The Shape of the Market Today
May 5, 2012 Leave a comment
If you need to sell your property quickly, it is important to understand current market conditions.
With the UK officially falling into a double-dip recession and inflation consistently above target, mortgages are still scarce and upsizing is the last thought on most hard-working families’ minds.
Below are some of the main reasons that prices are still subdued.
Factors Reducing House Prices
- More sellers than buyers. Very weak buyer demand.
- The high-end London market has until recently been buoyed by the rush of foreign investors from both the Eurozone and counties less politically stable than the UK, looking for a safe-haven for their wealth.
- The increase in Stamp Duty to 7% for homes above £2,000,000 and the anti-avoidance measures announced in the budget have made investing in the Capital much more expensive and far less discreet for wealthy foreign investors. Factor in the rising pound against the troubled Euro and suddenly, property investment in the UK looks a lot less attractive.
- Baby boomers and the inheritance generation are starting to liquidate assets as parents downsize, die, move to sheltered accommodation or just look to boost pension income.
- The financial squeeze and lack of consumer confidence may make matters worse. In particular, the prospect of public spending cuts is raising fears over a prolonged economic slump. Many jobs could be lost in the public sector with knock on effects.
- The mortgage and remortgage market remains in turmoil. In particular proposed mortgage regulation could make it even more difficult to get mortgages. For example, proposal to end interest only mortgages.
- As prices drop the equity against a mortgage drops and it is harder to remortgage.
- First time buyers have lost confidence and have fewer savings for a sizeable deposit as more income is eaten up by rising prices.
- The housing market is very nervous.
For the same reasons above however, if you are looking to upsize, now is as good a time as any as there is less competition in the marketplace and vendors may be open to accepting offers that they would otherwise have not considered a few months ago.