Greek
Economic crisis not affecting interest in Greek property, it is suggested
Estate agents are seeing a steady stream of enquiries about property in Greece, especially at the high end, but prospective holiday home buyers might want to adopt a wait and see approach due to the current financial crisis in the country. One agent seeing demand is Chestertons International which has found that so far the property market has proved to be stable and in particular, the island of Mykonos continues to grow in popularity. ‘If clients are not looking primarily for investment but want to own a second lifestyle property, then Greece continues to offer everything that it has always had to offer. If, however, clients are looking for future investment they will need to take into account both the economic environment and the ultimate currency that Greece might use,’ said Neville Page director of International at Chestertons. He explained that it is currently difficult to predict the final outcome of the negotiations between Greece and its European partners, but opinion seems to be becoming polarised between either Greek remaining in the Eurozone or re-establishing its own currency. ‘If Greece remains in the euro we would be very optimistic about property markets in the short term, particularly with the currency fluctuations in the euro we have seen in 2015, meaning new UK based investors can get more for their pounds,’ Page explained. ‘In the event that Greece was to adopt a different currency, there would be the strong risk of devaluation in the short term. However, this could provide a buying opportunity for the brave investor who recognises the enduring long term appeal of Greece,’ he added. Louise Reynolds, director of overseas property agency Property Venture, believes that if Greece introduces a new local currency, in all likelihood it would depreciate immediately. ‘The International Monetary Fund (IMF), has in the past predicted Greece would need a devaluation of at least 20% against the Eurozone average, just to balance its current account. Such devaluation would increase Greek competitiveness, but would have huge legal ramifications with regard to the existing debt owed to Europe and the IMF,’ she said. ‘The danger lies with the capital flows, which are the biggest unknown. The world’s central banks will do their utmost, as they did during 2008, to prevent financial meltdown or contain the damage through a range of mechanisms such as bank capitalisation, foreign currency swaps, and potentially capital controls,’ she added. She thinks property buyers in Greece and home owners may want to make sure they have access to money in an international bank, given the capital controls in place. ‘If Greece leaves the Eurozone, it is likely that savings in the state-controlled banks would be converted into local currency which are likely to be worthless. It is also likely that a mortgage could be converted into local currency so mortgage holders could benefit if there is a devaluation-effect,’ she added. Those who already own property have seen lettings… Continue reading
UK house price growth reaches 11 month high, says RICS survey
House price growth in the UK increased again in June, reaching an 11 month high, according to the latest market report from the Royal Institution of Chartered Surveyors (RICS). It comes at a time when market supply is falling with the survey showing average stock of houses per surveyor has fallen to its lowest since RICS began collecting the data in 1978. The survey also reports that buyer demand has increased in all parts of the UK expect the South East despite a more cautious attitude from lenders. It is the second month in a row that demand has risen. RICS says that one reason for the slight recovery in buyer enquiries is likely to have been a further drop in mortgage rates which is accompanying the ongoing strength of the labour market. The data also shows that 41% more surveyors expect house prices to rise over the next three months, which is the highest proportion since April 2014 and 36% more surveyors expect sales to increase despite the broadly flat trend in newly agreed sales. Across the rental sector, the demand and supply imbalance is also visible and instructions, which have been broadly unchanged for the past couple of years and show no signs of a material increase, are at growing odds with the rising demand that is putting further upward pressure on rents. ‘Although much of the discussion about supply shortages has focused on the owner occupier market, the survey demonstrates in no uncertain terms that the issue, at least at a headline level, is just as visible in the rental sector. This is most clearly reflected in both the house price and rental projections over the medium term which comfortably exceeds the likely growth in wages,’ said Simon Rubinsohn, RICS chief economist. ‘There had been some hope that the removal of political uncertainty following the general election would encourage more properties onto the market but the initial indications are that this is not proving to be the case,’ he explained. ‘Additionally, the recent flat pattern of appraisals by respondents to the survey suggests this is not about to change anytime soon As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable,’ he added. According to Jeremy Blackburn, RICS head of policy, pointed out that the government has its sights set on a long term project to drive owner occupation and property owning but the monthly survey shows that it is not just in this area where there is a marked shortfall in supply. ‘Just as significant is the pressure that is clearly building across the rental sector, through which a large part of our population is housed. It is particularly important for the younger more mobile workforce that it is central to improving our economic productivity,’ he said. He also pointed out that the housing benefit cuts announced the Budget will push many… Continue reading
UK financial watchdog says mortgage advice can be improved
Most people in the UK get suitable advice when they take out a mortgage but there is still room for an improvement in standards, according to a review by the UK’s financial watchdog. Two studies from the Financial Conduct Authority (FCA) found that many lenders have taken significant steps to provide advice for the first time. These firms, and those that have always provided advice, should now focus on delivering consistently good outcomes for customers. They also found that while there was no evidence of systemic customer detriment, some firms were failing to take reasonable steps to obtain sufficient, relevant information about customers’ needs and circumstances before making recommendations. Although 59% of advice provided to customers was assessed as suitable, with only a small number of cases assessed as demonstrably unsuitable, the basis for 38% of recommendations was unclear. The consumer research highlighted that some customers place the greatest importance on the initial monthly payment to the detriment of other factors. This can dictate whether they think a mortgage is a ‘good deal’ or not. ‘A mortgage is a significant undertaking for anyone. It is vital that customers are able to get suitable advice and a positive experience when deciding on their options. Some firms were able to provide this, but not all,’ said Linda Woodall, acting director of supervision at the FCA. ‘Although we welcome the considerable work of those firms delivering advice for the first time, and particularly those that have proactively identified issues within their own processes, there is still scope for improvement. We’ll continue working with firms to ensure they deliver good outcomes for consumers,’ she added. Following the review, the FCA said it will continue to work with industry to address the issues identified. Individual feedback to firms visited as part of the study has already been given, together with actions required as a result of the findings. Some firms assessed had already independently identified issues with their advice processes, and were making changes to improve their service to consumers. The review also found that many lenders had made significant efforts to deliver advice for the first time by investing in systems, front line staff and operational capability. Some firms were relying on highly structured processes. This often resulted in lengthy, stilted and repetitive conversations with consumers which limited the adviser’s ability to engage effectively and properly assess needs and circumstances. By contrast, other firms delivered advice with little or no structure, resulting in inconsistent quality of advice and a higher chance of unsuitable recommendations. The best performing firms have demonstrated that it is possible to strike an appropriate balance. The review of advice and distribution forms part of the FCA’s wider programme of mortgages work. Its thematic review into responsible lending commenced in April 2015 and from autumn this year, the FCA will begin a wider assessment of barriers to competition, with a view to launching a market study in early 2016 on those aspects of the… Continue reading
