After many months of misery, more and more people are beginning to concede that the housing market is finally demonstrating some positive symptoms.
It is always important to caveat any talk of recovery with a number of home truths. Firstly, any recovery in the housing market will not help many friends and colleagues in an industry that has seen long-standing and reputable businesses forced to close down because of the recession. Likewise, any recovery will be slow and relative – stopping the downward spiral which is not the same thing as returning to the ‘good old days’. It will be many months until there is talk of the property industry enjoying a boom.
However; for the first time in a while it feels appropriate to talk about the possibility of a recovery. There are a number of reasons for this. The National Association of Estate Agents (NAEA) monitors the industry carefully. We were the first to pick up a slight increase in house prices at the beginning of this year. It was unexpected – but in the months thereafter almost every organisation that carries out a house price index has picked up the same. Interest – or confidence – appears to be returning to the market.
The second positive indicator was the return of first time buyers after Christmas – a trend that then held into subsequent months. Throughout last year the proportion of first time buyers making up transactions hovered at around, and at times below eight per cent. Currently it is hovering at around 20 per cent. In an ideal market they would make up roughly 25 per cent.
We have had some positive political commitments also. The Conservative Party has listened to our calls and pledged, if it forms a Government, to scrap the pointless and expensive Home Information Packs (HIPs). The major lenders are showing signs that they are beginning to increase liquidity in the market – HSBC has introduced a 90% LTV mortgage. This is not perfect – and much more needs to be done to free up buyers, but it is promising; a possible indicator that the tide is turning.
But in my view the most positive indicator of all is the overwhelming evidence that suggests that confidence in the British property market has held. The British public has not viewed the slump as the complete collapse of the British property market; rather it has been considered a very seriously, but very much temporary setback.
Some commentators predicted that Britain would lose faith in property – in our experience that has not happened. Currently, potential buyers are eagerly looking out for a bargain. Perhaps they held off while prices plummeted, but now they are looking to get back on the ladder. The fundamentals of the market have held firm – and confidence is returning.
Confidence remains the key to the success of the housing market; as in my opinion the housing market remains the key to the success of the wider economy. By the time you read this article, we will know what measures Alistair Darling has introduced in his Budget, to help people to get onto the property adder. No doubt that I will elaborate more on this next month – I can only hope that he has taken heed of our calls.