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Twist Stick or Bust? How to Deal in the UK Housing Market Spring 2011

 

Day 1: Everything You Need To Know About Buying and Selling a House or a Flat in 31 Daily Bite-Sized Chunks

 

 

Welcome to Day 1 of our special series of blog posts running every day in March.

Ideally, it will be most relevant to you if you are looking to buy or sell in the Spring.

Be sure to sign up for a chance to have your Conveyancing carried out by Clutton Cox, free of charge.

This is the fifth in our seasonal series on the prospects for the Housing Market in England and Wales which began in Spring 2009.

So what does the Housing Market in England and Wales have in store in Spring 2011?

Estate Agents Who Know What They’re Talking About

This time we interviewed Estate Agents who we thought would give us a local and a regional picture of what had been going on in the Housing Market at the end of 2010, and what were the early prospects for 2011.

We interviewed Adam Offer from Besley Hill, one of Bristol’s largest Estate Agents; Chris Hill of C.J.Hole also from Bristol, who runs  very successful franchises ; Chris Wood of PDQ Property a well respected Estate Agent from Cornwall and James Gibbs and Paul Gillespie from Sunday Times Best Estate Agency Award Winners, Gibbs Gillespie, with offices in and around London.

What is interesting is that the views expressed were broadly in line with each other. Nothing dramatic will occur in the housing market this Spring.

Adam Offer reported that in 2010:

"The early autumn has been a little slower – mainly down to the Halifax stating the prices had tumbled by nearly 4% nationally in one month (this was later rubbished by other industry stakeholders) and the governments spending cuts were announced. However in the last few weeks buyers are returning – October will show the highest visits and detail downloads in our history. Over 250,000 people have visited our website and downloaded over 60,000 sales details".

Of prospects for 2011 Adam considered: “the market will show a further improvement on 2010 with a fairly busy spring.”

Chris Wood also echoed the same sentiments

“I believe the market will continue on a bumpy recovery for the next few months. Nothing dramatic to report; unless you are a journalist trying to grab a cheap headline”

Chris Hill of C.J.Hole had the same opinion;

“I think the housing market for 2011 will be much the same as 2010. The mortgage market will continue, all be it more slowly, to recover and there are signs of some better buy to let deals available, which will hopefully start to increase volumes in that market.

It is first time buyers who probably hold the key to the direction of house prices; with mortgage criteria being so stringent they are having to put in large deposits and even then are not finding very favourable rates.

I think 2011 will produce the same volume as 2010. I think Bristol will hold up in terms of prices, probably going up in Spring and levelling off over the Summer.”

Gibbs Gillespie were not expecting a radical change from the 2010 Market and were aware of underlying problems in the housing market:

“We anticipate a slight increase in demand due to seasonal factors early in 2011 but feel that the market will continue to be held back by lack of mortgage availability and concerns over employment and household incomes.

We do however expect the UK economy to recover more strongly than predicted and for confidence to improve as the year progresses leading to greater transactional volumes.

Overall we do not see 2011 as being significantly different to 2010 in terms of volumes and prices.

We expect demand from buy to let landlords to purchase to increase and demand from tenants to be strong. There is a likelihood of greater volumes of rental arrears and landlords would be best advised to look closely at the quality of tenant and not just the rental figure being paid."

Snapshot of the Housing Market:

Hometrack, the leading provider of residential property and housing information, is always a good place to look for a snap shot of the Housing Market.

Hometrack’s latest figures show:

-2.7% reduction in home price growth
• 10.2 weeks on average to sell a property (typically 2 months in the South and 3 months in the Midlands and the North)
• 12 viewings on average per sale
• 91.9% of Asking prices are being achieved
• Mortgage lending decreased by a further 13.7%
• 40% of sales were driven by cash buyers
• 45% of households estimated to have no mortgage

Hometrack’s own survey of some 5000 Estate Agents and Surveyors
hinted that the supply of homes may dwindle in the Spring and Summer, but not offset the downward pressure on prices, but that house prices may stabilise over the course of the year.

Should you Sell?

My conclusion last Spring 2010 was that for most homeowners, employment stability and mortgage availability will be the key features determining the strength or weakness of the housing market in the coming months.

Nothing I have seen or read radically changes that outlook, but what has emerged however is the spectre of an increase in Bank Interest and therefore higher mortgage payments, which was simply not on the horizon last Spring.

But inflation leading to a rise in Bank interest rates and rising household costs and inflation may well further subdue demand.

If you are only selling, provided you did not purchase at the height of the market in 2007, you may not lose money on your property: the better return depending on how long ago you purchased the property.

There is no likelihood of significant house price inflation in the foreseeable future.

Should you Buy?

The winners in this recession have undoubtedly been cash purchasers or low loan to value buyers picking up the best mortgages.

The Housing Market is still dependent on improvements in loan availability and a return of greater economic confidence.

If you are a first time buyer who can avail yourself of an important Stamp Duty exemption, but you will still require a big deposit, unless you can rely on the Bank of Mum and Dad.

Twist Stick or Bust then?

It is becoming increasingly difficult to generalise, as clearly some pockets of England and Wales are doing considerably better than other parts

Prices have definitely come down from the peak, and if you can obtain a mortgage or are a cash buyer, bargains are to be had

Forced sellers appear to be the most vulnerable.

But it is always something to bear in mind that if you are buying and selling any reduction in the sale price achieved can be offset by bargaining hard on your related purchase.