The UK has been greeted on its return to work today with the news that mortgage approvals rose 4% in the month from January to February this year.  Good news most will say.  However, the question that remains is is the UK market beginning its recovery, or is this simply a blip in an otherwise continuing downward spiral?

A number of property indicators in 2009 have suggested some form of recovery is under way.  From my own network of contacts in the property industry, January and February were certainly upbeat months.  So who is buying?  It seems it is a combination of first time buyers and property investors keen to take advantage of what they see as value in the market. There is certainly an increased level of demand from first time buyers who, having previously not been able to get on the ladder and have saved in the meantime, and now in position to take advantage of lower prices.

Many property investors, who will abide by the “buy low, sell high” philosophy, see an opportunity to buy up stock previously out of their reach.  Due to the increased numbers of repossessions, the Below Market Value (BMV) industry has certainly exploded in the last 3 months, with investors looking to buy at anywhere between 20% and 30% below market value on second hand property, and as much as 60% below market value for unsold developer stock.  These factors, combined with a stabilising in mortgage rates and products has led to increased enquiries, sales, and therefore the improvement in nationwide data released by various bodies.

In addition to this, lower interest rates have meant homeowners, specifically on tracker mortgages, have in some cases more than halved their monthly outgoings.  The government can therefore argue that lowering rates has put more money back in some people’s pockets.  However, it has been well documented that rate cuts have not, in the main, been passed on, so the financial easing has not affected the whole homeowner market.

So where are we?  Well general economic data would suggest the bottom has not quite arrived.  Job cuts are still being made and mainstream lending does not appear to have improved much.  Coupled with the facts that repossessions are still rising and general transactions between homeowners are still low would suggest that there is a blip in the market.  However, supply and demand are still fundamental when looking at the property market.  As prices fall, demand generally increases, and there is no doubt that demand has increased in 2009.  One could take a further view that if property prices continue to fall, the demand will continue to increase from both increased levels of first time buyers and investors looking for even better deals.  Therefore, it is my opinion that the property market will find a natural recovery point in the not too distant future.

It would seem that as the sun comes out, the days are longer and the weather takes a turn for the better, good news seems to be emerging from one of the nations leading Building Societies, with figures showing house prices and mortgage lending rising in March, compared to the previous month.

Nationwide have reported that in February 2009, the average house price was around £147,746, but the March figure has just emerged at £150,946, which is just under a 1% increase, at 0.9%.

I think it’s fair to say this is quite an unexpected rise, but does this really indicate we are heading into calmer storms and leaving the hurricane recession behind us? According to Nationwide, it is very early days, as they described the change as a “surprise bounce” and warned against concluding the market had turned.

Commenting on the figures Fionnuala Earley, Nationwide’s Chief Economist, said:

“Spring brought a surprise bounce to house prices in March. The price of a typical house increased for the first time since October 2007, rising by 0.9% during the month and reducing the annual rate of fall from -17.6% to -15.7%. This brings the price of a typical house to £150,946. The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached.

The Bank of England has already taken strong measures to ease the tensions in economic and financial markets by cutting rates and commencing quantitative easing. However it will take time for these to work through into the housing market before we can expect a sustained recovery in house prices.”

To add to the good news about house prices, Nationwide also revealed to the country that Mortgage Approvals were the highest since May 2008, with February seeing mortgage approvals rise to 37,900, nearly its highest level for a year.

The more houses that are sold and purchased, the more money is pumped back into the economy, so these two pieces of news are not only a great joy to hear, but also tiny bits of gold dust that we need to start collecting in the years ahead.

So, in a year of mass redundancies, economic doom and gloom and of course the lack of any money to spend on the nice things, we say thank you Nationwide and may you bring us more good news next month, the month after and the following months that come.

You see, we like good news, it just feels better.

Back in the autumn I was looking forward to the latest round of property exhibitions and promptly booked my tickets for a couple of them in London & Birmingham. I entered both in anticipation & left disappointed. However, my own personal feelings aside I noticed an overwhelming feeling amongst agents that the branding exercise of an exhibition stand was still very much a must, despite the lack of investors through the door.

Now before you say it, of course I attended on ‘trade day’ – day one of three which is often perceived as a big networking event where cold pitching business is welcomed as opposed to discouraged. However, upon following up conversations during the oncoming week I would ask how they felt the attendance was and they would all say the same, that it was “ok” but “no, not a great deal of leads but they’ll do”. And besides, since when would an agent take a non-client call the week after an expo!

This told me that the branding exercise of attending was still very much at the forefront of their priorities despite the economic downturn. So with another round of exhibitions just over a month away I have begun to think about attending these also. By contrast I could be right in not having enthusiasm for doing so and certainly on the basis of my attendance last time round it would be a waste of energy! However this time round I shall be there with bells on (ok, perhaps sans bells) for other purposes, more on that another time.

So between the autumn & oncoming exhibitions we have seen a fair few goings on in the exhibition scene, particularly goings. One major exhibition has downsized from its traditional venue at Excel to the smaller Earls Court whereas another has retained its choice of larger venue. For me this reflects a paradigm shift in the quality of the anticipated audience. Active investors in the market are fewer but most certainly present, so gone are the days of bag grabbing “shoppers”, which can only be a good thing.

However the question which does remain is that are those actively in the market likely to attend an exhibition nowadays? Are they now sticking to their trusted agents and or relying more on the internet? Only time will tell. For me this is a last throw of the dice for the exhibitions. If they work then they will live on, but what if they don’t? If no-one comes through the doors, who is going to part with their decreasing budgets to attend again this autumn? However, with market share diminishing and hot on the heels of the announcement this week of voluntary administration by a household name attendee & purchaser of larger stands, those agents remaining have little option of siding with the former. Attend they will and with maximum optimism, but one thing is certain.

The question is branding more important that online marketing will be answered come the end of spring.

Selling properties, especially investment properties and buy to let properties used to be quite easy. Sorry to all the sales people out there, but it did.

Having previously worked for a property investment company, I know that it was plausible to push through 4 – 5 deals a week, very rarely without any lending problems and mortgage approvals tended to be easier than finding a Manchester United fan in London. Those were the glory days of lending and up until a year ago the level of lending was at a record high and the amount of buy-to-let mortgages that were being approved was staggering, also accompanied by some of the best rates investors had ever seen.

Some would say this is the reason we are in the midst of a recession and struggling, but that is another blog, one of which we have covered and will cover elsewhere.

Recently, I brought a couple of stunning BMV deals to the table, as we felt that after a year in which we would not touch property, we now had a couple of deals that really did make sense to the investor. This was due to better discounts, newer and an increased amount of decent mortgage rates and just the general feeling that property had hit its lowest level and was now starting to recover, according to reports from leading lenders and banking institutions.

We sold Penn Lane within a couple of days and currently have offers on the further two properties that we have on our books, but we kept hitting a common discussion with some of our investors – “would love to buy it, I am just too old, I wont get the mortgage”.

As with anything, previous misconceptions had started to creep back in to investors minds. Some of our investors tried to get a mortgage just as things were starting to look really bad and were hit with many reasons why they would not be approved, one of them being age which is in fact in relation to risk. This had then been indented into their investment strategy and they were probably now missing out on deals that they really wanted to get involved with.

We work with one mortgage broker and a quick call to them to inform them of this supposed age issue and we were met with they reply that this indeed was not really the case anymore, and in fact we could offer mortgages to people in their late 50’s and beyond. Chris then went back to the investor, forms went in, and he is now waiting to complete on the deal next week, which is a bonus not only for us, but also for the investor that a year ago was simply not able to go through with these deals any more.

In April last year mortgage lenders got edgy, they were panicking, they knew trouble was ahead and they were refusing mortgages for many reasons. In fact, I can not mention the name, but I knew of one mortgage that would not go through this time last year because the property had decking!!

With mortgage lending now recovering, new criteria are in coming into play and some old reasons to refuse are falling away.

Are you too old for a mortgage on an investment property? Ask us, you might just be surprised.

Some good news has been reported from the British Bankers’ Association (BBA) this morning, with early indications showing that mortgage approvals rose in January, with approval levels hitting 23,376 last month, up 4% from 22,416 in December.

But, as it seems with every other story that has some good news in it, there is also some not so positive reports, with the number of approvals in January still 43% lower than the same month a year earlier.

Hardly surprising in the current climate, but the fact that mortgage lending is continuing to rise month on month could be taken as a sign that we are starting to emerge from the gloomy mist which has been partially caused by the lack of lending over the past 6 or 7 months.

BBA statistics director, David Dooks, said of the latest data:

“The high street banks’ mortgage lending is still seeing double-digit annual growth, albeit in a much slower market. Lower borrowing costs and falling property prices have underpinned demand at these lenders, who are providing over two-thirds of all new mortgage lending. There is only limited demand from households for unsecured credit, while a fall in their deposits in January reflects a tendency to draw on cash or to move into alternative financial products.

“Lending to non-financial companies rose after two monthly falls, with modest increases in several industrial categories, while finance for other financial companies reversed the year-end fall in lending.”

The BBA also reported that in January, net mortgage lending rose by £2.9 billion, consumer credit rose in line with the recent average and overall company finance increased by £14.1 billion, reversing the previous month’s fall.

However, personal deposits fell by £2.3 billion as spending drained cash and savers sought alternative deposit products.

It is good to see some positive comments from the BBA, hopefully which will hopefully encourage more people to apply for mortgages who might not have previously considered applying, as they thought they did not stand much of chance in being approved. If we see another month of increased approvals for February, indications would suggest that the housing slump has reached its lowest bottom point and that the only way from here on in is up.

But, until we see the figures from the BBA and other leading bodies next month, we will take the positives from the news today and hope there is much more to come.

After 11 months of continual house price falls, it would seem the run is finally over, at least according to one leading bank.

According to the Halifax, the price of UK homes rose by 1.9% in January, and data based on mortgage approvals showed that the average house price reached £163,966.

A quote on the BBC website reads:

“There are some very early signs that market activity may be stabilising, albeit at quite a low level,” said Halifax chief economist Martin Ellis.

“Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market.”

Although this news is somewhat unexpected, it does contradict the survey released from Nationwide last week which reported prices had in fact fallen by 1.3%, so really it is up to you who to believe. But when more banks and mortgage companies release their figures, we will be in a better position to know the more accurate standings. Even so, it is great news that house prices are now starting to rise again, which could indicate the prices have fallen as far as they are going to go, something we are all hoping for.

In other news today, the Bank of England is expected to cut the interest rates again, with most predicting another 0.5% cut, taking the rates down to an amazing 1%, great news for those of us on tracker mortgages. The news will come later this afternoon, with our Managing Director Chris Davidson offering his view on whatever the conclusions may be tomorrow.

The forthcoming cut is not so welcomed by some business groups, based on the fact previous reductions have failed to help; they do not want to see another cut today. They would rather the bank increase lending, which to many small and medium businesses is a very valid point to be making. The Federation of Small Businesses (FSB) is one of the business groups saying it would prefer rates to stay on hold for February, according to the BBC.

So, house prices up and interest rates down, many will begin to ask the question this morning, is the recession beginning to ease, or have we just had a good month ahead of even worse times to come. A pessimist or an optimist will provide different thoughts, opinions and conclusions, but if the report is accurate, it really is a great month to be buying property as you might not get a chance to get it much cheaper.

Don’t forget to check out our latest BMV property deal by clicking here, we only have this one unit left, which we expect to sell today.

Leading UK and international property search portal TheMoveChannel.com has acquired top lead generation agency Lead Galaxy.

TheMoveChannel.com will take over the overseas property website portfolio operated by Lead Galaxy, in a deal which stands to create the world’s largest and most popular international property website.

With more than 45 different ‘venture’ sites dedicated to property sales in countries all over the world, the deal will see TheMoveChannel.com take an even greater share of web traffic, particularly in locations such as Cape Verde, the Caribbean, Egypt, Florida, Italy, Malaysia, Montenegro, Turkey and the UAE.

Whilst all of the property sites will now come under TheMoveChannel.com brand, the combined power of both TheMoveChannel.com and Lead Galaxy will ensure that visitors can browse the broadest spectrum of properties for sale, while allowing advertisers to maximise the number and quality of leads generated for their listed properties.

Dan Johnson, of TheMoveChannel.com said, “This deal will undoubtedly consolidate our position as the leading overseas property portal.

“With a bigger advertiser base and a far wider choice for investors, TheMoveChannel.com will be at the forefront of overseas property search and of course, the more users and more enquiries we attract, the more sales there will be for advertisers,” he said.

Gerard Doyle, Director of Lead Galaxy, said, “I am very much looking forward to joining the board of directors at TheMoveChannel.com.

“This amalgamation between two extremely strong networks will allow existing Lead Galaxy advertisers to reach an even wider audience and attract more interest than ever in their properties.

“The consolidated brand and new technology platform can only help to improve visitor loyalty and maximise value for our advertisers,” he added.

Going forward, the joint forces of these two industry heavyweights will provide a powerful platform for launching into new and untapped markets, with a wide range of planned projects that includes multilingual portals, web services and personal finance.

The consolidated sites will be live today, Thursday February 5th, at www.themovechannel.com

The property portal boom of the early noughties was never so much feared but certainly kept an eye-on by high street estate agents all over. The dot com boom had finally spread to this sector also, and thus it came as no surprise when some of the larger players in the market joined forces to incept RightMove. It cornered the web market for UK property overnight, a position it cemented furthermore over the oncoming years.

Certainly as the decorations had been put back in the attic this time last year, RightMove began January 2008 where it had left off, top of the tree with not a bauble in sight. Whilst they did not have complete domination they most certainly did have such a sizeable market share that funding for listing their properties there was already allocated before the word ‘budget meeting’ could be raised in your average high street agency. For UK property, the online marketplace was very fragmented. Whilst it was realistically accepted that Rightmove sat atop the pile, agents still believed they needed to be on board with at least 2 other portals to further cement their online presence in the wake of competition.

This time last year paying per enquiry generated was virtually unheard of. Whilst there could be arguments as to which other web portals could claim to be 2nd or 5th etc (which I won’t go into), it’s fair to say that they all carried the same business model as RightMove  – signing up for a period of time, usually twelve months – and paying a flat monthly fee for the privilege. I was saying this time last year that the UK portals could learn a lot from the overseas sector where commission share and especially pay-per-lead were more prevalent amongst the key players. Having witnessed three years of competing companies using virtually the same tactics, the time was right for one of them to take a bold decision and announce a performance based business model. None did.

At the time I still think I was right and from an agents perspective I’m sure they would love to turn round the clock & choose such options, had they been available of course. This is hypothetically speaking though and we all know how the industry went as the year went on, don’t we? The portals were fine as they had their agents contracted to a period of time, but now the agents were in many cases paying subscription fees for reduced results.

Approximately half way through the year some of the “second tier” companies aimed to consolidate their positions by joining forces. This began with the acquisition of HotProperty in the spring by PropertyFinder and was followed shortly by the formation of the Digital Property Group in July who united the marketing arms of FindAProperty and PrimeLocation amongst a few others.

Following the traditional “August lull” there has usually been an upturn in interest as soon as September hits although this year saw the opposite as we headed towards recession. We saw a number of agents unfortunately cease to trade for a variety of reasons, but un-negotiable marketing costs will have certainly been contributing factors whilst not inadvertently the sole blame.

With this in mind there is a realistic danger that when subscriptions lapse there will be an alarming low rate of renewal retention. I’m quite sure that the portals themselves have recognised this and have contingencies in place should it be the case, but if not it could spell a tough year for them. The fact of the matter though is that the industry is only in decline, it is not dead, and those agents still winning instructions and seeking buyers need an online presence in order to attract both vendors and customers alike. With this in mind I reiterate my statement of this time last year. The time has come for performance related business models. If just one of them tried this, I think they would, quite frankly, clean up.

Today I’m going to take a look at what type of property will be a good play in 2009, with 2 main contenders: existing,completed properties or the recent investor’s darling, the off-plan..

Firstly, as a pre-text, it does depend on strategy.  If you are looking for a holiday home to use in the next few months, you will probably not be considering off-plan…so for the purposes of this piece we will assume it is for investment in 2009.

A comparison – existing, income generating properties are in many ways a lower risk play than off-plan and generally perform better in a downturn.  What is important with existing properties is that you have real-time evidence to base your decisions on: current comparable property prices, rents levels, availability of tenants, mortgage rates and terms, currency (if buying abroad), political situation, etc.  As your property is active as of now, compared to off-plan which is active in the future, you have the benefit of what judging information on what is happening now to manage your risk more appropriately..

With off-plan, it is a more speculative, higher risk type of purchase.  Off-plan is a solid enough investment in a booming market, where increases in equity are sought over rental yield.  You are however taking a leap of faith with off-plan and need to ask that many more questions.  Depending on location, such as an emerging market, there may be nothing built with no idea of valuation other than the developer’s price as a guide.  In the time between “purchasing” and “completing”, a whole set of factors will change, either in your favour or against you.   These factors include, property values, rental yields, mortgage rates and terms, final construction quality, infrastructure changes and exchange rates.  So off-plan is a higher risk play; some projects will be of great success but many others won’t.

With regard to the off-plan boom in the current climate, there is a caveat, and this applies to off-plan units that are soon to complete, or have just completed.  A number of locations round the world have suffered from over-supply of units from developers.  In several countries I have been to, many developers are renting recently completed, previously unsold, off-plan units out to generate some income.  These units are available for a snip of the advertised price when they were off-plan so, depending on your strategy and where you would like to buy, there are no doubt some excellent recently completed, or soon to be completed, “off-plan” deals.

Therefore in today’s market, for investment it is generally a better bet to go for completed existing properties, or soon to complete, “previously off-plan” properties, where the evidence to make your investment decision is real-time rather than 2 years away.

For more than three years now I have often cast a very watchful eye over the property portal industry. Whilst working within it I would always keep tabs on what the competitors were doing and now I have stepped outside the circle I am moreso keeping tabs on new developments.

I started out working for one of the smaller independent portals in the UK side of the market and we were operating out side of the top five yet trying to build market share. We always had a firm belief that through hard work we could achieve a standing close to or even above those situated in second place and below, but the top dog was always perceived as untouchable. Never say never I know, but they were a bridge too far.

So as the economic times continue to constrain the budgets of estate agents all over the country, how do they survive? Cutting costs is the obvious answer. The aforementioned portals aggressive business model of demanding considerable amounts per month is one such reduction that can be done away with virtually immediately, especially if on a rolling contract, so it came as little surprise that of the 22 agents in Hereford an astonishing 70% have chosen to withdraw their subscriptions [Source: Global Edge]. So if Hereford serves as an example, what of the rest of the nation?

Whilst I have yet to research the response of various competitors this has heightened a perspective that I have held for a few months now in that the portal market is set for a radical change. It has always been such a fragmented market, but now, in line with other industries, it will whittle down to the industrious few. I personally believe that smaller sites will unfortunately now cease to exist over the course of 2009 and that the market leader will not be the only one to face reductions in subscriptions. In fact, they’ll all face it. If the best performer faces reductions, any other portal believing there is market share to seize has, quite frankly, delusions of grandeur.

In the oncoming weeks I shall further analyse competitor reactions to this and intend to make a few phone calls to that effect. Watch this space.