Tuesday, July 11, 2006

New apartment prices fall

11 July 2006

"The average price of a new home in the UK in June was £258,581, down 0.5% compared to May. But the fall was caused by an increasing oversupply of new apartments, said SmartNewHomes.com in their new homes index for July. All other property types increased in value over the month.

Despite apartments being the only property type to fall in price this month their domination of the housing mix (58.6%) has meant just a 1% fall in price has had a negative effect on the overall average cost of a new home.

Over the last three months new properties have fallen by 2.3% and over the year to last June they fell by 1.1% the new homes website said."

Anyone who invested in apartments recently is now likely to be in a difficult position with a choice of selling at a loss or letting for a lower than anticipated rent.

Chris Bell


Monday, July 10, 2006

Parents/Students Buy-To-Let Bonanza

SUNDERLAND has recorded the biggest increase in house prices in a survey of 109 university towns and cities across the United Kingdom.

Parents who invested in property while their children went to university in the North East have found that the value has climbed by 147 per cent over five years. Prospective investors need not be put off, however: the average cost of a home in Sunderland remains nearly £5,000 lower than for the region as a whole.

A report by Halifax Estate Agents found that many parents, faced with the prospect of student debts totalling £20,000 or more after years of study, are studying house prices alongside university league tables and are turning to bricks and mortar to help to finance their children’s higher education.

The property generates an income while the student offspring is at university through rooms let out to other students. After graduation it can be let out to tenants, providing a steady income for many years thereafter.

However, parents whose children win places at the top universities will need to lay out large sums if they want to buy a property in those towns and cities, the report says.
London University colleges, which feature strongly in the top 20 of The Times top universities league table 2007, have property prices to match. The parents of a son or daughter who is enrolled at Imperial College, based in Kensington, West London, could pay on average £605,000 for a property in the area.

House prices in areas near the college, which is ranked third in The Times league, have risen by 64 per cent in five years.

For properties close to University College, the average price is more than £444,000, and for anything near the London School of Economics, parents would have to pay on average £310,000.

Outside London, property prices in some of the other top 20 university towns are almost as steep. In Oxford, the top seat of learning for the fifth consecutive year in The Times league table, and in Bath, ranked ninth, property prices are on average more than £250,000. A home in Cambridge, ranked second, costs on average £227,000, while in St Andrews, ranked 18th, the average is just under £200,500.

Durham recorded the highest house price growth of the top 20 university towns. The average cost of a home in the city is now more than £145,000, 122 per cent higher than in 2001.
House price inflation in Loughborough, which had the second-highest increase in the top 20, was 111 per cent over the same period.

Loughborough was also named England’s top provincial university and was rated best for student satisfaction. Nottingham is the least expensive top 20 university location in which to buy a property. The average price is £139,000.

Based on house price growth alone, the top-performing university towns and cities were predominantly in the North and had property prices below the regional average.

Claire Gibb, of the Kensington and Chelsea estate agents Bective Leslie Marsh, said that parents who invested found that the lettings market for student properties was buoyant. “Students frequently look to share in three or four-bedroom houses or flats, but their budgets often don’t stretch that far, so they look for one-bedroom or studio flats where their money goes further,” she said.

“We are always desperately looking for one-bedroom apartments. In August and September properties come and go so quickly on the rental market, the supply just disappears.”

Shared accommodation, whether for students or young professionals, is one of those areas where it is still possible to make good money in property. If you are considering property investment it is worth checking out the returns from renting out rooms individually rather than houses.

Chris Bell