The property market has been subdued ever since the collapse of Northern Rock and the birth of the credit crunch changed the landscape of financial services and how they operate.
It’s been 6 long hard years since and there now finally appears to be evidence that we may well have some form of stability.
The biggest problem for the property market has been affordability, in particular for first time buyers and those with little equity in their homes. Banks have been unwilling to take any risks and therefore only lending to an elite customer base such as those with huge deposits and an excellent credit rating, all risk was taken out of the equation which is understandable because major lenders had all been burnt by the fallout of over-lending on properties and taking on too much risk.
So the banks went from lending 120% on a property to just 70% - a huge shift in their policy.
Where does this leave us today? Well the property market hasn’t crashed as many expected/feared, if anything it has stabilised and in some areas such as London and the south east have actually seen prices increase in the last couple of years. The market has been very robust and demand continues to outstrip supply.
It’s a tight market at the moment but it’s beginning to show signs of recovery, the banks are now competing on the 90% mortgage products which is great news for first time buyers who have been saving hard for a deposit in recent years, if the trend continues and property prices continue to remain firm, the economic climate continues to improve and unemployment falls then confidence will return to the market, we are just beginning to see signs that 95% mortgages could be back on the shelves soon which will give the market another shot in the arm.
For 6 years we’ve seen extremely low transaction levels, mainly forced movers such as death, divorce and debt, there’s been very little else happening but this month Rightmove reported that 7 out of 10 sellers are “discretionary movers” and new sellers are up 20% vs January 2012 which bodes well for the rest of the year.
It’s brave to call the bottom of the market in terms of property transactions but there is enough evidence out there to suggest that the only way is up. Although a return to the “good old days” from 2000 to 2007 is unlikely, a nice steady growth would be very welcome.