last four decades the Spanish tourism industry has grown to become the second biggest in the world. According to the World Travel & Tourism Council, Spain generated a massive €225.4 billion in economic activity related to tourism in 2007. Keen to maintain its position as a major destination the Spanish government invested approximately 40 billion Euros, about 5% of GDP, into tourism related facilities and infrastructure during 2007. The figures are truly staggering. Each year Spain welcomes in excess of 60m visitors with nearly 14m from the UK alone. The developing luxury end of the market is growing as new golf and spa resorts draw wealthy visitors from around the world, including the United States, Northern Europe and Russia. Because of this it is widely expected that tourism income will increase over the coming years. Although many areas of the property market have taken somewhat of a battering recently, this is by no means representative of the entire market and many regions are still providing good returns. Investors might need to rethink their Spanish property buying strategies a little, but counting this country out is not worth the bet. From its pristine beaches to its beautiful mountains and historic sites, Spain still has what it takes to pull in expats, holidaymakers and buyers. Considering this, investing in Spanish property still makes a great deal of sense. With this in mind we are currently looking at a number of exciting Spanish investment opportunities and hope to bring these to you very soon. We will be emailing full details to our registered members just as soon as they are available. To check out our current property availability please click the link below.
* Source: International Monetary Fund
What is it? – Void A void or rental void is a period where a rental property is un-tenanted and as a result is not developing rental income. Void periods are a concern for any property investors as clearly a reduction in the level of rental income has a serious impact on the rental yield of the investment. Although void periods are to be expected it is absolutely vital to factor voids into your initial rental calculations when looking to purchase a property for investment purposes. It is also critical to reduce these periods to an absolute minimum and there are a number of ways of doing this. You could for instance reduce the price of the property thereby undercutting your competition and attracting a tenant more quickly. The rental price can be increased at a later stage if necessary but remember a drop in the monthly rental of £20 or so is far more acceptable that a month without a tenant. Make sure the property is in good condition, if necessary give it a coat of paint, clean the windows and make good any wear and tear. Give the property a little something extra and make it stand out. You could for instance install a flat panel TV or plumb in a dishwasher, little luxuries such as these can give your property the edge when compared to the property next door that doesn’t have these. If your rental property is a house make sure that the garden is presentable. Cut the grass, remove weeds and add some colour with some hardy plants. The exterior of the property is every bit as important as the interior, do not forget it. Look at your property through the eyes of a potential tenant, would you rent it? What would make it more appealing to you as a renter? It really needn’t cost much but it could be the difference between renting or not renting the property and this can be a whole lot more expensive. “If I had my life to live over again, I’d be a plumber” – Albert Einstein (1879 – 1955) |
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The Worldwide Property Group Ltd. Suite A & B, The Courtyard, Abingdon, Oxford. OX14 5SE Tel: 01235 553569 email: enquiries@w-wideproperty.com Web: www.w-wideproperty.com Copyright – The Worldwide Property Group Ltd 2009 The Worldwide Property Group is a marketing agent for developers and whilst we endeavour to ensure the accuracy of information contained in this site, including figures and forecasts at the time of publication, the Worldwide Property Group does not guarantee or take responsibility for their accuracy
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Global Investor May 2009
