by Mark Johnston
The Current Housing Market.
It appears that the latest recession may not have put all British households off the idea of owning their own home, but many continuing to struggle to get that first foot on the property ladder.
Recent reports have stated that “housing affordability” has improved. However, a home is deemed affordable when it costs less than four times average yearly earnings.
Industry experts feel that economic uncertainty, rather than mortgage availability, has been the greatest constraint. Research shows that very few houses are being bought and sold and most of those are the result of sales forced through job moves, deaths or someone’s inability to keep up with the repayments.
“Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand,” Martin Ellis halifax housing economist, stated
Some property experts have suggested that many would-be sellers are staying out of the market until it returns to what they regard as “normal”. Although a crash in prices is unlikely, because demand exceeds supply; new house building is now far behind the rate at which new households are being formed. But it is highly unlikely that prices will return to the days when the only direction was up.
The Council of Mortgage Lenders (CML) said: “We agree that there appears to be no clear trajectory for house prices at the moment. This is not surprising considering the uncertainties currently found both on the supply and demand side.”
However experts believe that problems still exist and therefore more needs to be done to get the market moving. Unrealistic expectations on the part of vendors seem to be stalling the transaction process.
Some Government schemes have been introduced to kick start the market from the bottom up, Mortgage rates have fallen in recent months, driven by the Bank of England’s Funding For Lending scheme pushing cheap money through banks and building societies to borrowers.This provides cheap funding to lenders and encourages them to increase or maintain their mortgage books.
So far figures have shown that the take-up has been poor. Over the past six months it has however been cheaper and easier to get a mortgage, especially for first time buyers.
Many lenders have suggested that borrowers should ‘Snap them up now, because they will vanish if the eurozone collapses.
However, according to financial experts the grim reality is that, however competitive mortgage deals may be, and however “affordable” houses may be people are still not buying them.
As the property market struggles for direction, some suggest it faces a bleak winter ahead, while others tip a gentle return to growth.
Research suggests that the UK housing market should see a stronger end to the year with transaction levels expected to pick up and price falls predicted to slow. According to the latest Royal Institution of Chartered Surveyors (RICS) housing market survey the market will be helped by greater mortgage availability on the back of recent Government initiatives and chartered surveyors’ expectations for future sales reached their highest level since May 2010.
Story link - The Current Housing Market.
Related stories to : The Current Housing Market.