According to the Land Registry, house prices in January were down by 15.1% since the same time last year. Every region in England and Wales has seen property prices fall by at least 12% in the last year. Buyers are waiting until they see that the market has bottomed out, and with the waiting, house prices are expected to continue falling for the next few months. There are however signs that the freefall may be easing and soon may have reached the bottom.
For example, with prices in prime spots in London being down up to 20% compared to the March 2008 peak coupled with the weak pound, buyers from overseas are seeking to pick up a bargain. The window of a strong euro against the pound and the security of bricks and mortar in prime location adds further appeal. Although Londoners themselves may object to property being snapped up it will be one small prop to help stabilise house prices. Importantly, according to TimesOnline, cash sales, which are not recorded in the statistics produced by Nationwide or by Halifax, now account for a whopping 40 per cent of transactions as buyers turn to property as a more lucrative alternative to low-paying deposit accounts.
Mortgage availability is beginning to see change. In January, mortgage approvals held steady at 31,000. Although this is half of what it was last year, they have averaged 31,000 for the last six months. Mortgage lenders typically want a deposit of 20% of the purchase price which is a hefty sum to secure. Saving for a deposit takes time and in this time house prices fall. However, Northern Rock will soon begin to offer some 90% mortgages. The Bank of England is expected to lower base rates again and is also likely to increase the amount of money in the British economy, both of which will improve the supply of funds for mortgages.
The current low interest rates, although will not lead to a sudden housing market revival, do make loans more affordable which will be another positive support for both new and existing borrowers. According to Halifax, mortgage payments have fallen from 31% of gross earnings for a new borrower in the first half of 2008 to an estimated 21% in January 2009. The house price to average earnings ratio has decreased to an estimated 4.48 in December 2008 from a peak of 5.84 in July 2007; a fall of 23%. The long-term average is 4.0. Potential buyers are noticing the opportunity: according to the Royal Institution for Chartered Surveyors enquiries from new buyers rose in January 2009 for the third successive month.
Of course, there continues to be pressure on incomes with rising unemployment and the negative impact of the turbulent financial markets on the availability of mortgage finance, but the update is that there are signs that the freefall on house prices and drought of mortgage availability is easing. As such, it could be wise to buy before house prices reach bottom as with low prices, low interest rates and increased mortgage availability an eventual recovering economy could bring house prices to rebound sharply.
Susy Copus writes about all aspects of the property market. Her work has featured the UK Property Search Engine, Wheres My Property, and Renovate Alerts who find property to renovate.
Article Source: http://EzineArticles.com/?expert=Susy_Copus
Nema komentara:
Objavi komentar