Property News - March 2009
Welcome to our property investment newsletter, the aim of which is to keep you up to date and informed as to the most recent property trends.
With the Bank of England having now slashed the base rate to 0,5%, the Royal Bank of Scotland committed to lending £9bn and Northern Rock pledging an additional £14bn we believe that the current down turn in UK property prices has now bottomed out and we should start to see a recovery in 2009.
If you are interested in buying into the UK property market at its low point, we have currently managed to secure newly completed units that start at £52,500 Priced by a RICS surveyor at 35% below market value these units represent very good value for money.
For further information on UK Property Investment Packages please contact: Bradley Hancock on +27 72 0196192 or via email [email protected]
Home repossessions, insolvencies and distressed residential property sales jumped alarmingly in the last quarter of 2008, according to results released from Distressed Asset Index. The index, which tracks various distressed asset classes, shows that the residential property market is in a deepening recession, house prices are continuing to fall and interest rates cuts are having a muted effect on mortgage arrears.
The Reserve Bank’s Monetary Policy Committee (MPC) cut the key monetary policy interest rate – the repo rate – by 100 basis points to 10,5% as a result of declining domestic inflation and deteriorating global and domestic economic conditions. In reaction to this, commercial banks cut their lending rates to the public, i.e. prime and mortgage rates, also by 100 basis points to a level of 14,0%.
As we move into 2009 we are now almost 18 months into the credit crunch and the resulting economic downturn, both of which have had a rapid and significant impact on London’s residential market.
With prices for some new properties falling by as much as 40%, yields of over 10% are possible. Considering that returns for rental property have rarely topped 3-4% over recent years, rents that amount to a tenth of purchase price per annum are proving very attractive.
The price per square meter normally decreases as the size of the land increases. The price per square meter will also be affected by factors such as the proximity to road and rail networks as well as by shop frontage, foot traffic and so on …
The decision to cut base rates by a further 0.5% will improve activity in the long-term, but, like other recent cuts, will have little immediate effect in itself. Indeed, the government’s recent decision to force the nationalised banks to lend will probably do more to revive lending than any change in interest rates.