by Mark Johnston
A report recently revealed that two in five properties on the market currently have had their asking price cut at least once, as many home buyers play the waiting game.
Over optimistic home owners are finding that they must lower their financial expectations if they actually want to sell.
The housing market is like all other markets controlled by supply and demand.
Home sellers are being forced to drop asking prices by around £7,000 to secure a sale. Figures produced by the department for communities and local government (DCLG) show that the average asking price is £231,543 which is 14% higher than the average selling price of £203,528.
Therefore a potential ‘stand off’ looks to emerge within the current housing market as optimistic home owners are pricing their properties above the amount potential buyers have at their disposal. This is due to many struggling to secure a mortgage.
Falling house prices have been blamed on a mortgage drought as potential buyers especially first time buyers find it increasingly difficult to secure an affordable mortgage deal.
Research shows that gross mortgage lending is down 3% from £14 billion in July 2010 and £13.6 billion in August 2010.
With warnings that the bank of England base rate could rise up to around 2% by the end of the year and also concerns about the wider economy, as 2.48 million people are out of work, many potential buyers are understandably apprehensive.
For those buyers managing to secure a mortgage still have to face deposits of at least 25% for any decent deals. Many potential house buyers have also seen the equity in their current home eroded by price falls. Although in the short term there are bargains to be had, but with inflation escalating it will not and can not last.
It seems however that first time buyers have been in the news this week, as a report from the Council of Mortgage Lenders (CML) stated that July 2011 saw a ten month high in the number of first time buyers purchasing property.
The number of products available on higher loan to value is the highest since the financial crisis began. A report by moneyfacts shows that there are approximately 35 95% loan to value products and 271 90% loan to value products on the market at this
The cost of such products have steadily reduced over the past few months, although at first glance they may appear expensive if comparing them with the low bank of England base rate, historically speaking they are still competitive.
Northern Rock just recently reduced rates on selected mortgages across its range by up to 0.90%. These include its products of 80% loan to value, 85% loan to value and 90% loan to value.
Experts have forecast that sellers will have to continue to drop their asking price well in to the next year at least.
Some analysts have suggested that those who are being forced to sell their properties and first time buyers with poor equity or low deposits will suffer the most. However the current market will benefit landlords, as people have to rent rather than buy, and
also buyers looking to trade up who have large deposits.
Whilst there seems to be improvement in affordability and choice in the housing market it is still the number of properties available and the number or lenders who advertise higher loan to value products, make it difficult to actually obtain them.
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