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UK property investors eye virtues of foreign parts |
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HOME >> NEWS >> UK property investors eye virtues of foreign parts |
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April 3,2008
 Property investors frustrated by rising mortgage rates and falling house prices in the UK are beginning to direct their demand abroad.
Estate agents have seen a marked increase in the number of inquiries from those looking to purchase a property overseas since the credit crunch began to disrupt the mortgage market.
Nationwide, Intelligent Finance and Chelsea Building Society announced this week sharp rate rises to many of their mortgages. Larger UK lenders have been pulling offers, raising rates and restricting maximum loan-to-values.
In just over six months the number of mortgage products on offer in the UK has halved, with lenders such as Scottish Widows, Halifax, Bank of Scotland and Woolwich citing severe funding constraints as the cause.
Last month’s mortgage approvals were among the lowest on record, down 33 per cent year on year, according to figures from the British Bankers’ Association. Lower mortgage approval numbers, coupled with elevated house prices and modest disposable income growth has had a negative knock-on effect on the housing market. In March house prices fell for the fifth month in a row. Nationwide said the rate of growth in the housing market was at its lowest for 12 years.
Global Insights, the economic research company, expects house prices in the UK to drop by 5 per cent over 2008 and 2009 with the escalation of the credit crunch.
But, according to lenders and estate agents, regarding the UK housing market as homogeneous can be misleading.
“Pricing still depends on where you are and what type of property you have,” said Peter Bolton King, chief executive of the National Association of Estate Agents.
Properties in London and the south are still fetching their asking price and many at the higher end of the spectrum – more than £3m – are prompting bidding wars, said property website Primemove.com.
“There are a lot of people who still want to move and a lot who still want to buy second homes,” said Bolton King. And while UK mortgage providers are increasingly unwilling to provide funding, European lenders are widening their mortgage offerings, said Stuart Law at Assetz, the property investment group.
The credit crunch that has hit the UK and US residential housing markets has not made a similar impact on other European mortgage markets, leaving offers relatively unchanged, according to Melanie Bien at Savills Private Finance. Deals are possible with very low or no set-up fees and those with a poor credit history can obtain the same interest rate as those with clean histories so long as they pay higher deposits. A number of French banks and building societies have also recently introduced 95 per cent and 100 per cent mortgages.
“Buying a second home is increasingly expensive in the UK,” said Bien. “It’s possible to buy something cheaper overseas and still expect value appreciation.”
Although Spain’s residential property market is experiencing a valuation drop as a result of oversupply, in France property prices are up 4 per cent year on year, and in Germany they have risen by 2 per cent, according to data from Assetz.
Simon Conn, managing director at Conti Financial Services, said financial worries meant UK investors wanted these more traditional areas, rather than newer markets such as Bulgaria. “With all the financial uncertainties around now what people are looking for is safety,” said Conn.
By Elaine Moore
Source: Financial Times |
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International Corporate Governance
This issue explores how governance attributes are directly related to the substantial variation - across both countries and companies - in ownership, investment and valuation. |
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