Musings of a London Property Finder
House prices across the country fell 1.4% in October according to the Nationwide House Price Index but the low volume of sales is indicative of the lack of financial malaise in the market overall, as homeowners refuse to negotiate on price, constricting supply.
Fionnuala Earley, Chief Economist at Nationwide commented “While vendors refuse to cut their price, the levels of activity are constrained. Asking prices have fallen this year but the rate of decline has been significantly behind that of other measures. Consumers still expect prices to continue to fall into 2009 and will therefore be reluctant to trade without some discount on the asking price. This type of stalemate ultimately limits the number of transactions which can take place. This could however indicate that conditions are not yet very stressed, as sellers have not felt the need to dramatically reduce their prices for a quick sale.”
Demand is being stymied by conservative lending on the part of the banks. According to Nationwide there are 55% less buyers in the higher loan-to-value bands, ie buyers with low deposits, than this time last year. The best rates are on offer to buyers with 25% deposits but those with 15% can also borrow. Gone are the days of 90% or 95% mortgages, for now at least, although the mortgage advisers we use have told us they would expect lending to relax next year to allow mortgages at these rates during 2009.
Anecdotal evidence from our Clients would indicate that many first-time buyers are very keen to enter the market, assuming they can get funding. Increasingly they are approaching us for guidance in order to secure the best deal and be cushioned from further price deflation, expected next year. These buyers are key to getting the market moving again, not only through their own purchases but also enabling buyers further up the chain to complete.
Our Clients in the £750,000 – £3 million bracket have tended not to move, rent their property and purchase another or rent their property and rent elsewhere. The London Property Finder is redy to act when you want to move