City bonuses tell half the story
November 2005 saw property transactions up on a monthly basis and prices rose in October. According to the Nationwide index they jumped 1.3%, bringing the annual growth rate up to 3.3% from 1.8% in September.
At the same time Propertyfinder.com, claimed that house hunter confidence in the market was strengthening, and buyers were borrowing, on average, 58.5% of property values, up from 54% at the beginning of the year.
But the news was probably a little optimistic. While annual house-price inflation may have been up, it remained cool in comparison to the same time in 2004, when house-prices were rising by 15%. The three months to October saw a more modest rise of 0.2%, which reverses the falls seen in August and September, possibly a result of August's interest-rate cut. The blip was likely to be short-term rather than a trend: with inflation rising, interest rates were destined not to reduce in the short term.
Other market watchers were also predicting a continued fall in average house prices in the London market.
While well-heeled home buyers who targeted wealthy Belgravia — a favourite haunt of city traders with bonuses to spend — were out surveying the market, the number of buyers registering with estate agents only rose by 2.1% in October. Possibly the modest price reductions encouraged buyers out early rather than waiting for clear bargains at the end of the fall. But while there were more buyers about there were even more sellers with properties on their hands.
So what about unsold stock coming on to the market? Some agents reported their level of unsold stock was 50% higher than the previous year, and rising. Some advised a property price reality check. In October 2005, sellers accepted offers of an average of 6% below their asking prices, which was not surprising considering that prices relative to incomes was near an all-time high in the UK. Moreover, with repossession orders up 66% on the previous year, sellers had to accept less before the market readjusted.
Big bonuses continue to boost top-end house sales
City traders continue to benefit greatly from their yearly bonuses, and estate agents are rubbing their hands with glee.
While bonuses reached a peak in 1999 to 2000, there is still plenty of money earned in the city that is ploughed directly into the (mostly London) housing market. The correlation between top bonuses and the strength of the housing market is still clear to see. Last year up to 3,000 bankers were expected to earn at least £1million each in the biggest City bonanza for years. Two bankers at Goldman Sachs were rumoured to have taken £10m, and 24% of City bankers said they were expecting their bonus to be more than double last year's.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The overall cost for comparison is 7.1% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There may be a fee for the mortgage advice. The precise amount will depend on your circumstances, but we estimate it will be 1.5% of the loan amount with a minimum fee of £500 added on to the loan.
Mayfair Consulting Limited is an Appointed Representative of The Mortgage Times Group Limited, 279 Tottenham Court Road, London , W1T 7RJ , which is authorised and regulated by the Financial Services Authority no. 303007.
