Ayrshire Real Estate

House builders in Trouble

admin — Thu, 10 Jul 2008 09:25:31 +0000

FRESH turmoil in markets drove share prices into official bear market territory yesterday amid worsening news of job losses in housebuilding.

Mounting fears of recession sent the FTSE 100 tumbling 3 per cent at one point, pushing the UK market below 5,385 and into bear territory – defined as a 20 per cent fall from its recent peak of 6,732 last year. The index rallied later to close 72.2 points down at 5,440.5.

The black mood was lifted slightly in late afternoon by a pledge from Ben Bernanke, chairman of the US Federal Reserve, of continuing support for America’s stricken banks and a further $5.37 fall in the price of Brent crude to $136.50, well down on the peak of almost $146 hit last Friday.

But the late relief brought no respite for banks and housebuilders, with fresh falls that took Bradford & Bingley down 19 per cent to 34p, Royal Bank of Scotland down 3 per cent to 194.9p and Barratt Developments down a further 3.7 per cent to 39p as problems piled up in the sector.

Persimmon said one in three of its Scottish staff was to be laid off, prompting a warning from a leading trade body that Scotland’s housebuilders could axe up to 8,000 jobs if the downturn worsens.

Persimmon, which has regional offices in Bathgate and Hamilton, said 85 staff would go out of a total of just over 260.

The cuts are part of a wider 1,100-strong redundancies programme at the company – about one in four of its staff – and against a slump in completed house sales of nearly a third year-on-year to 5,501 in the six months to June. Persimmon’s average selling price fell 4 per cent. Persimmon builds between 1,800 and 2,000 homes a year in Scotland, where it introduced its upmarket Charles Church brand in 2006.

A spokesman for Homes For Scotland said yesterday: “A total of 52,500 are employed directly in housebuilding in Scotland and we believe between 10 and 15 per cent of these jobs are at risk.”

That suggests the axe hovers over between 5,250 and 7,875 housebuilding jobs in Scotland.

Homes for Scotland, which represents firms accounting for 95 per cent of new homes for sale in Scotland, said a further 47,250 jobs were indirectly related to housebuilding.

Jonathan Fair, chief executive of Homes for Scotland, said: “The severe problems facing our members will have even more serious repercussions the longer UK government inaction continues. Indeed, our own Scottish Government’s ambitious housing targets are now at risk.”

But Fair added that Scotland was the most resilient housing market in the UK and needed to “hold its nerve and steady the market”.

Taylor Wimpey and Barratt Developments have confirmed nearly 2,000 combined redundancies – about one-sixth of their workforces.

Commercial property slump

THE year-old downturn in commercial property values gathered pace last month, according to property adviser CB Richard Ellis.

The firm, one of the biggest contributors to industry-wide data from Investment Property Databank, also noted that corporate rents had fallen for a second straight month.

CBRE said capital values fell by 1.3 per cent in June and were now 18.5 per cent lower than their peak last summer.

The data suggests that the industry downturn has entered a second phase that will continue to put pressure on property loan covenants.

CBRE said rents slipped by 0.1 per cent in June as the UK economy deteriorated and demand for workspace dipped.

House prices on the slide.

admin — Thu, 10 Jul 2008 09:21:36 +0000

British house prices fell by 2 per cent between May and June, above expectations of a 1 per cent decline, adding to growing evidence the slowdown in the housing market is gathering pace.

According to Halifax, the UK’s largest mortgage lender, house prices fell by 6.1 per cent in the year to June - the highest level since March 1993 and up from 3.8 per cent in the year to May.

However, Halifax said today that the average UK house price remains slightly higher, up 2 per cent, than two years ago and more than 10 per cent higher than in June 2005, indicating that the British housing sector still has some way to go before it reaches the bottom of the cycle.

This morning, Barratt Developments became the latest housebuilder to release dire sales figures and announce 1,200 job cuts, as conditions in the mortgage market continue to tighten and make it more difficult for borrowers to secure home loans.

UK Housing Report

admin — Wed, 21 May 2008 15:25:59 +0000

Conditions in the UK housing market will “get worse before they get better”, with mortgage lending expected to fall by 21 per cent this year while house prices will decline by 7 per cent.

According to revised figures released by the Council of Mortgage Lenders (CML) house prices will fall by 7 per cent in 2008, in contrast to its previous expectations of a 1 per cent rise.

Today’s figures also reveal gross mortgage lending had been expected to total £340 billion this year but is now forecast to reach £285 billion in 2008. Over the same period, the number of house sales are predicted to fall from one million to 770,000.

Michael Coogan, director general at the CML, said: “Over the next few months, lending volumes will get worse before they get better.

Howard Archer, chief UK and European economist at Global Insight, is also forecasting that house prices will decline by 7 per cent this year and by 9 per cent in 2009.

Though he admitted: “…it is looking ever more possible that house prices will suffer double-digit falls both this year and in 2009, given serious buyer affordability constraints, limited and often more expensive mortgages available due to ongoing very tight lending conditions, a deteriorating economic outlook and reduced prospects for further interest rate cuts in the near term at least.

Gross mortgage lending in April showed an improvement on the previous month, rising 5 per cent to an estimated £25.3 billion compared to March. However, compared to April last year, gross lending fell by 8 per cent.

Families hit by Credit Crunch

admin — Mon, 19 May 2008 07:15:43 +0000

Families were warned last week to prepare for years of stagnant growth in house prices and take-home pay, but big rises in the cost of living, in one of the Bank of England’s bleakest economic assessments for years.

Mervyn King, the Bank’s governor, said that the rate of inflation reached 3% in April and could hit 3.7% by the end of the year because of the soaring cost of fuel and food. This would be well above the Bank’s 2% target and the highest for 16 years. And while the cost of living shoots up, the economy is set to grind to a halt by the autumn with growth of just 0.2% a quarter over the rest of the year.

King said: “For the time being at least, the ‘nice’ decade is behind us. We are travelling along a bumpy road as the economy rebalances.”

House prices are already falling and Halifax said last week that homeowners should be prepared for values to fall until at least the end of 2009 while earnings catch up, enabling first-timers to get back into the market.

Martin Ellis, chief economist, said: “If we were to see a 10% fall in house prices by the end of next year, they would be back at sustainable levels. Even then, homeowners should be prepared for prices to go up less than earnings for several years.”

The combination of stagnant growth and persistent inflation has raised the spectre of “stagflation”, although the economy is still a long way from the double-digit inflation of the 1970s. However, there is plenty to see you through the gloom. Here we look at ways you can protect yourself from the hard times ahead.

Ask lenders to keep back rate cuts

If you set aside the £30 you saved when the Bank last cut rates and used it to pay off debt, you could save £6,080 over the next 10 years. Brokers such as MONEYSCREEN say that it has never been more important to build up a cushion of equity in your property because lenders are increasingly reserving their best rates for homeowners with 10% and sometimes 25% equity.

While you may have sufficient cushion now, that may not be the case in a year’s time if prices fall by around 10% as expected.

Someone with a 25-year £200,000 mortgage on a tracker at 5.63% would have saved £30 last month when the Bank cut interest rates. If you could afford the mortgage before the cut, you could ask your lender to maintain your mortgage at the same level, which would knock £10,081 off your loan over the term and would allow you to repay it 14 months earlier.

www.moneyscreen.co.uk

Invest in coal

Despite the general focus on oil prices, coal is still a significant global player. British Gas says about a third of Britain’s energy is still produced from coal.

The price of coal has soared in the past 12 months from $30 a tonne to $100 a tonne, due largely to the demand from economies such as China.

However, the price of coal-mining firms is still cheap compared with oil firms. Research by M&G, an analyst, shows Exxon’s oil reserves have a similar value, in terms of energy, to the coal reserves of Peabody, the world’s largest non-governmental coal producer. However, while the market value of Exxon is £500billion, the value of Peabody is nearer £19billion.

You can invest in UK Coal, Britain’s largest coal producer. On Friday it was trading at 525p a share, 16% up from the beginning of the year. John Davey of adviser Bestinvest also recommends the First State Global Resources fund, up 47% over a year.

And finally, don’t fill up on Fridays

The national average price of unleaded petrol has risen 4.4p in the last month to 112.2p. Diesel has risen by 6.8p per litre in the same period to 123.6p.

Petrolprices.com , the comparison firm, says many forecourts increase the rate on fuel by 1p just before the weekend.

“Petrol stations put their prices up on a Friday because that’s the day that most people tend to fill up. It won’t save you much money, but at least you are getting back at the oil giants,” said Brendan McLoughlin of Petrolprices.com. The price usually comes down again for the rest of the week.

You can also save by taking advantage of free fuel deals. Fiat is offering £1,000 cashback when you buy its Grande Punto for £7,500-£13,500 until June 30. The deal has also been extended to the Fiat Sedici, a 4×4, which costs between £13,000 and £15,840

Ayrshire Real Estate Blog

admin — Wed, 02 Apr 2008 20:13:56 +0000

Welcome to the Ayrshire Real Estate blog.

Ayrshire Real Estate have been buying properties since 1999 and have gatehred a wealth of information on the local and national property buying markets. This blog will keep you up to date with future changes and the likely effects to the housing market.

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