News: Weekly News Round Up - Pensioners See Increase In Equity, While Young Buyers Count The Pennies

Fri, 11 Jun 10

The age of homeowners took centre stage in this week’s property market news.

While many pensioners are seeing the value of their home rise, younger buyers are counting the pennies and spending frugally when they finally secure their first home.

According to latest research by equity release firm Key Retirement Solutions the value of homes owned by pensioners has risen by nearly £2bn since the beginning of the year – see Home News 10 Jun 2010.

The value of their equity stood at £767bn at the end of May.

But not all pensioners are enjoying this boom in prices. Those living in Scotland have seen the value of their equity fall by 7.8% since January.  Falls in the value of equity since the start of the year were also recorded in the West Midlands, Wales, Yorkshire and Humberside and the south east of England also saw a fall.

Those in the north east and he north west saw rises of 4.6% and 1.8% respectively in their equity level during the same period.

Dean Mirfin, group director at equity release firm Key Retirement Solutions, said: "The housing market recovery remains patchy with winners and losers across the country.

"The property wealth owned outright by pensioners represents a potential source of income for the over-65s particularly when other sources of retirement income are under pressure from low interest rates, rising inflation and falling annuity rates."

At the other end of the age scale, young first-time buyers are managing to kit out their new home for as little as £3,782, according to research released by Santander.

The lender also found that one in six first-time buyers are furnishing their new home for as little as £1,000.

First–time buyers in London spend the most on furnishing a new home, spending an average of £5,495. This is nearly double the amount spent by those in the East Midlands, where the average expenditure is a modest £2,892.

The most popular purchases were sofas, armchairs, beds and kitchen appliances.

Phil Cliff, Santander director of mortgages, said “Many first-time buyers are so focused on saving for the deposit and fees that they don’t have as much as they’d like left in the bank for furniture and furnishings.”

At the top end of the housing market a Torquay based property developer is attempting to cash in on World Cup fever by offering a pair of diamond and gold football boots to the buyer of a home worth just under £2m they are putting on the market in the area.

Charles Martin, development director at Martin Developments said: “ As World Cup mania reaches fever pitch, we wanted to make sure that any would-be Wayne Rooney or Steven Gerrard is kitted out for the big event.” The football boots will be made to measure for the buyer.
Elsewhere in property market news this week, t
he Bank of England’s (BoE) monetary policy committee has kept interest rates at the record low level of 0.5% for the 15th month in a row. The BoE also announced this week that it had not injected any more money into the UK economy through its quantitative easing policy.

The news has been welcomed by the property sector.

David Brown, LSL property services commercial director, said: “It’s a relief to see that the MPC have held their collective nerve and kept interest rates low.  Following the recent jumps in inflation, there were fears we might face an interest rates hike sooner rather than later.”

A poll of economists released by Reuters this week shows widespread belief that interest rates could remain on hold until next year. Europe's ECB also chose to keep the base rate steady at 1.0% this month.

However, the now widening sovereign debt crisis raises the spectre of an increase in base rates.

Simon Gammon, head of Knight Frank Finance, which specialises in mortgages over £1m, is among those warning of a rise in interest rates in the long term.

He said:  "Today's decision by the Bank of England’s Monetary Committee to keep the base rate on hold at 0.5% for the fifteenth month running was in line with the market’s expectations

“The longer term view is that interest rates will rise considerably from their current record low, and seriously considering a fixed rate for your mortgage now is very important.”

By Joe Lepper 

See also: Asking Price Index, House Prices and Trends by Town and Postcode, Mortgages, Life Insurance and Mortgage Protection Guide




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