News Review: Property
“Gazanging” sellers get cold feet and pull out by
Grenville Turner, chief
executive, Countrywide
Bad news usually means good news for someone else, however it’s quite difficult to feel positive after reading the recent headlines following international
monetary
Fund’s “dangerous new phase” comment with regards to the global economy. according to the imF,
there’s still a 38% chance double-dip recession in the uS. For this side of the pond, the same report estimated that there is 17% risk of things getting worse before they get better. nick clegg’s response was along the lines of the ‘road to recovery’ getting ‘a bit longer’ – it’s unlikely this message 18 months into a recovery will have the most positive impact on consumer sentiment and the health of the housing market and wider economy. Widespread negative media
coverage hasn’t helped – ‘Staring down the barrel of economic disaster’ (the front page of the ever-positive daily mail). Let’s hope it doesn’t affect consumer confidence in the longer term.
Sales slump it’s no surprise that house sales have been hindered by buyers’ uncertainty of the future market, though it’s important to remember that most sellers are buyers too and we hopefully will see an improvement in options to encourage more first time movers.
i do have to stress that although there have been a number of sellers that are pulling out of sales at the last minute (enough to add a new g-word to label occurrences in the current market apparently – “gazanging”), we are still seeing serious sellers come to the market with improvements in realistic price expectations. Sales are going through. in fact, the national association of estate agents recently reported that in July, agents sold more property than in the same period last year. Positives can be found in
some recently published reports;
nationwide’s
consumer confidence report for august, though reporting a minor slip in consumer confidence, was generally stable, especially considering the riots and european market turbulence which took place.
consumers expect to see the value of their home fall by 1.3% over the next six months – again, potentially a sign of more realistic pricing to come?
House prices hit on the subject of average house prices, Halifax reported a 1.2% fall in august, the first fall since april, representing an annual decline of 2.6%. nationwide also measured a fall, though only 0.6% for the month, taking average prices to £165,914, only 0.4% down on the same period last year. Lack of economic growth will potentially cause further falls, though supply still fails to match buyer demand in many locations.
6 mortgage introducer OCTOBER 2011
“There have been a number of sellers pulling out of sales at the last minute - gazanging”
interestingly,
BTL boost needed demand continues to outstrip supply in the rental market this month, with countrywide’s lettings division recording a significant number of applicants. Stock levels remain low, even though the buy-to-let lending sector continues to thrive. However, with Kensington recently announcing it’s withdrawing its 85% loan to value buy-to-let products and the Post office pulling out of the buy-to-let market completely to focus on other customers, lending in the sector could benefit from more competition. as pointed out by financial
countrywide’s
services director nigel Stockton recently, with a significant proportion of all buy-to-let lending continuing to be dominated just two lenders, there is a growing need for other larger lenders to enter the arena.
Lending lifts across the market, the cmL’s recent house purchase lending figures showed increased lending in July, to £7.3bn from £6.9bn the previous month. Volume also rose to 48,800, though lending to first-time buyers fell in volume to 18,200 down from 19,500 in July last year.
according to the report, first- time buyers borrowed an average of 3.18 times their income.
Furthermore, the latest
cmL report estimates £13.4bn of gross mortgage lending took place in august, a 6% rise from July and a significant 10% increase august last year. even taking seasonality into account, this figure represents the highest monthly total for august since 2008. now we are nowhere near the £19.3bn borrowed in august 2008, but this is a welcomed improvement for the overall health of the market.
Higher LTVs needed on the product side, competitive deals continue to appear. abbey’s latest range, included a 3-year, no fee, 3.19% fix. By slashing their rates again, they have shown that they mean business. overall for consumers, choice continues to grow with mortgage Brain measuring an 82% annual rise in the number of products available. this includes a 40% rise in
the last six months alone, with over 3,900 mortgage products entering the intermediary market since march 2011, pushing the number of live products to 13,842 as of 30 august compared to 7,618 a year ago. So with the uK’s low housing supply look sets to keep house prices stable (according to ratings agency moody’s), let’s hope lenders address the deposit affordability issue and get some higher LtV products out there to make sure people who want to move can move!
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