News Archive - June 2009

This is our news archive for articles published on the website and sent to our Leeds Property Networking newsletter subscribers. To get the most up-to-date property-related news, before it appears on the website, enter you details in the box on the right.

Week-Ending
19th June 2009

News Summary

Ten US banks to repay Tarp funds (FT)
The US Treasury said last Tuesday that it would allow 10 banks to repay government aid because they had raised sufficient capital. The US Treasury are to recoup $68bn from the banks, much more than it had originally expected. The swift return of the funds is a sign that some stability has returned to a sector that was stricken last year and could restore confidence in US banks. But what does this really mean to you and I...? Well for one, it means that the banks may be better placed to start to return to some form of normal lending...however, the cynic in me sees the main reason is to remove the restrictions on Bankers' pay...i.e. their own vested interests! 
Read more of this story here >>>

More fixed-rate mortgages go up
As predicted by the FT...more big lenders have increased the cost of their fixed-rate mortgages for new borrowers. The Abbey, Lloyds, Nationwide have all increased their Fixed Rate lending. The main factor behind the changes has been the increasing cost of swap rates. These are the fixed rates at which banks and building societies borrow money from each other, for specified periods of time, to fund these particular mortgage deals. And what happens within the residential sector soon follows within the investor sector.
To read more on this story and how this may affect you, click here >>>

Home ownership 'aspirations hit'
Young people's aspirations of home ownership have shrunk as a result of the recession, according to a survey by the "not-for-profit" Chartered Institute of Housing (CIH). The proportion of UK youngsters who believed owning their own home was "the ideal living situation" dropped in the last year, the poll found. Perhaps we should not be suprised by such reports given the level of media coverage of the "crash" and "Credit Crunch", and the fact that young people will view the Banks with more suspicion and will be much less trusting than they used to be. They will also be aware of the difficulties now facing many people in obtaining mortgage finance at an affordable level - the best rates are still at or below 75% Loan to Value (LTV) for residential mortgage deals - way out of reach for many young and not-so-young aspirational homeowners. But then every cloud...rental demand is reported to be up.
For the full story click here >>>

UK house price 'gap' smaller, says survey
Sellers are accepting offers at an average of 11% below their asking prices, an improvement on the previous report from RICS, reinforcing suggestions that the slump in prices may be slowing. Remember that when we talk about "price falls slowing", this means that property prices are still falling...but at much smaller rates. Worst areas are still up North, with vendors accepting offers at 75% of asking price - perhaps a mixture of optimism (of the vendor/agents) and hard-bargaining (of the purchasers) - with the best areas being London (93%) and Scotland (97%).
To read the full story follow this link >>>

...more bad news from RBS, this time...

RBS chief warns about higher property losses
Stephen Hester, RBS chief executive, said the bank did not take into account the full extent of writedowns on its property loans. His comments were taken from a speech at the British Property Federation annual conference in London, and he went on to state that the decline was slowing, but recovery was still some way-away: "We are not yet going up but the pace of decline has moderated substantially."
To read more on this story >>>

...and on the commercial side...

Retail rents to drop by a fifth
Rents across the UK's high streets and shopping centres are set to drop by almost a fifth between now and the end of next year, quashing hopes of a revival of the retail property sector, that's according to a report from property consultancy Colliers CRE. Maybe good news for retailers, but only for those who remain in business...bad news for the large property companies and their balance sheets, as they continue to writedown their asset (property) values due to the fact these are based on rental yields. One opportunity I picked up recently was to seek out empty or boarded-up commercial property and look at ways of adding value, e.g. attracting a tenant "pre-purchase", exploring other forms of revenue from such a building (mobile phone masts, advrtising, conversion, etc).
Read more of this story >>>

Sign of firmer demand for houses
The discount homebuyers can expect when buying property at an auction has fallen to its lowest level in 15 months as confidence starts to return to the housing market. Those buying at auction in May achieved prices roughly 11 per cent lower than on the conventional market, in contrast to the 40 per cent discount common at the turn of the year.

HEALTH WARNING: Such measurement needs to be analysed carefully. Remember, Auctions are a indicator of the "wholesale" prices of property, meaning this type of analysis merely demonstrates the retail and wholesale prices have been coming closer together. It also demostrates that the market is still slowing and no matter which route a vendor chooses to sell their property, prices are still lower than they were, say 12 months ago.

Remember that I wrote a week or two ago about the need for a minimum number of housing transactions (mortgage completions) per month for a stable housing market?...Well that data has not changed and remains about 50% of where it needs to be, so stability is still a long way off.

Week-Ending
12th June 2009

News Summary

City is best-value hub for property investors
The slump in the value of City of London offices has been so severe that it is now the only real estate hub in the world that offers a good deal for international investors. So if you're into Commercial Property, and are looking for a bargain or two...have a look in London.
Read more of this story >>>

Lloyds repays £2.3bn to UK Treasury
Lloyds is believed to be the first bank in the west to have repaid the bail-out aid provided by the UK government in an attempt to stabilise the banking system. Oddly, for the uninitiated, the government actually bought £1.7Bn of the share placing (£2.3Bn being received from other investors), essentailly funding part of the share placing to enable Lloyds to repay Treasury borrowing. In simple terms, the Government has "swapped" some of its preference shares into normal shares, and it still owns over 40% of this banking giant.
Read more of this story >>>

In a separate story last week, the bank also announced it may close up to 400 bank branches, including 164 Cheltenham & Gloucester outlets set to shut in November.

West Bromwich seals deal
The building society has clinched agreement with debt holders to convert debt into capital that would allow it to retain its independence. In so doing, this allows the society to retain its mutual status (for the time-being), but this may only be a sticking plaster for this troubled organisation, the UK's 8th largest Buiding Society.
Read more of this story >>>

Bank of England to extend quantitative easing
Companies will soon be able to offload high-quality short-term debt on to the Bank, which announced plans to extend its asset purchase facility to forms of working capital. The quantitative easing programme has thus far focussed on Government Bonds (£77Bn out of the £80Bn total "spent"), whereas this announcement will see the programme help ease the burden on companies struggling with working capital and viable businesses being jeopordised.
Read more of this story >>>

Week-Ending
5th June 2009

News Summary