A lot of UK properties with development budding are now sold at property auctions. Property auctions could be quite daunting places for the layperson and if you are seriously trying to purchase at property auction then it is a good idea to go with and you must be an observer before you go on with purchase. You need to be prepared for the bid and must go with necessary preparation. On the auction day visit the place before hand. Many UK property auction houses need you to get register as a bidder at the start of the sale. Check if this is the case and double check the catalogue entry as you would not desire to purchase the wrong property by accident. Stories of people grazing their noses and purchasing a house by error are very much exaggerated. The auctioneer would be noticing your whole body not just your hands and he would not misconstrue who is bidding and who is not. Do not generally go with the first bid, try to avoid it. If a UK property is not well liked, the auctioneer might drop the starting bid to a lower level. You would not certainly want to pay more than you actually had to. As soon as you have entered the bidding, attempt to suspension for a second or two between bids. By slowing down the speed you could assist yourself to prevent your adversary from getting over-excited and bidding more than they planned to. Finally, do not on any account bid above your before agreed limit. The down side of purchasing at UK property auction is the high possibility of inviting unsuccessful costs (many of your opponents would be actually professional dealers who would be buying for cash and are capable to estimate their own renovation costs. Their costs therefore would be much lesser than yours). The up side is that there are authentic bargains to be had. The dealers would characteristically be looking for a boundary of 20% plus financing costs. This margin could be really yours - if you purchase wisely at UK property auctions.
The aim of this UK property predications article is to give the property investor or the average home owner an in depth insight into what might happen in the UK property market in 2008.
Firstly let's take a look at what happened in 2007 and the early part of 2008.
The debacle of what happen in the subprime mortgage crisis sent a shock wave through the financial World. Northern Rock is probably the biggest name causality of the credit crunch, in the UK to date.
Any business that relies heavily on debt and borrowed money has been hit hard. Banks and financial institutions are tightening the purse strings and property investors are feeling the squeeze and many are nervously looking at other ways to reduce the risks in their portfolio. Investors are particularly nervous if they are coming to the end of any fixed term mortgage agreements.
There is a good chance new mortgage rates will not be as favourable, hence potentially taking thousands of pounds out of the investors pocket.
Are we on the road to another recession?
Many people are looking at the property market crash of the 1990's and are wondering if we are heading down the same route now.
The bottom line is that there is always a chance we could be going down that same path; however, the likelihood of this happening today is currently very slim. The reason we are unlikely to be heading towards another property market crash is because there where two major contributing factors that helped bring down the property market in the 1990's that don't currently exist for us today, these are:
1. Unemployment was sharply on the rise.
2. At their peak, interest rates were almost 15%
How is capital growth going to be affected this year?
All indication are that property prices this year will be much flatter than they have been for a long time. In fact, for the first time in years we are now beginning to see a few months in a row where the average price of property in the UK is actually going down instead of up.
However, locations such as Scotland and London are still bucking this trend. For short-term capital growth there are no real safe bets at the moment, but the safest of what is on offer tends to be in Scotland and down south in places like London.
Nonetheless, there are still location in the UK that are potentially undervalued and should still see a slow but steady price increase this year.
What are the facts?
The media, as usual, is predicting the worst and that there will be negative equity this year and house prices will plummet, but the truth is, nobody really knows what the property prices in the UK will do.
However, when it comes to UK property predictions, history does prove one thing. Time and time again the media are using pure guess work when it comes to the property market and they more often than not, get it wrong. The job of journalists and reports is to sell newspapers or get people to watch them on TV. Unfortunately, often times this means sensationalising stories which in the end, end up having little resemblance to solid facts.
At the heart of the UK property market is the basic law of supply and demand. So, while demand far out strips supply then we can confidently predict that long term prices will increase. There are also important economic and social factors that have to be analysed at the same time, but as a general guideline, this law normally holds true. However, that is not to say that in the short term they won't remain stagnant or even go backwards.
The Good News.
There has been a recent announcement that the Bank of England is going to make 50 billion pounds available to lenders in the UK to try and revitalise the flagging mortgage market. This is an extremely proactive and unprecedented measure to try and keep the UK economy as stable as possible.
Now, it may take several months for property buyers to feel the benefits of the money, but long term it should help to ensure the economy does not end up in the same mess as it did in the 1990's.
The Conclusion.
Even though 2008 is likely to be a volatile year for property owners, for the astute investor who has a big cash reserve and knows where to locate the undervalued properties, because of less competition from other investors who are trying to sit out the current uncertainty in the market, this year could prove to be one of their most profitable ever.
Both Ada Denis & Carlton Johnson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.