Housing Market 2009 not all bad
Not all doom and gloom for the housing market
Monday, 12, Jan 2009 02:30
A UK residential agent, Hamptons International, has outlined why 2009 might not be as bad as we all think.
They have put together a list of 'positives' for why this year shouldn't be all doom and gloom - with their own list of predictions.
Marc Goldberg, head of residential sales, at Hamptons International said: "Increased buyer and seller confidence will not happen overnight. Any uplift will also be dependent on factors such as mortgage availability, unemployment levels, the degree and duration of recession on the high street and overall global economic outlook.
"However, we believe that the sharp correction in house prices that took place throughout 2008 will positively impact the 2009 housing market, as people begin to realise that the worst of the house price falls have already happened; boosting optimism and confidence and encouraging growing numbers of prospective buyers to start their search for a new home."
Hamptons International's key reasons to remain optimistic this year are:
1. The bank base rate is only 1.5 per cent compared with 5.5 per cent last January. As a result, the cost of borrowing is gradually reducing and affordability for many is enhanced.
2. Prices have already dropped by 20-25 per cent since the peak in 2007. The general consensus amongst industry commentators is that the full peak to trough drop will be 30 per cent which, if correct, means that we are most of the way to the bottom of the market which we expect to reach by the middle of this year.
3. Lower prices also enhance affordability. The pound has lost around 35 per cent of its value against the euro and 30 per cent against the dollar in the past 12 months. This makes the UK property market far more attractive to overseas buyers and the net impact combined with price falls for this sector equates to more than a 50 per cent drop in the cost of buying a UK property.
4. Vendors are far more acceptant of the need for price realism in order to achieve a sale. This was not the case at the beginning of last year and we had an uphill battle to close the expectation gap between buyers and sellers. Those looking to sell now are generally extremely motivated.
5. Banks are under extreme pressure to increase liquidity and it is widely expected, with government pressure that mortgage finance will increase during the course of the year.
6. Pent-up demand; research from across the Hamptons network indicates that plenty of people have a desire to move but have delayed their plans due to falling house prices. This suggests that as soon as any positive news is reported we will see a strong pick up in demand.
7. Stock of available property is down 25 per cent since May last year according to Hamptons figures. A reduction in supply will take some downward pressure off prices which also suggests the bottom of the market is not far away.