MARKET REVIEW
Sluggish Britain
T
he Council of Mortgage Lenders (CML) expects property sales to remain at around 860,000 this year. That is fifty per cent lower than the 1.6 million sales that took place annually before the
recession. Can the market continue at this level? Will house prices start falling again? Will the property market spark another recession? The CML for its part does not believe that
the threatened double dip will take place. Even though the recovery has been patchy and weak, the housing market, mortgage market and economy generally do “now appear to be on a more stable footing.” But the Halifax saw a bigger than expected
becoming reluctant to sell would,
Current signs that homeowners are
fall in prices at the end of last year. These fell by 1.3 per cent in December against November; much higher than the 0.4 per cent figure expected. Halifax’s housing economist Martin Ellis, is downbeat. “Looking forward, we expect limited movement in house prices during 2011 but with the risk on the downside. Current signs that homeowners are becoming reluctant to sell would, if continued, help reverse the imbalance between buyers and sellers.” Paul Diggle of Capital Economics said, “With the pressures on house prices still building, we anticipate that prices will fall considerably further into the red this year. Admittedly low interest
14 FEBRUARY 2011 PROPERTYdrum
reverse the imbalance between buyers and sellers.”
if continued, help
martin Ellis halifax
I’m in no rush... – when will we move?
How long can the housing market remain in this state? Asks, Alistair Bertrand
rates and a possible contraction in the number of willing sellers have the potential to limit the speed and scale of the house price fall in 2011, but with houses still overvalued, and the economic fundamentals of the housing market weak, we think that it’s entirely plausible that prices at the end of this year will be up to 10 per cent lower than they are at present.” He says that this is bad for the wider
economy because falling house prices means low consumer confidence. A fall would, however, be good news for first time buyers. Another big hurdle is the further tightening
of the mortgage market. Whilst rates are still at a historic low, proposed new regulations from the Financial Services Authority could further weaken the market and make interest only mortgages a thing of the past. And the CML is gloomy on the level of finance creeping into the market; it has predicted that mortgage lending will decrease to £6 billion
in 2011; the lowest level since 1980. This is, in part, due to the banks having to repay £130 billion to the government under a special liquidity scheme. The fact that interest rates are likely to remain the same in the
first half of 2011 will stop the bottom falling out of the market. It is predicted that interest rates will remain at 0.5 per cent until October 2011 and then rise gently.
Shall we wait?
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