Property auctions in london
Properties auctions are on a rise in New York with an increase of 32% in the second quarter of this year itself. The main reason being the increase in repossessions due the bad shape of the economy with deteriorating affordability conditions, job cuts, no festival bonus announcements, the slackness in business, the credit crunch and so on. In addition to all the above reasons, the interest rates are never being cut to the effect that the average man who is earning marginally or is already jobless is not able to repay the loan installments which he has raised for the home finance mortgage some 1-2 years ago when the real estate had a boom.
This boom instigated a high inflation for which the present property owners had to pay a huge price. While some are trying to recoup all that loss through high rentals, some small property owners whose property is not able to sail for high rentals are in a fix. They need to repay the installments which they can hardly afford with the general prices on the rise. The result being that many properties are being forfeited by many financial institutions and are put on auctions for retrieving their mortgage outstanding balances. Needless to say, as the prices were very high, the home equity of the owners is quite meager and then after forfeiture, the owners hardly get anything in return after repayment of their mortgage payments. This heartbreaking situation is seen very often in the cities of New York and the only city which has tried itself to somewhat save from this trauma is London.
London is the only place where there have been only 49 retail properties and around 50 commercial properties at auctions representing the lowest number of properties offered. However, analysts find it difficult for London to maintain the present situation and expect the economy to spill off if only London would be forced to lose the strength of its innovative, competitive and internationally focused markets in these present conditions:
The working age employment rate (i.e. for females 15 59 years and for males 15 64 years) of the London population is only 69% which is very low when compared to the high levels of working age employment rate of the nation averages of 75-80%. Further, analysis shows that - of the 2.1 million jobs created newly every year nationwide, about 1.1 million new jobs which account for more than 50% are being filled up by foreign nationals thereby leaving the nations workforce jobless or low wage earners of which London is also a part.
The overall gas, electricity rates are on a rise with a marginal solace from August with the Consumer Price Index recording a fall from 4.1% to 3.9%. However, this Index does not cover the mortgage interest rates and they are the main culprits for the increased cost of living. Actually, last year, the Bank of England to control the soaring real estate prices increased the interest by.5% which is being transformed by the financial institutions to the lenders and they are facing the higher interest rates due to the operation of Adjustable Rate Monthly (ARM) installments. This is raising the monthly installments and thereby increasing the outstanding balances thereby ending up in forfeited properties. Till now, the strong London market could gulp most of its effect but now on, as the market forces are weakening the economy, it is hard to say, till how far these levels can be sustained.
In addition to these woes, the depression in the US markets is having its influence in the London markets also. The weakening of dollar is a matter of concern as it is strengthening the British pound to record levels and as of date, the British pound is rated in its 26 year high levels. Though a strong pound represents more foreign investment chances, the negatives are not to be forgotten. Strong currency means a direct hit to the exports balance. The international business of London as such is facing a tough time with exports becoming cheaper and the domestic market not able to digest the excess exportable goods as the retail inflation is in a rise and the ordinary man is not in a position to entertain too many retail goods. The result is that the industries are facing a slack in their business and as such are not able to afford too many paying jobs. This is in turn affecting the overall employment scenario and particularly in London wherein the working force age group is the least. Further, the strong pound is somewhat not attracting too many foreign investments as the overall economy is decelerated and as such the London stock markets are also not performing to their utmost levels.
All the above reasons are complementing each other for a harder economy in London and if things continue in the same way, London will also be forced to follow suit with the other cities in New York as regards the properties auction numbers and the reputation of London auction markets with huge lots of buyers chasing too less auction properties may be marred as too many non-prime properties may be announced for auctions in the near future. Naturally, then London auctions will have to face the situation of 70-74% success rates and those whose properties are not saleable even in auctions will have to face a bitter credit crunch. To avoid this situation, the London resident owners have to be very careful of their repayments.
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