Experts differ on housing market scenario

Contrasting views Housing prices go through a cycle; they have been consistently going up in the last four years, so a bit of a fall was due. It is what markets are all about, quips a market analyst. Property economist at Capital Economics, Ed Stansfield, recently stated he expected house prices to fall 20 per cent from their peak by the end of next year.

Mr Stansfield reasoned: “The economy now slowing – with confidence faltering – and no sign that the tightening seen in lending criteria is coming to an end anytime soon, it is hard to see what will stop further house price falls.
 
But there are market players who think otherwise. For example, chief executive of the National Association of Estate Agents, Peter Bolton King, mentioned the trend needed to be put into proper context. He explained: “We have been seeing huge price rises of double percentage points in recent years in the housing market. Overall a 1 per cent drop is a small proportion of the increase and certainly not enough to throw many individuals into negative equity the way witnessed it in the early 1990s.”

Review your portfolio holdings on regular basis and churn it if required

Property is considered by many as one of the easiest and most effective assets to generate a good cash flow without having to put in too much of one’s precious time.
One can arrange the activities related to property management in such a way that it will not take too much of one’s time. One can organise one’s portfolio effectively with help of experts.
Property market experts usually suggest investors to take a long term view and do not sell frequently. However, there is absolutely nothing wrong with reviewing your portfolio holdings. Indeed it should be done on frequent basis; selling some investments that let you to go on and acquire even more properties and ultimately, improve the overall profitability of the portfolio is definitely a sensible strategy.
As a prospective buyer and a holder of property, you will also be required to develop effective means for doing cash flow analysis. This broadly means tracking cash flow as well as vacancy rates – both for your own property and the market in general.

Points to consider during surrender of the tenancy

Surrender of the old tenancy can take place when the landlord and tenant enter into a new agreement during the validity period of an existing agreement. In other words, for surrender to be effective by operation of law (to be implied from the mutually agreeable conduct of the parties concerned to a tenancy agreement) their conduct should be unequivocal.

Removing signs of occupation from the rented premises, such as furniture, belongings, and any family members, pets, friends and similar such mutually agreeable acts of both parties well indicate that they both consider the tenancy to have been over.

Surrender may also operate when the tenant has decided to abandon the premises. The landlord may accept the surrender by tenant through a simple gesture of changing the locks and ultimately re-letting the premises.

Everything may look simple, yet care needs to be taken during the act of surrender. Importantly, the same must be unequivocal. It would be wrong on part of the landlord to assume that the tenant has abandoned the tenancy, unless all formalities are completed.

The BoE Monetary Policy Committee member gives a call for rate cuts

A member of the Bank of England’s Monetary Policy Committee that sets interest rates, recently said in a speech house prices could fall by almost 30 per cent over the next few years provided interest rates were not cut. Mr Blanchflower added: “I am not suggesting that such a drop will necessarily occur, but it may well be the case. Cutting interest rates now may help in preventing such a dramatic fall.” A regular supporter of lower rates, he mentioned ‘aggressive action’ was required to stop a steep downturn in the economy.

No surprise, consumers are now getting more cautious. It is not difficult to understand why. A market analyst pointed out: “April was another tough month for the housing market.”  The figures only substantiated this. The Bank’s data showed new mortgage approvals had decreased to their lowest level since records started in 1990. This was partly owing to the problems faced by first-time buyers in getting a good mortgage deal without a significant deposit.

On the other hand, the fall in prices – down 1.8 per cent over three months – compared with the previous quarter, is sure to be welcomed by some new buyers who have witnessed prices shoot up by 45 per cent in the past five years.