UK Property Buyers venture back into the market...at last!

April 14, 2009 - PRLog -- On the contrary, new-buyer inquiries in February rose to their highest level since August 2006, according to the Royal Institution for Chartered Surveyors. March figures are expected to show another rise. This enthusiasm has yet to translate into a rise in sales — mortgage lenders have yet to water those “green shoots”, although HSBC’s decision to offer better rates to some customers who have a deposit of only 10 per cent may foreshadow a future rise in sales, particularly to first-time buyers.

Are we at the bottom of the market?

No, although some commentators believe that certain properties have now reached their floor and that average house prices are not far off. Most estimates agree that prices have fallen by about 20 per cent from their peak. Commentators believe that another 5 to 10 per cent drop is realistic. But as Rupert Sweeting, head of Knight Frank’s country house division, says: “No one rings a bell when you reach the bottom.”

Nationwide reported a 0.9 per cent rise in prices in March, a statistic regarded as a blip, especially as Halifax recorded a 1.9 per cent fall for the same month. But it was a blip that may herald an end to the dramatic monthly price falls to which we had grown accustomed and reflects the increased demand for property. “Most of the major house-price surveys have begun to pick up a slight increase in house prices,” says Peter Bolton-King, chief executive of the National Association of Estate Agents. “We have also seen a return of first-time buyers. Most importantly we have seen that the demand for property has held. Rather than having lost faith in property, potential buyers are eagerly looking out for a bargain.”

So, is now a good time to buy?

If you have enough cash to obtain a best-buy mortgage or to buy outright, these indicators may be enough to inspire you to go ahead now, particularly if you are a first-time buyer who has been waiting for price falls. However, if you do not have a big deposit, it is better to wait than take out a mortgage with a high interest rate. Also, prices are expected to “bump around the bottom” for the next couple of years, according to Savills.

There is still room to manoeuvre on price if the seller has not dropped the asking price sufficiently. Bargaining power is still with buyers, although this may change, agents say, when the consensus is that the bottom has been reached.

Who is buying now?

Buyers of prime property may face stiff competition from foreign buyers, who are out in force. Chesterton Humberts made nine top-end sales in Kensington in March — all were to foreigners. David Adams, of Chesterton Humberts, says: “Before calling the bottom I would prefer to see lending improve to a sustainable level to an extent that British residents with reasonable jobs and equity are able to trade homes again.”

Homeowners who need to trade up for lifestyle reasons are inclined to carry on regardless. One of the reasons that spring is the traditional buying season is because families need to move closer to schools in time for the next school year. “Owners have to be in by August or September, and for this, they need to be looking now,” Sweeting says.

Those with lots of capital sitting in savings accounts are also scouting about. “Capital left in the banks is actually being eroded,” Sweeting says, “whereas property is a tangible long-term asset”. First-time buyers are among those most keen to view properties but are not so likely to follow through with an offer.

I want to sell. How hard is it now?

Sellers in a falling market tend to be motivated by one of the three Ds: death, divorce or debt. However, if your price is right, there should be no shortage of buyers. Agents say that properties priced 25 per cent below their peak are shifting — consistent with the extent to which average prices have already dropped and are predicted to fall.

Agents warn sellers not to take expectations that the market may be at or close to the bottom as a sign that they can start upping their asking price. David Smith, a senior partner at Dreweatt Neate, says: “Increasing your asking price simply on the back of one set of data would be extremely misguided. The state of the economy, rising unemployment and very weak consumer confidence mean asking prices won’t be rising for some time.”

For sellers worried about the social ignominy of a For Sale board going up in a downturn, off-market is the preferred option. Ask your agent about how to sell privately.

Shaun Ascough of prime property London & Uk Country property search agents, Sands Home Search, comments: "many owners of the finest London & UK Country properties will contact agents and prime property search agents to discretely offer their properties for sale in a tough market like this. That way the general public (and the bridge club members!) don't get to know their business"

Is the availability of mortgages improving?

Not for those who have deposits worth less than 25 per cent of the property, unless you are a financially stable high-net worth borrower, in which case you can expect preferential terms from some banks on loans worth up to £2 million.

HSBC’s new 4.99 per cent on loans worth up to 90 per cent is competitive but is reserved for its Premier and Plus current account holders. Melanie Bien, director of the mortgage broker Savills Private Finance, says: “If you need a higher LTV (loan-to-value), it is still a struggle. Lenders are also quick to reject applications for what appear to be the softest of reasons, underlining their reluctance.”

Those with big deposits and clean credit histories need not feel so unloved, she says. “There is no issue if you have a significant deposit and clean credit history. The best deals are for those with 40 per cent to put down. But some lenders, such as RBS and First Direct, have reduced rates for those with a 25 per cent deposit.”

What deal should I take?

Brokers are currently recommending longer-term fixes. As Bien says: “There is a strong possibility that if you opt for a two-year deal, you will be coming to the end just as interest rates are rising.”


Source: Times Online

# # #

Sands Home Search are property search agents who specialise in finding the finest properties for sale in London, the UK Country House, Estate, Equestrian & Farm property markets & the prime residential property market in Cape Town, South Africa.