Housing Market

2nd April 2009

Some positive signs, but a long way to go.

Looking at recent press comment about the state of the market, it is difficult to find cross-party agreement on the long term outlook.  Two things are certain though - across all sectors, we haven't yet reached the bottom of the market and, when it happens, the upturn will be slowed by the restricted availability of finance.

Having said that, the first three months of 2009 have seen glimmers of a more positive attitude from lenders and purchasers alike.  At the top end of the market, prime Central London property has probably seen a 25% fall in value in the last 12 months.  When priced realistically, this type of property is now of interest to the cash buyer from overseas, who perceives a double benefit of price reduction and attractive exchange rates.  There are signs that deals are now happening in areas that have been stagnant for some time. Lenders too are making funds available, but they are limited and highly sought after.

Overall, the market is seeing increased levels of viewings, if not transactions, prompted by an undercurrent of belief that price falls to date make investment attractive.  However, translating this belief into action for the average man on the street is hampered by a limited supply of capital and highly restrictive terms for new mortgages.

At the end of the day, the UK is a nation of home owners.  A recent survey* showed that 88% of respondents still view home ownership as a sensible investment in their future.  This could be the single most important factor in driving the residential market forwards when economic conditions start to improve and the restrictions on lending are eased.

(* YouGov survey commissioned for the New Home Marketing Board, March 2009.)