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Homebuyers' confidence rising as loans get easier. But prices are on the up too Homebuyers' confidence rising as loans get easier. But prices are on the up too
(2 months later)
In Bulwell, on the northern edge of Nottingham, in the bright July sunshine, hard-hatted construction workers are setting up a lawn sprinkler to soak the grass of a pristine children's playground, while saleswoman Lorraine escorts keen young couples around a trim little show home.In Bulwell, on the northern edge of Nottingham, in the bright July sunshine, hard-hatted construction workers are setting up a lawn sprinkler to soak the grass of a pristine children's playground, while saleswoman Lorraine escorts keen young couples around a trim little show home.
There will be 40 houses here, on the site of a bulldozed former council estate, and the developer, Keepmoat, which specialises in regeneration projects, can't sell them quickly enough.There will be 40 houses here, on the site of a bulldozed former council estate, and the developer, Keepmoat, which specialises in regeneration projects, can't sell them quickly enough.
Like many smaller builders, Keepmoat suffered badly during the depths of the downturn, shutting down its Midlands operation altogether in 2008 – but it is due to build 600 properties locally this year and 2,000 across Britain.Like many smaller builders, Keepmoat suffered badly during the depths of the downturn, shutting down its Midlands operation altogether in 2008 – but it is due to build 600 properties locally this year and 2,000 across Britain.
You don't have to go far to see why: for the first time since the onset of the financial crisis more than five years ago, the local property market is looking up.You don't have to go far to see why: for the first time since the onset of the financial crisis more than five years ago, the local property market is looking up.
"Buyers are far, far more confident than they've been for a number of years," says Karen Eccles, manager of the Beeston estate agency branch of the Nottingham building society. In leafy Wollaton, close to the rolling Wootton Park and the main A52 to Derby, she proudly shows off a smart-looking four-bedroom detached house that sold within a fortnight, just below its £440,000 asking price. Another, modern property nearby with a sunny garden went on the market on Saturday, at £410,000, and was snapped up by the end of Monday."Buyers are far, far more confident than they've been for a number of years," says Karen Eccles, manager of the Beeston estate agency branch of the Nottingham building society. In leafy Wollaton, close to the rolling Wootton Park and the main A52 to Derby, she proudly shows off a smart-looking four-bedroom detached house that sold within a fortnight, just below its £440,000 asking price. Another, modern property nearby with a sunny garden went on the market on Saturday, at £410,000, and was snapped up by the end of Monday.
A year ago, Eccles says, either of these homes could have sat on her books for months; now, when new prospective sellers come into the office, she can point to a string of local sales in recent months. "It was really busy in March and April: we were putting things on like crazy".A year ago, Eccles says, either of these homes could have sat on her books for months; now, when new prospective sellers come into the office, she can point to a string of local sales in recent months. "It was really busy in March and April: we were putting things on like crazy".
A few minutes up the road in less affluent Bilborough, a neat ex-council house has just been snapped up, again within two weeks, for just below the asking price of £89,950.A few minutes up the road in less affluent Bilborough, a neat ex-council house has just been snapped up, again within two weeks, for just below the asking price of £89,950.
Lorraine Giddings, head of the Nottingham's branch network, says viewings in the first six months of 2013 were the same period last year, and sales up 30%. "That's the feedback from other agents as well: the market is definitely more buoyant, and customers are definitely feeling more confident," she says.Lorraine Giddings, head of the Nottingham's branch network, says viewings in the first six months of 2013 were the same period last year, and sales up 30%. "That's the feedback from other agents as well: the market is definitely more buoyant, and customers are definitely feeling more confident," she says.
After five years when most housing markets outside London and the south-east remained in the deep freeze, the revival in Nottingham is reflected across a growing number of areas.After five years when most housing markets outside London and the south-east remained in the deep freeze, the revival in Nottingham is reflected across a growing number of areas.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, whose latest survey showed a marked improvement, says: "If you look at the underlying trend, it certainly suggests that things are picking up in certain parts of the country."Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, whose latest survey showed a marked improvement, says: "If you look at the underlying trend, it certainly suggests that things are picking up in certain parts of the country."
The newfound sense of optimism has not sprung up in a vacuum. Cheaper mortgages have helped. The Bank of England's Funding for Lending policy, launched a year ago, gives banks cut-price loans so that they can reduce the costs of borrowing for their customers.The newfound sense of optimism has not sprung up in a vacuum. Cheaper mortgages have helped. The Bank of England's Funding for Lending policy, launched a year ago, gives banks cut-price loans so that they can reduce the costs of borrowing for their customers.
Lenders have responded with bargain borrowing deals, many of them offering fixed rates for up to five years – rare before the crisis. With prices in many areas still well below their pre-crisis peak (by 6.4% in central Nottingham, for example), the banks have also started to relax some of their lending criteria. A report from the surveyors e.surv last week suggested high loan-to-value mortgages, worth at least 85% of the value of the property, are at their highest level since 2008.Lenders have responded with bargain borrowing deals, many of them offering fixed rates for up to five years – rare before the crisis. With prices in many areas still well below their pre-crisis peak (by 6.4% in central Nottingham, for example), the banks have also started to relax some of their lending criteria. A report from the surveyors e.surv last week suggested high loan-to-value mortgages, worth at least 85% of the value of the property, are at their highest level since 2008.
Richard Donnell, director of research at the housing data firm Hometrack, said: "Some of these mortgages are very attractive for people, and then it only takes a pick-up in confidence, and they decide to move."Richard Donnell, director of research at the housing data firm Hometrack, said: "Some of these mortgages are very attractive for people, and then it only takes a pick-up in confidence, and they decide to move."
He argues that Funding for Lending has been a much more important driver of the surge in property transactions than the government's Help to Buy scheme, launched at the budget. The first part of Help to Buy, which is already available, offers five-year interest-free loans to the buyers of newbuild properties.He argues that Funding for Lending has been a much more important driver of the surge in property transactions than the government's Help to Buy scheme, launched at the budget. The first part of Help to Buy, which is already available, offers five-year interest-free loans to the buyers of newbuild properties.
The much larger second element of Help to Buy will begin in January 2014, offering taxpayer-backed mortgage guarantees – an idea questioned by, among others, Sir Mervyn King and the Treasury select committee.The much larger second element of Help to Buy will begin in January 2014, offering taxpayer-backed mortgage guarantees – an idea questioned by, among others, Sir Mervyn King and the Treasury select committee.
The chancellor, George Osborne, hopes that boosting demand, by making more mortgages available, will prompt Britain's builders to crank up thousands of new projects up and down the country, helping to tackle the housing shortage.The chancellor, George Osborne, hopes that boosting demand, by making more mortgages available, will prompt Britain's builders to crank up thousands of new projects up and down the country, helping to tackle the housing shortage.
But Roger Harding, head of policy at homelessness charity Shelter, warns that the big private-sector housebuilders that dominating the market are unlikely to build the right mix of housing at the right pace.But Roger Harding, head of policy at homelessness charity Shelter, warns that the big private-sector housebuilders that dominating the market are unlikely to build the right mix of housing at the right pace.
HomelessnessHomelessness
"The builders are open about how they are moving towards a lower volume, higher margin model, which is good for their profitability, but won't deliver the housing we need for society.""The builders are open about how they are moving towards a lower volume, higher margin model, which is good for their profitability, but won't deliver the housing we need for society."
In a report to be published next week, Shelter argues that the government's package of housing policies will fall woefully short of the 250,000-a-year building target many experts see as necessary to keep pace with rising demand and tackle homelessness.In a report to be published next week, Shelter argues that the government's package of housing policies will fall woefully short of the 250,000-a-year building target many experts see as necessary to keep pace with rising demand and tackle homelessness.
It's hard not to agree with Keepmoat's spokesman, Shaun Fielding, that the bright new homes in Riverside View are more appealing than the cheek-by-jowl ex-council properties that adjoin the site; but at £110,000 (up from £95,000 when they first went on the market a year ago), they are unlikely to be within reach of the residents of the homes that were demolished to make way for them.It's hard not to agree with Keepmoat's spokesman, Shaun Fielding, that the bright new homes in Riverside View are more appealing than the cheek-by-jowl ex-council properties that adjoin the site; but at £110,000 (up from £95,000 when they first went on the market a year ago), they are unlikely to be within reach of the residents of the homes that were demolished to make way for them.
Harding fears that in the short term, the main result of improved mortgage availability will just be a renewed surge in prices. In the capital, where the top end of the housing market has been turbocharged by foreign investment, the recovery began more than a year ago. The gap between London house prices and those in the rest of the country is at a record high, and the skyline is already thick with cranes. Here, building is happening on a gargantuan scale.Harding fears that in the short term, the main result of improved mortgage availability will just be a renewed surge in prices. In the capital, where the top end of the housing market has been turbocharged by foreign investment, the recovery began more than a year ago. The gap between London house prices and those in the rest of the country is at a record high, and the skyline is already thick with cranes. Here, building is happening on a gargantuan scale.
At Nine Elms, the mind-bogglingly large £15bn regeneration scheme on the south bank of the Thames, around Battersea power station, 16,000 new homes will be built over the next few years.At Nine Elms, the mind-bogglingly large £15bn regeneration scheme on the south bank of the Thames, around Battersea power station, 16,000 new homes will be built over the next few years.
Local councillors, led by Lib Peck, the Labour leader of Lambeth council, the co-chair of the Nine Elms Partnership, have battled to extract the highest proportion of affordable homes they can from developers – about 30% on most of the sites in the borough.Local councillors, led by Lib Peck, the Labour leader of Lambeth council, the co-chair of the Nine Elms Partnership, have battled to extract the highest proportion of affordable homes they can from developers – about 30% on most of the sites in the borough.
But Peck admits that it's a tough struggle: "The aspiration is to make sure it feels like a place – we don't want it to be bolted on, so that it's alien to our existing population."But Peck admits that it's a tough struggle: "The aspiration is to make sure it feels like a place – we don't want it to be bolted on, so that it's alien to our existing population."
But so far, one of the few completed developments is the swanky St George's Tower, which offers, "exceptional interior design, elegant exteriors and breathtaking views" – for those who can afford them.But so far, one of the few completed developments is the swanky St George's Tower, which offers, "exceptional interior design, elegant exteriors and breathtaking views" – for those who can afford them.
A busier, more vibrant housing market will be good news for many, but Harding says: "For young families, every price increase means home ownership slips further out of reach."A busier, more vibrant housing market will be good news for many, but Harding says: "For young families, every price increase means home ownership slips further out of reach."
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