Property Prices on the downturn
The Royal Institute of Chartered Surveyors has reported that the early burst of activity in the housing market during the first quarter of 2012 may be unrepresentative of the true economic picture, as surveyors around the country report a slump in prices and requests for their services.
As has often been the case historically, the market in London has remained buoyant, while surveyors across the rest of the British Isles have portrayed a starker image of the housing sector. RICS stated that 19% additional surveyors have rated more properties downwards, with Wales and Northern Ireland based surveyors quoting 36% and 50% decreases respectively. However, 86% of London surveyors proclaimed that property prices in the capital have either risen or remained the same through out the year.
Major UK mortgage lender, Halifax, has said that prices appear to be dropping, with the average decrease by their estimate being 2.4% of the value. With the general financial criteria becoming stricter for mortgage finance, this could have an impact on those looking to move home or switch their debt to a more preferential interest rate, as lenders continue to request a minimum deposit of 10-15% of a properties value to arrange a loan.
RICS also highlighted the end of the stamp duty break for property owners with a home valued under £250,000 as having had an effect on market confidence. Many market analysts have claimed that the dash to complete on a property before the reintroduction of a 1% stamp duty charge to purchases below this amount created false hopes of an uplift of activity in the sector. As many have noted, to truly push the market forwards, more first time buyers are required to take the tentative step to purchase. The widening of the stamp duty net will have a notable effect on how soon this is possible, as many younger investors are not able to raise the deposit margins required to buy a home.
But RICS did look to temper the gloomy outlook, stating “It is still noteworthy that 63% or respondents reported no change in prices, and of the ones that did see a fall in prices, 81% did so in the 0-2% range.” Susan Grant, a Senior Contractor mortgage specialist at Contractor Mortgages Made Easy, said “While it may look like there has been a slight slow down in activity, we are receiving an increase in interest for mortgage advice. Many of these enquiries are from London based contractors, but as a national firm we are still being contacted by contractors across the UK, having found the harsher lender criteria for mortgage advances to be a potential obstacle.”
Article by: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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