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7 posts from May 2007

May 30, 2007

Buy-To-Let Boom Isn't Over

Buy-To-Let Boom Isn't Over

30 May 2007

4wallsandaceiling.com Newsletter

Source The Motley Fool

News that the buy-to-let market is still powering ahead will come as a complete shock to some given the doom and gloom surrounding another interest rate rise and house prices continuing to creep up. But there are many sound reasons for the growth.

What started out as a trickle of investors is now turning into a flood. The backlash against poor-paying pensions was part of the impetus and encouraged people to start switching money into bricks and mortar instead.

The authoritative Council for Mortgage Lenders says the number of buy-to-let mortgages rose by a staggering 48 per cent last year taking the total number to about 850,000. While figures for the first half of this year aren't available yet I feel sure they will show continued growth.

And why not? High interest rates are actually good news for landlords. It means more potential first-time buyers are priced out of the market and forced to continue renting.

Plus the massive influx of EU migrants into the UK has swollen the numbers of renters. More than 600,000 people have moved to these shores since the EU expansion in 2004. And more will follow.

It seems the majority of landlords have been sensible and not jumped in feet first in spite of many media pundits' forecasts. Specialist lender Paragon backs this up with evidence that more than 70 per cent of buy-to-let borrowers opted for fixed rates, protecting themselves from those devils at the Bank of England who still haven't quite got a grip on inflation.

Two more rate rises are predicted by the end of the summer. Many shrewd landlords have seen these hikes as a time to actually start edging up rent to keep healthy yields.

Going forward, lenders have slowly realised how responsible these types of borrowers have become. Repossession figures are low as are defaults. In response many mortgage firms are relaxing their criteria and offering more competitive deals.

For example Halifax specialist arm BM Midshires has a standard residential tracker mortgage at 4.99 per cent. Its buy-to-let equivalent is only one basis point higher at 5 per cent. And deposits needed are much lower than before, reflecting lenders' increasing comfort.

This has all helped fuel the buy-to-let boom.

The only fly in the ointment is a warning from City watchdog the Financial Services Authority about fraud within the buy-to-let sector. It has found landlords masquerading as first-time buyers or pretending they intended to live in the property in order to secure their buy-to-let purchase. This is to secure bigger loans and smaller deposits.

This shows the desperation among some to get their foot further up the property ladder. But there is a danger they will spoil it for the rest of us. Like all the money that has been pouring into property funds, it shows the British obsession with houses is alive and well.

For the majority of us let's hope it stays that way.

Nick Says...

Firstly I had to get off the floor when I read this, not only because someone shares my views, but more that the source came from The Motley Fool. Theres a chap called Cliff D'Arcy who writes for "the fool" who is dead set against property as a source of investment !! "Theres now`t so queer as folk" my Grandma used to say and it just go`s to show, this chap gives advice on borrowing money, investing money etc and yet he was foolish enough to sell his house a number of years ago "to wait for the crash" before buying... so he sold a house that has had tremendous gains over the last few years only to pay someone elses mortgage via renting!!

My question is how can someone be so blinkered in his views?

Clearly he is not beyond any form of investment, his credentials show that, yet when it comes to property that has a powerful and proven history, he digs his heels in !?!?!? It just goes to show, do your own homework before taking anyones "word for it". Including mine.

Anyway enough of that, I hope you enjoy the read and I hope you share my views. Provided you keep a level head and a professional attitude you will do alright and if your not sure just get yourself educated.... the lesson is try not to be as blinkered as Mr Darcy.

May 29, 2007

House price index May 2007

Click Here for House price index May 2007

Nick Says...

Click on the above for the latest House Price Index, courtesy of Rightmove.

May 25, 2007

Serious British Property Investors "Steer Clear of Bulgaria"

Serious British Property Investors "Steer Clear of Bulgaria"

25 May 2007, Friday

4wallsandaceiling.com newsletter

Source Sofia newsagency

Bulgaria, which was until recently touted as one of the most popular countries for UK property buyers, appears to have lost its appeal to the more serious property investors, according to new claims from an industry body.

According to Arlette Adler from the Federation of Overseas Property Developers, Agents and Consultants (FOPDAC), Bulgaria's property market has now reached saturation level, which may interest those first time buyers looking to invest abroad.

"The more serious buyer is looking at [other eastern European] countries and considering them," said Adler.

"The thing that is bothering many of us [about Bulgaria] is that they are building all over the place," she added.

FOPDAC recommended that Britons looking for an overseas property investment in an emerging market should turn their sights on Croatia, Montenegro and the Czech Republic.

This is the second time in the last month that British experts say investors are shunning Bulgaria due to oversupply at the expense of infrastructure projects.

At the beginning of the month specialist house TRI Investments warned property investors to steer clear of European holiday destinations such as Bulgaria, France and Italy.

Nick Says...

Primary, secondary, tertiary markets choose the right one.

Factual information gathered from: -

Sofia News Agency www.novite.com. Simon Clark Poverty in Bulgaria.

www.leeds.gov.uk, www.gulfnews.com


Choose the right market.

Primary, secondary, tertiary.

``I’ve always found that the real secret to property investment is a thorough understanding of where you wish to make your investment. You see there are 3 types of market, primary, secondary and tertiary. Investing in these markets without a thorough understanding means simply this, your not investing your gambling! So lets get into this for a minute.

Please understand that none of what I’m suggesting is written in stone, but I would suggest it’s a sensible guideline. Primary markets will always be places like The UK, Spain maybe Florida. In all of these markets the economy is very strong and investments are stable.

Secondary markets would be places like Portugal or Cyprus, these markets tend to be higher risk lets say, and maybe the better way of wording it is they are growing markets, so your return may take a while.

However, tertiary markets would be place like the eastern block countries, Slovakia, Montenegro, Bulgaria maybe even as far fetched as Dubai, much more of a higher risk. Now I’m not suggesting that these markets are not worth investing in, however, I think its fair to say that inherent with this form of investment is risk and therefore a high-risk strategy is needed.

We know that you can buy very cheap properties in these countries and we also know that some of these countries are going into the EU at some point and what happens to the price of properties when countries go into the EU? They steam up in value more or less overnight.

However, who’s going to mortgage it? Who’s going to rent it? Where is your exit, and if none of these things are considered before you bought that property your not investing, your gambling and you’ve just been sold to!

There’s no point owning an investment that you can’t get the cash out of!

Lets focus on Bulgaria and what I mean by exit.

How are you going to realise the cash out of the property? Who are you going to sell it to, it’s not as if they earn a tremendous amount of money over there is it? That’s why they are all coming over here!

Did you know that 99% of the population of Bulgaria earn less than 3.10euros per day and a third of them only earn .77euros per day, so for most of them it’s only 96.10euro per month.

Shocking isn’t it?

Ok here’s the maths.

Of the 4 biggest lending institutions in Bulgaria, the average interest rate is about 6.63% and the average loan to value (LTV) is 68%.

So if you bought a 100,000euro property, you would have to put in a 32,000euro deposit, and your LTV would be 68,000euro, based on the above that would cost you 375.70euro per month.

It costs you 375.70 per month and most of the country earns only 96.10 per month! You can see where I’m going with this.

What it all means is this. You are going to have to rely on foreign money, of which you have no control, to support your investment and not the local one, because they havn`t got any.

That sounds like a gamble to me...not an investment.

The flip side of this are primary markets like the UK. Lets take a student let in Leeds for example. What we have here is a steady housing market of which we can predict, not only that but you have a sizeable pot of tenants to dip into. Out of 715,404 people in Leeds, there are 120,000 students all at the same university all within a city no bigger than 2.4 square miles, which is one of the smallest cities in the UK.

More students are coming every year and there is not enough property for them to live in.

So we have a captive market for tenants and a property that’s predictably going up in value.

Now that’s a primary market, I trust you’ll agree.

To conclude: -

Take me for example, I’m risk averse, in other words I’m not a gambler. I’ve never been into a Casino in my life, let alone a betting shop. So for me investing in a tertiary market would be the wrong thing, it’s not going to sit comfortably with me and I won’t sleep well at night. Like I said I’m not suggesting that you can’t make money out of these markets, however, it would be sensible to enter the one that suits you as an individual, and don’t be sold to.

...and that’s another thing, allegedly, Dubai is imminently having 5000 investment properties coming on-line more or less at the same time, the question is are there 5000 tenants?...oh yes and most of Dubai’s salubrious waterside investments are currently sinking at the rate of 5inches per year, I bet they never saw that one coming!

If you need any other information on investing in property, please contact us at enquiries@4wallsandaceiling.com

May 18, 2007

Why The UK Housing Market Will Not Crash

Why The UK Housing Market Will Not Crash

Newsletter from 4wallsandaceiling.com

Source Property Investor News

Nick Says...

I`m not going to make comment on this at the end, I found this article on the web from a great source called "Property Investor News".

I have a view on the UK property market, for what it`s worth it`s just my view which I would like to share with you. The body of writing below compounds my way of thinking of which the basics go like this... We are an island, and not very big, and we are not making land any more. We are a large global economy, that is why people are coming here to make their money. Both those factors lead to one thing, Supply and Demand.

As Kate Barker stated we don`t have enough property and we have too many people wanting/needing it!

There are no other countries in the world that can lay claim to that, other than maybe Cyprus and/or a few others but no where near as powerful as the UK. Not even the USA, lets face it land is not "a premium" there is it because they have lots of it!

Read the article with an open mind, and remember, providing you take the medium to long term view it can be a lucrative and low risk investment... just get educated.

"With the average price of a house at £200,000 and residential property making up 53% of household net wealth, whether the UK housing market is going to crash or otherwise makes regular pub conversation.

It is certainly quite easy at one level to worry that the market could crash in the next few years. With house prices rising by 10.2% on average every year since 1996 and average every year since 1996 and average gross earnings rising by 4.2% every year, the ratio of house prices to incomes has increased from 4.4 to 7.9 in the same period.

It is an easy and lazy argument to make that the house price inflation seen in recent years is driven by speculation – and we know that all speculative bubbles must eventually burst.

However, there is one fundamental problem with the housing market in the UK that will prevent a housing market bust: the demand for houses by far exceeds the supply. This fundamental mismatch, which developed after the housing market fully recovered in 1996 from the 1989-1990 crash, is caused by a number of factors – which are likely to persist in the foreseeable future.

First, the UK does not have large enough stock of houses. In 2005, 193,000 new houses were built – the highest in over fifteen years. In her housing review in 2003, Kate Barker said that to bring real house price growth down by a significant amount, the UK needs to build 245,000 houses every year. Government planning restrictions and schemes such as key worker housing , prevent the construction sector from fully responding to the house market’s price signal.

Second, population growth has risen sharply in recent years, boosted because more of the world’s people want to live in the UK. The population of the United Kingdom increased by around 1.7m, according to the government’s official statistics, between 2000 and 2006 (in effect this is likely to an underestimate because of the difficulty in measuring migration flows). This equates to around 800,000 new households. Yet between 2000 and 2006 only 1.1m new houses were built in the UK. This means that 300,000 additional new houses is insufficient to account for the growth rate of churn and second-home ownership, for changing house-type and location demand and for smaller household sizes.

Third, when thinking about buying a house, potential house buyers do not compare their income to the price of a house. Rather, they compare their income to their annual mortgage payments. With interest rates at or below around 5.0% in recent years, mortgages remain affordable when compared with the early 1990s. Although mortgage payments as a share of household income have risen from 15.0% in 2001 to 19.6% in 2005, they remain well below the 34% recorded during the 1989 crash.

Fourth, the new large and rich countries of the world – commodity producing countries and the Asian dragons – remain happy to park their new found wealth in the world’s main financial centres: New York and London. A significant amount of money that flows in to the City of London, by one mode or another – such as £8.8bn worth of City bonuses paid out this year – ends up in the property market.

Fifth, because of the nature of economic growth it is natural that certain areas of the country will see more economic activity as the economy expands. Because of lack of transport infrastructure, these growth areas are unable to geographically increase their labour catchment areas, meaning that more people need to live in certain locations – exacerbating the mismatch of supply and demand.

Looking forward, as long as supply continues to fail to react adequately to the burgeoning demand for housing, it is very unlikely that house prices will crash. However in our latest house price forecast, we do see an upcoming slowdown for UK house price inflation. We forecast that house price growth will slip from an average 8.5% last year to 7.6% this year and 1.5% in 2008, before picking up again. Higher interest rates, tight household bills and an economic slowdown will cut back house price inflation, making talk of a possible crash more of a pub topic. But as long as the fundamentals remain unchanged, in my opinion, a housing bust is very much off the cards."

Buy-to-let demand has increased property quality

Buy-to-let demand has increased property quality

Newsletter from 4wallsandaceiling.com

Increased competition in the buy-to-let market means that most rental properties are now of a higher standard than ever, an industry body has claimed. Recent reports from a variety of sources have indicated that the rentals sector is enjoying an unprecedented level of demand., fuelled by several factors including ever-increasing house prices and an influx of immigrants who do not have the necessary capital to purchase a property outright.

The recent upturn in demand has "rescued and revitalised" the rental sector, according to the Association of Residential Letting Agents (Arla), a professional and regulatory body for letting agents in the UK. Spokesman Malcolm Harrison says the increasing number of buy-to-let investors "has brought in good landlords who have got good quality properties", as well as making the market "competitive - which is good for the tenants".

As a result of higher standard properties becoming available to the renter, the average length of tenancies is going up, according to Arla statistics, with tenants on average now staying in a property for 17 months - and 25 per cent of tenants have been in their property for two years or more. Increased tenant satisfaction may be partly ascribed to the fact that rental properties are now usually structurally sound and "nicely furnished", says Mr Harrison, because "investor landlords are going to be careful what they invest in - they're going to make the property competitive because they want to let it quickly".

Another factor of interest to the buy-to-let investor is the increased acceptance of renting a home. According to a recent survey undertaken by Alliance & Leicester, it is now more "socially acceptable" than ever before to live in a rented home. The building society predicts a 41 per cent increase in the size of the buy-to-let market over the course of the next ten years, describing it as "buoyant".

Stephen Leonard, director of mortgages at Alliance & Leicester, remarked: "Demand for rented property has been growing steadily in recent years and returns on buy-to-let have increased. This growth is expected to continue - as the number of renters rises further and buy-to-let becomes even more attractive to both existing and potential landlords."

Mr Harrison agreed, saying he has seen a recent "change in culture". "People are happy to live in rented accommodation now", he remarked. "People are not being in such a rush to get onto the property ladder and all these various components come together in a buoyant, sustainable, private rented sector market."

Nick Says...

The last sentence really nails it to me, it would appear that renting is now becoming socially acceptable, this can only be good news. However, lets keep our feet on the ground.

As much as it seems to be a no-brainer the focus has to be "find the demand, then create the supply", this may seem easy and in essence it is, however, only if you have a system to work to.

As with any business you must treat it with a professional attitude. Having delivered a large number of seminars and workshops within this industry, one thing that sticks out when it comes to assessing strategies for individuals is their inability to treat this "investment outing" with a professional attitude. Most people still think of it as a hobby, something else to do behind their existing career. This is wrong, very wrong and more importantly dangerous.

If there is one piece of advice I can give to anyone starting, or even if they already are, involved within this industry at whatever level is MAKE SURE YOU HOLD A PROFESSIONAL ATTITUDE. If you are not sure, and remember not all of us got taught to buy property at school, get some training.

Having said all that take peace of mind that there is good money to be made, just as long as you stay on top of your investment, take responsibility for it and act professionally.

For any advice on investment please try Property Mentor they are the only company that I have come across that ONLY offer education NOT huge membership fees or "bolt-on" seminars... more importantly no property sales... the view is if property is that good, why would I sell it to you? Go and find your own its not that hard provided you have a sensible system to achieve it. 

May 17, 2007

Cyprus house prices up 9.6% for year in April

Cyprus house prices up 9.6% for year in April

Source:- Financial Mirror

Newsletter from 4wallsandaceiling.com

Residential house prices in Cyprus rose by 1.1% over the previous month in April, according to the BuySell Home Price Index, as the index reached 122.44 and brought the average home price in Cyprus to CYP 95,394 (EUR 196,680).

Compared with the same month of 2006, prices rose by 9.6% in April, slightly lower than the 9.9% increase recorded in March.

Data on building permits suggest that demand in Cyprus is being driven by residential customers and is being fuelled by both local and foreign buyers. The number of building permits authorised rose by 7.7% in 2006.

The hedonic BuySell Home Price Index, which takes into account changes in the quality of housing, was created and is updated monthly on behalf of BuySell Cyprus Real Estate by MFC S. Platis.

The index is announced during the second week of each month and depicts the movement of prices at which residential properties are sold in Cyprus, based on the extensive BuySell Cyprus Real Estate database.

The BuySell Home Price Index was rebased in September 2005, in order to keep the Index updated with respect to the most recent quality characteristics of the housing market in Cyprus.

Nick Says:-

As I have said before the timing is right to get involved in Cyprus...I found something else to compound this blog...

Cyprus to become business and investment hub

The Cypriot government aims to turn Cyprus into a regional business and investment hub. The Commerce, Industry and Tourism Minister Antonis Michaelides commented “In the past three years, Cyprus has achieved high rate of growth in satisfactory conditions of employment and low unemployment”.

The government, Michaelides went on to add, is making every effort to promote business through the technological upgrading, the modernization and the expansion of existing industries and encouragement for export trade as well as improved plans and programmes for government grants.

On the energy front, he said the country has to secure its energy needs and bringing into the country natural gas for electricity purposes.

Speaking about tourism, Michaelides said the goal is to modernize and enrich the local tourist product, in line with the strategic development plan for 2003-2010.

Nick Says:-

One of the main reasons that you would put Cyprus into a primary market is the fact that it is an island, and not making land anymore! More importantly, and as the above blog eludes to, there is a tremendous amount of wealth in the island. So you have an island and wealth, whenever these two ingredients come together, in my book, that would make a primary market for investment....very much like the UK, here we are the 4th largest Global economy, that is why everyone else is coming here to make their money which equates to "supply and demand".

This is something that no other economic giant can have. All the other economic superpowers have all the land they need, we and importantly Cyprus has not.

This is why you are currently getting such tremendous growth patterns in Cyprus. If you have been thinking of getting involved in Cyprus, may I make a suggestion...GET ON WITH IT!


If you are interested in purchasing investment property or your own home in Cyprus, ypu should consider buying this book. It has 31 pages of the most concise information you could ever need when it come to buying property in Cyprus. From the Legal ramifications through to the Banking issues, all of which is complimented by some beautiful photographs of the island.

Available at 4wallsandaceiling.com for only £4.99.

May 01, 2007

IKEA Announces New Store in Nicosia, Cyprus

IKEA Announces New Store in Nicosia, Cyprus

Newsletter from 4wallsandaceiling.com

Source:  Woolworth Group

ITTL Trade Tourist & Leisure Park Ltd, a 100% subsidiary of Woolworth (Cyprus) Properties Public Ltd, is the owner of a property with an area of 102.000sq.m. in a prime location in Athalassa - Nicosia. In this property, the Shacolas Emporium Park is currently under development, a modern shopping mall with international specifications where the customer will combine shopping with leisure.

In the Shacolas Emporium Park Shopping Mall there will be a wide variety of well known retail brands in different shops. There will be a Debenhams Department Store, a Hypermarket of a well known multinational company in the sector, various fashion brands of various well known and successful international chains, a large shop with sports apparel and equipment, shops offering various other services, a multiplex cinema, restaurants and coffee shops. The total area available for use is 27.000sq.m.

In the same area there will also operate a large furniture store IKEA of the well known Swedish chain. The building will be built by the IKEA franchisee at his own cost.
The total parking space in the total Shacolas Emporium Park area will exceed 2.500.
All the above buildings are expected to be completed and operational in the second half of 2007.

Copyright Woolworth Group © 2006,

Nick Says ... Great news all round for property investors in Cyprus!.  First of all, the fact that IKEA are responding to a demand for inexpensive furniture in Cyprus means that they believe it is worth investing in the island.  IKEA only build stores where their market research has indicated that there is going to be sustainable demand.  This is another indicator of the health of the Cypriot economy.

Secondly, as a seasoned U.K. investor, I find that IKEA furniture works extremely well for my rental properties as it is of excellent design quality, and is durable and practical as well as being extremely affordable.  I am really pleased that I can now access IKEA’s products for my Cypriot property when it completes next year.  Traditionally, furniture in Cyprus has been more expensive than in the U.K., so the introduction of IKEA will make the market more competitive and provide affordable furnishing solutions to both investors and people furnishing a holiday/retirement home.

IKEA’s investment in Cyprus is therefore positive for investors from both angles and I look forward to trudging the aisles there in search of a Bjorken shelf or two!


If you are interested in purchasing investment property or your own home in Cyprus, ypu should consider buying this book. It has 31 pages of the most concise information you could ever need when it come to buying property in Cyprus. From the Legal ramifications through to the Banking issues, all of which is complimented by some beautiful photographs of the island.

Available at 4wallsandaceiling.com for only £4.99.