Housing market still difficult to call

August 30, 2012

Landlords Insurance

The latest figures available for the year ending May 2012* still appear to indicate a less than adrenalin-boosting property market.

As the Guardian’s report indicates, property prices outside of London appear to be best described as flat overall and even including London, transaction volumes appear to be consistently depressed.

All the usual reasons are being wheeled out to explain this, the same reasons we have been hearing since 2007/08.  It may be intuitively difficult to directly associate problems in the Eurozone with the UK Housing market but perhaps what is clear is that confidence still appears to be patchy at best.

Yet again, the absence of bank funding and requirements for very high deposit levels, are also being held up as prime causes of why things are sluggish.  There does appear to be little doubt that many potential house buyers are still finding it difficult to secure sensible funding.

That is a pity.  Nobody appears to be seriously advocating a return to pre-2008 excesses and what is now clearly seen to be the lunacy of 120% mortgages etc.  Yet perhaps there has been something of an over-reaction and over-correction, evidenced by some banks offering deals for those that are able to put forward a minimum of 50 per cent deposit, whilst others requiring 10 and 20% as the norm.

As has been pointed out many times, these demands for large cash deposits particularly hit new entrants to the marketplace or those seeking to make their first move up the ladder.  Younger people or new families are not in the best income-earning position to store several tens of thousands of pounds of savings away before purchasing a property.

As has been recognized for decades, if the lower layers of the marketplace are not moving due to financial constraints, then this has a serious knock on effect at all levels above it, including the buy-to-let market.  Searching for the best buy to let insurance cover etc. might not make great sense if you are doing so against a backdrop of being unable to sell a property and/or secure a mortgage.

One cannot help wonder if a return to perhaps the days of the 95% mortgage might not be sensible, particularly in the case of first time or second time buyers.  It just might be the boost that the market so desperately needs.





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