Confidence in the housing market may be short-lived
Published ¤ 01/07/2009
Nick Hopkinson, Director of Property Portfolio Rescue (PPR) commented on the Nationwide June House Price Index, which showed a rise of 0.9% in property prices:
"Today's lender update highlights renewed buyer enthusiasm for the best properties with few sellers and very thin house sales volumes. The best locations and most desirable properties are seeing price stabilisation at the moment; whereas less desirable areas and homes are still seeing big annual price falls.
"Unfortunately, I fear that this renewed confidence and the increased buyer interest that Estate Agents are seeing will not last beyond the summer. Mortgage rationing is set to continue, as the banks struggle to recover from the credit crunch. This is causing a clear disconnect between property viewing and buying figures. Also, unemployment figures are getting worse daily and the wider recession continues apace. Massive national and personal debt problems will see much more house price pain when interest rates start their inevitable increases next year."
Nick is not alone in this view. Many industry experts believe the recession is "W" shaped, which may mean we will see things get worse again, before the true recovery.
Banks have already tightened criteria, and increased longer term fixed rates, and are still making it difficult for many people to get the mortgage they require. And, as this tightening continues, we may well see the number of house sales drop further and the value of property fall further.
If we compare this housing crisis with that of the early nineties, it would be easy to believe that the market has a long way to go before it sees any real improvement. In the nineties, there was a slight recovery, blamed on people trying to profit, before a continued fall in prices for another 3-4 years.
I hope this is not going to be the case, and I would be very happy to see my thoughts proved wrong. However, if you would like to discuss this issue further, please feel free to get in touch.
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