Thursday 21 February 2013

High Buyer Demand On The Back Of Low Mortgage Rates


Many property experts project that residential prices in the capital will rise in the short to medium term, on the back of low mortgage borrowing rates and a rise in the number of international buyers looking to acquire property in London, widely considered to be the ultimate safe haven market.

Mortgage borrowing rates have fallen sharply in recent week, with some two-year fixed rate deals starting from as low as 1.99 per cent, on the back of the Bank of England's Funding for Lending Scheme, which was introduced last year.

There are growing signs that government efforts to boost mortgage lending are trickling down to people with smaller deposits, reflected by the fact that there has been a sharp rise in the number of first time buyers.

November's mortgage lending data from the Council of Mortgage Lenders (CML) shows that the volume of first-time buyers increased by 24 per cent year-on-year, with a total of 21,700 loans advanced to first-time buyers, worth £2.7 billion, in November, marking one of the highest monthly totals seen in the past three years.

For the second consecutive month, first-time buyer loans accounted for 41 per cent of all home purchase loans, compared with the longer-term average of 38 per cent.

"Encouraging activity in the first-time buyer sector in November contributed to an uplift in house purchase lending, suggesting the underlying trend for year-on-year increases should continue," said Paul Smee, director-general a CML.




Attractively low mortgage borrowing rates has led to a rise in the number of homebuyers searching for a house or apartment for sale in Little Venice, St John's Wood, Primrose Hill, Marylebone, among a host of other desirable locations in the English capital.

"All these areas have seen surging prices over the last year," said Andrew Ellinas of leading estate agents Sandfords.

He added: "The best houses and apartments in these areas now represent a safe and secure place to store funds as well as a base in some of the loveliest areas in the most vibrant, cultured and cosmopolitan city on earth."

Whether talking to Mayfair estate agents or Marylebone estate agents, or any agent in a sought-after part of London for that matter, they will all agree that London is proving a wealth magnet thanks to its safe haven status.

                              

London's political and relative economic stability has helped to attract a high number of overseas property investors in recent years, as they seek to preserve wealth in light of political, economic and financial upheaval in their home nations, helping to push property prices higher.

Yet, despite the surge in London property values, the weak pound, ironically, has actually made acquiring property in London relatively cheaper for some foreign buyers, particularly those from Asia.

Shirley Humphrey of Harrods Estates said: "The prime central London residential market is as popular as ever with international investors. While interest from Russian and Middle Eastern investors remains strong, increasingly, buyers from Hong Kong and Singapore are making a significant impact."

Wealthy overseas buyers generally look to buy property in some of London's most exclusive areas, which explains why so many look at property for sale in Fitzrovia, Chelsea, Mayfair, Hyde Park, among other desirable districts.

International purchasers, especially those from Asia, are particularly interested in acquiring new build homes in the capital.

Trish Henderson, Sales and Marketing Director, of Taylor Wimpey Central London, said: "Investors from the Far East, in particular Singapore and Hong Kong, have been key drivers in the prime London new build residential market. These buyers are looking for solid investment properties, but more and more, properties in areas that offer a great range of lifestyle and education options for their families.

As we start the new year confidence to the residential property market appears to be improving, helped in part by low mortgage rates. Many housing experts predict that transaction levels will continue to increase in many parts of the country and this in turn could lead to significant capital growth.

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