Twist Stick or Bust?-How to Deal in the Housing Market Summer 2009
- AuthorPaul Hajek
I published my first Article, Twist Stick or Bust?-How to deal in the Housing Market Spring 2009 in early March this year. Now, it’s time to revisit the Housing Market to see what Summer 2009 has in store.
Where are we then? My opinion is garnered through the information available to me, both as a Conveyancing Solicitor with Clutton Cox , dealing with Conveyancing throughout Bath, Bristol and South Gloucestershire and as a Director of ActionMove, a leading Home Information (HIP) Provider for Bristol and South Gloucestershire.
Whilst, I felt in March we were still some way off any recovery, the signs of improvement that have occurred are perhaps greater than many could have optimistically have forecast.
Positive Signs in the Housing Market:
-Fresh data from both Nationwide and Halifax have confirmed that House Prices rose in May by 1.2% and “2.6% respectively.
-Mortgage approvals were also up for the third consecutive month, up 13% in May
-Hometrack, the housing data group surveyed almost 1800 Estate Agents and Surveyors, confirmed prices had remained unchanged in May for the first time for 20 months, and that the average time it takes to sell your home is now down to just under 10 weeks
- The boldest statement was contained on the front page of The Independent newspaper earlier this month declaring that analysts believed that the Recession was in actual fact over!
Barriers to a Housing Market recovery:
-The people who are moving are still those with low loan to value mortgages in wealthier parts of the country. It is perhaps understandable that commentators are getting excited, but we are far from a return to normal conditions.
-The 35600 mortgage approvals referred to above in May, are way off the previous 7 years average of around 88,000. In this new Housing Market paradigm, post Credit Crunch, we may need to see as David Smith of the Sunday Times has suggested a rate of 60000 or so approvals to ensure price stability.
-First time buyers, a vital component to an overall Housing Market recovery are still struggling to find sufficient deposits to get themselves on to the housing ladder.
For now, it can be said with certainty, the sentiment, that the bottom of the market is near or has been reached, is fuelling increased activity in the Housing Market and should continue into the summer.
A delicate balance might be achieved where prices stop falling and begin to reassert themselves matched by the increased activity. As ever, events may still derail any nascent recovery. Unemployment will continue to rise for some time; headline business failures will be a feature; Banks may further tighten lending despite Government protestations. All factors which might drain fragile confidence.
Twist, Stick or Bust then?
It would be wrong to become overly optimistic. Nevertheless, if you are buying and selling, it is important to realise that any reduction in the asking price of your home, can be offset by bargaining hard on your related purchase.
If you are buying and worried that the floor has not been reached, you may already have missed the best bargains.
If you are selling only and bought within the last 2-3 years you will almost certainly be unable to realise as much or any profit from selling now.
To use the immortal words of Donald Rumsfeld; “There are known knowns; there are things we know we know. We also know there are known unknowns".
The speed of decline into recession went largely unnoticed, so too could be the speed of the recovery take us by surprise. Sentiment and confidence must continue to strengthen.
Peter Hamer, CEO of the insurance giant AON, speaking about the Recession in the Sunday Times recently concluded that “If consumers think it’s over [the recession], then it is. It seems now to hinge on confidence”.
We await the summer months with hope and some confidence.