Is property on the rise?
The housing market is on the way up, say agents, who are reporting increased buyer activity and competitive bidding. But there is concern that a recovery is being stalled by weak mortgage lending. A selection of experts tell us how they see it
Chief Eeconomist, Royal Institute of Chartered Surveyors
It is becoming increasingly hard to ignore the improvement in the news flowing in about the housing market. Activity has picked-up, albeit from abysmally low levels, and prices now actually seem to be rising in many parts of the country, with London a principal beneficiary. In fact, some parts of the capital are even seeing competitive bids for the right sort of property in the right location.
More generally, the gap between asking and sale prices is now narrowing. However, there is a need for something of a health warning to be attached to this recovery.
A key reason why prices are now rising is a lack of good quality supply. RICS tracks new instructions to estate agents each month and, crucially, they are continuing to fall. Meanwhile, the ongoing lack of mortgage finance remains an issue, as does the potential for more job losses as the year wears on. More fundamentally, although it is in everyone’s interest for higher activity levels to return to the housing market, the last thing potential first-time buyers will want to see is prices recovering too quickly, leaving them stuck firmly on the sidelines.
Co-owner of Godfrey and Barr, which specialises in up-market sales and rentals in Hampstead Garden Suburb, Mill Hill and surrounding areas
There has been a dramatic change over the past two months. Buyers’ mentality has moved from lethargy to urgency. In the past two months, over 400 new people have registered to buy.
The under-supply of property has meant that gazumping has started again, caused mainly by people being told that they can’t have something that they want.
To ensure the housing market recovery is sustained, unemployment needs to fall. There also needs to be easing by the banks and building societies for mortgage advances. Loans of less than 75 per cent are relatively straightforward, but loans above this are still a problem. This has to change.
Our biggest challenge is convincing sellers that there is a market and encouraging vendors to sell. We do not envisage a rapid increase in values just yet. The housing market is still too shaky for this to occur.
Director, Goldschmidt & Howland, Property estate agents for Central and NW London
We are experiencing increased activity. Prices are no longer falling so buyers are concerned that if they don’t move soon they will miss the market. The lack of properties for sale are causing competitive bidding which we have not seen since late 2007.
The main issue still remains with banks and building societies — they are slow to lend and some valuations do not reflect true market price.
Each area of London is different, so an umbrella statement for the property market is neither accurate nor helpful for anyone. Concerns must focus on the eventual rise in interest rates, which will impact on some sellers who are already under pressure.
Supply and demand drives property prices, and while the supply in our key areas of north London remains low, demand exists and will continue to grow.
Principal of Jeremy Leaf & Co and RICS housing spokesman
The housing market is certainly stronger than three or four months ago but it is being constrained by the actual costs and availability of mortgage finance. Although there has been an increase in mortgage approvals to around 40,000 per month, this isn’t making a material difference yet. A 50 to 60 per cent transaction/mortgage approval increase is needed to even begin to return to more ‘normal’ levels.
Easing on the financial side will make a big difference to transactions. We want to see transactions increase but more balance between supply and demand to facilitate a sustainable recovery.
The market seems more resilient to bad news as demand is there, even from developers looking to take advantage of the huge under-supply which is developing. On the face of it, the housing market does appear to be close to bottoming out, with activity picking up and prices stabilising.
However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still uncertain, unemployment set to continue increasing and finance for first time buyers still in short supply, there are a number of obstacles for the market to overcome over the coming months before we can confidently state that recovery is at last under way.
Property consultant in north London
In January, the market improved, and after April, things started to go a bit crazy, but I think we will see a typical seasonal lull over July and August. The question is what will happen in September.
The problem is that there is heavy demand and less availability. People are thinking, if it’s available, buy it. I’m just not sure this can be sustained if there are no properties coming on. Sellers don’t want to sell at what they feel is ‘bottom-end’, but the buyers want to buy now, so a vendor puts a property on at slightly more than they would have six months ago.
Every area in Manchester has been affected, but the suburbs and the north less so. There has been a degree of increased activity but this has been at the bottom end of the market — properties under £150,000.
There is a feeling that the market place is starting to pick up, but this is at a much-reduced level. I don’t think we are quite at the bottom of the market yet.
Finance is relatively available as long as you have a deposit. We are still having big problems with mortgage valuers down-valuing stock.
Managing director, Preston Bennett
There are serious signs of recovery now. The perception is that we have reached the bottom and are bouncing along it. People who sold and sat waiting are now coming out of rented property and looking to buy as they feel that prices are now more attractive. First-time buyers are definitely coming back.
Prices, which seem to have stabilised, are holding up better in London and the suburbs. We are achieving very near the asking price on second-hand property; sometimes above it. Optimistically, there could be a full recovery by spring 2010.
The main challenge is the lack of funding: too slow/too little release of mortgage funds. On new-build properties, valuers are still too cautious which, in turn, restricts the percentage of funding potential buyers can obtain.