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A Topsy Turvy Property Market place can the Government help?
A Topsy Turvy Property Market place. Which is the Fake news and can the Government help First Time buyers
These variations are to be expected, however what does seem strange are the statistics themselves. The fact that House price growth is still so strong, due to high demand and restricted supply, seems at odds with other snippets of information about the residential property market. Nearly 40% of House prices have been reduced, and in the recent quarter 28% of Residential transactions fell through ( Perhaps Exchange Insurance is a worthwhile investment http://www.buy2letconveyancing.co.uk/
These seemingly contradictory facts spread across the whole residential property market, in the rental market a lot of commentators have talked about Buy to Let Landlords releasing houses on to the market as they cut back their portfolio.
It seems that the rental market, which feels as if it has had more Government intervention in the last 2 years than the previous 20 years has started to reach a balance and adjust to the new reality. Landlords particularly those who own more than one property seem to have accepted the new level of returns on investment that the market offers. What's happening is a simple balancing of supply and demand and the balance is reached by the increase or decrease of rents. The regional variation in house prices also probably reflects Landlords moving their investments outside of London as opposed to Landlords stopping investing.
In the residential property market, the same forces are at play, increasing demand meeting very restricted supply. The balancing factor of house prices will again show variation in ups and downs according to the demand and supply in each region and location. The overall shortage of housing seems to point to further house price rises in the future, and probably underlines the fact that house prices are not going to crash any time soon. The one unknown is the lowest end of the house purchase chain, the First Time buyer. This is because once someone has a property to sell then to some extent the fluctuations in price are self-balancing in that if you sell low, you can buy low, sell high then you will probably have to buy high.
At the start of the chain the First time buyer has no such consolation, if the price is high then they have to find the deposit and mortgage needed regardless of pricing. In a market as unbalanced as the current one this is difficult. The Government has recognised this and the Help to Buy scheme has given a push start to the First time buyer market. This only helps new property buyers (and therefore Housing Developers) leaving large swathes of potential buyers who get no such support.
We can hope for more interventions from the Government to help First time buyers as Housing seems to be becoming one of the very hot Political touchpoints of the moment. The problem with this of course is that there is only so much that Government can do. Deciding to launch a host of new towns (many of which seem to have MOD land available for sale) is fine. It will no doubt impact the demand for housing in those areas, it will not however help the majority as the impact is too local. Unless these locations offer good commuter links to areas of employment then they will not help supply meet demand. So unless the Government is willing to consider a real leap of imagination in providing support to all potential First time buyers regardless of whether they are purchasing new or old then this part of the market will remain fragile.
If the Government embarked on a large scale and funded drive to build more social housing then this may over time lead to Landlords reducing their housing stock. As it would result in a rebalance of rents to reflect the change in supply and demand of rental property. In turn this could impact of House prices as more Housing stock became available for sale.
Personally I could not see a Government being willing to embark on the scale of action and funding which would be required to alter the market dynamics, and so the see saw will continue and we will keep reading seemingly contradictory facts and articles. These contradictory statistics and articles have to be seen against against the backdrop of a Housing market in which there are simply too few properties to meet the demand for housing. Which means that in this topsy turvy world regions and locations may show reductions while overall the trend for House prices remains upward.