MARKEToutlook
Light at the
end of the tunnel?
Agents are reporting multiple
offers and properties selling within
days but is the market really
recovering? By Danielle Simpson
fter a daily diet of depressing expects house prices to fall another eight Mark Graves, Managing Director of
A
headlines, falling house per cent from here but rise six per cent Linear Financial Services, comments, “The
prices, redundancies and during 2010 and 2011. only way lending can be maintained at the
repossessions its little However, in order to drive any sort of current level is if cash purchasers continue
wonder we’re searching for recovery in the housing market consensus to swallow up competitively priced
green shoots and itching to among economists and lenders is clear; the properties because, although we are
call the bottom of the market. Yes, the banking crisis has to end first. encouraged by the number of first time
number of home purchases rose to 39,000 buyers who want to enter the market, there
in March but it only sounds good until you are simply not the products available for
compare it with the crash of the 1990s those without large deposits”.
where monthly mortgage approvals stayed According to the Council of Mortgage
above 60,000. Then there’s the ‘good news’ Lenders, there were 34,800 FTBs in August
from Nationwide that house prices fell by ’07 compared with 8,800 in January ’09 and
just 0.4 per cent in April, but for the same just 9,400 this February.
month Halifax reported a decline of 1.7 per “Many first-time buyers are unable to
cent. There’s activity from cash buyers, but secure a mortgage without the support of
this needs to continue to spell significant their parents,” continues Mark. “With
recovery, and as first time buyers hold fire lenders predicting the market will fall
lenders are up against rising another 10 per cent, buyers with a 90 per
unemployment as GDP is contracting fast. cent mortgage would be in negative equity.
It’s a sobering picture to say the least. Furthermore, home-owners coming off the
According to Peter Rollings of Marsh back of fixed rate deals are securing
and Parsons, the market in London is at or variable rate deals at around three per cent,
as close to the bottom as makes no but if they moved house, that rate would
difference in a medium to long-term increase to six per cent or 6.5 per cent so if
investment. “People either want to get on People either want they don’t need to move, they won’t. If
with their lives once more and move, or are anything, the market will be quieter in the
seeing the market as an excellent to get on with their second half of this year.”
investment opportunity,” says Peter. “Over It is clear that the cost of bringing a 90
90 per cent of our sales in London’s central lives once more and per cent mortgage to the table far exceeds
region have been to cash buyers and now that of a 60 per cent mortgage loan to value
that the mortgage market is loosening up I move, or are seeing mortgage so it is little wonder that all the
would expect the market to get busier lenders are competing in the same market
during the year with prices probably the market as an space. Mark explains, “Until lenders find a
bumping along the bottom for the rest of way to make money out of high loan-to-
2009, then starting to pick up in the first excellent investment value lending we are not going to see any
quarter of 2010. The chronic shortage of real recovery in the market for a while.
stock might mean a quicker recovery but opportunity.’ Government-owned lenders are under
don’t hold your breath!” Indeed, the Centre huge pressure to provide products for first
for Economics and Business Research PETER ROLLINGS, MARSH AND PARSONS time buyers, but how much of this is just
32 JUNE 2009 PROPERTYdrum
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76