House Price Spy Blog

As mentioned in my last blog, I have entered the market for a new home. Looking for more a bit more space and improvement in terms of a view and outlook. Well as of Friday I wrapped a deal for a new property! Hurray for me…the euphoria has well and truly worn off now however and back to work!

While I still think I got a good deal, I am left wondering how it can take 6 weeks for the change over to be made? There are bargains out there and this was one of them, the property needs work and this will certainly have put people off which is why the asking price has fallen by around £40,000 plus. Expecting to take a hit on my present property, which I will find out this week, I still expect to be up on this deal when the market gets back to normal. After a meeting with a mortgage advisor I will know what my choices are re-payment wise, although anyone with equity in their property and a decent payment history will have options-not the number you would have got in 2007 but not to despair.

After a month solid viewing properties and reading dozens of prospectus its clear that its a buyers market with sellers biting the bullet and cutting asking prices. One good thing is that with a fall in sales estate agents will bite your hand off to deal, and they turn up on time! Everyone in the industry (that is still in a job) is super keen to deal! If you have every taken time out to view a property and the estate agent has left you out in the cold you will know what I mean…

The market is expected to start some sort of bottoming out/recovery process during the next 12 months and this could lead the country away from phrases like recession and ‘boom and bust’ for a while.

As the process of moving, selling and the transfer moves along I will comment on a few things that come up and see whether the government is doing enough to make it worth our while to buck the current trend and move property.

Abbey have ditched thousands of local lawyers from their approved panel of regional lawyers due to their not bringing in enough work. What does this mean to you? Many people in the UK could now be hit with an extra legal charge of up to £250, due to having to have an extra lawyer to ensure that money was properly passed to the buyer. While local businesses going bust is always bad no matter who they are, this means there is less competition in the legal market.

Speaking as someone who is in the process of entering the market, I can definitely confirm that its a buyers market with large numbers of ‘buy to rent’ landlords selling and taking the hit. This means there are loads of properties on the market, some of which would never usually be there, certainly not for the low prices which I am seeing. Landlords are wanting to sell out quickly before prices fall even further meaning that they have not spent the required time on DIY and upgrading before selling that would usually be done. This means that there are even better bargains, especially if you want to put your own stamp on a property and not have all the word done before you buy. The big question will be will the market fall even further and if so by how much?

Lots of people I speak to are guessing that it will not be too long before we see some sort of recovery. Meaning that this is a great time to buy property, prices are down between 20% and 30% and there are bargains to be had.

The ‘buy to rent’ bubble has burst but rents have shown growth compared on previous months so it may be the time to hang in there! These properties account for a large proportion of the market, with the lending market the way it is you can expect renting to grow.

The latest predictions coming from the property industry is that while it might be 2013 before we see the market recover growth at 2007 levels we should see a bottoming out of the slump during 2009, and growth after that time at a reduced rate.

People will need confidence, whats the point in buying when prices are still dropping. You can be sure that when some stability comes back and people are confident that prices will not fall further there will be a huge number of purchases made in the UK, and the economy will start to grow after that time as all the money that goes along with it is pumped into the economy. At that point everyone who has been waiting it out will enter the market and prices will start to rise.

At that point the Government, FSA and Bank Of England will need to mensure that the current ‘crisis’ cannot occur again.

Another story this week concerns renting properties, the price being asked is dropping as people tighten their belts in the credit crunch. Anyone who bought renting property in recent years and has had to re-adjust to tighter lending restrictions will feel this, the new lending environment has concentrated on homeowners with little regard of affects on businesses small and large.

Whether you are staying put and want to make a few improvements or you want to tidy your property up before you enter the property market this is the perfect time to use your DIY skills! Tooled Up is the UK’s leading trade, enthusiast and novice home improvement retailer with tools, fittings and advice/guides for all jobs aroud the house including decoration, lighting, woodwork, plumbing and more!

If you need to get a few jobs around the house or want to learn a little a bit more about how its done then this could be the place to start, there are guides and advice for all levels of knowledge from DIY geniuses down to plain novices like you and me!

DIY is one industry that is booming despite the credit crunch, with increasing numbers of the population of the UK doing work that may have been done by workmen in the past especially relatively simple tasks such as painting and tiling.

DIY and decoration can really improve your chances of getting the asking price for your property without making huge cash outlays. Remember that neutral colours might not float your boat but are always advised by property professionals, you are selling to other people! House Price Spy has a whole section nof advice on DIY and selling/buying property so check this out!

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The latest dire predictions are that property prices are set to drop again and Buy To Let borrowers are set to panic sell to reclaim some cash. prices could fall by an average of 40% in total before we see a recovery!

The Government has been criticized for wanting lenders to lend at 2007 levels even though that was what brought about this situation in the first place! The £12.5 billion VAT cut has also come under fire as being pointless and taking money out of the free borrowing public coffers just when it is needed.

In addition, earnings on average in the UK have hit the lowest value since 2004, VocaLink who process 90% of the wages earned in the UK stated that growth slumped to just 2.4% down 0.3% from the previous month (Jan 2009). As you might expect manufacturing was hardest hit with a tiny growth of just 1.4%.

People who were ‘credit card tarts’ and changed their credit cards for the best deals thus avoiding paying their cards off have been hammered and are now paying the costs with all major cards changing offers and demanding payment for outstanding debt. Zero interest deals are now for a shorter duration meaning life is increasingly difficult for fickle borrowers.

You can get free property details at House Price Spy including sold house prices, growth month by month for the last 12 months and alerts on areas you are interested in!

Below are a few of the news stories doing the round:

Mortgages granted in the UK are down by half on this time last year and mortgage spending is down to a record low, however the number of re-mortages was slightly up on previous months.

The Bank Of England has announced that it will print £75 billion currency over the next 3 months to prop up the markets, this will see savers lose out even further but will see borrowers who have tracker mortgages gain from the recent rate cuts.

Devaluation of the Pound is always the last card to play and it means we are facing a bad few years, I personally am surprised that Gordon Brown stands back and lets this happen. Although as someone pointed out to me, incumbent governments have a habit of making the financial system as bad as possible and wizard like resolving things 6 months before a general election giving everyone a tasty bonus to vote the right way. Is this Gordons way of making things look really bad and then making himself look great when he saves us all?

The Royal Bank of Scotland and Natwest have both refused to pass on the recent mortgage rate cut, even though they are now mostly owned by the Public after money was pumped in to save them. Is this not a damning inditement of the way the goverment/BOE have dealt with the financial crisis? The industry needs to be regulated but not strangled, a healthy sustainable mortgage market is one which can offer good deals to customers and still make profit. The present situation is a false paradise for borrowers and a lose-lose situation for savers, what will happen in 6 months time? will things be reversed or equaled out.

In my short absence The Bank of England has cut the borrowing rate to a new historic low of just 0.5%. To put this in perspective the rate in October was 5%.

While no-one will be complaining about saving a few pennies (apart from those on fixed rates…who will be putting their finger in their ears and praying the rate goes back up asap) is this really the way forward for the mortgage lending sector? When you penalise the industry they will automatically charge their customers more which will defeat the purpose. Mortgage holders are also savers, consumers and voters…

Apart from the fact that everyone will be saving their money (with hopeless interest rates) rather than rushing out and spending it ‘cos its free money!’, the medium term health of this industry is going to be in putting money into the finance sector and regulating it like never before.

This is only a temporary measure, what happens when the recession deepens in 6 months time and lenders HAVE to raise the rate to keep going? How are people going to react to that? Thats when you get a proper 1970s recession with mass unemployment, riots, tax exiles and rising crime.

When is the general Election Gordon? it would be incredibly cynical to push the UK into an recession just to keep some hope of another term in Government.

The BOE and the government will both say that the BOE has the final say in mortgage rates but look what a mess the economy is in after just few years of their control! The FSA has promised to get their act together and the BOE should do the same. Lowering the mortgage rate is fine but the long term plan should be for more than ‘boom and bust’, quick fix measures! As a homeowner you know there is nothing for free, you would just like leadership rather than tuck shop politics…