With Nationwide boasting that UK house prices are back to 2008 level, you would expect everyone to be confidently selling their homes. Last month the average price of a home rose by 0.9% to £161,816 which was almost an identical match of figures in September 2008 before the financial crash. The collapse of Lehman Brothers saw a huge blow to house price, bursting the housing boom. However today, expects are challenging whether the recent released figures by Nationwide are something to get excited about or not. Is the economy showing light of recovery? Or is this a simply a momentary ray of light soon to be crushed by predicted growth in unemployment?
Window of opportunity
Considering that house prices have risen for five consecutive months, there is said to belief that the housing market in on the mend. During the last months homeowners have built greater confidence and have accelerated in repaying back their mortgages faster and even putting down larger initial deposits when taking out new mortgages. Consumer confidence is something that was largely hit by the economic crisis and so to see people making brave decisions once again is something economists did not expect for some time. James Hayman of Cluttons estate agency in London, has commented to ‘The Times’ that “Sellers should make hay while the sun shines, as an increase in the supply for sale easily could tip the market out of favour”. His urge for sellers to exceed straight ahead with selling their home without wasting time, suggests that there is a lot of more sustainable confidence amongst potential sellers. Therefore, this is what is feeding the current rise in house prices.
Furthermore with the problem of “accidental landlords” whereby many people decided to delay selling and rent out their property instead during the recession, there has reputedly been a is loss supply for sales. This in turn is why James Hayman of Cluttons, feels it is a perfect opportunity for potential sellers to advantage from the low supply and sell their homes now while prices are rising. Additionally there is a “window of opportunity” for anybody wishing to sell.
In May this year, Nationwide reported the average house price was at £154,016, which was then a drastic improvement since the financial crash. However, with the current average house price is sitting at £161,816 indicates that there has been consistency in growth over the last two quarters. Despite this, economists and estate agents are warning people to almost take this news “with a pinch of salt” and still remain cautious in selling/buying property.
Keep your guard up
BBC News reports that Martin Gahbauer, the chief economist of Nationwide, believes that the future of the housing market may not remain as prosperous as of current. Underlying contributors include a prediction of even higher unemployment. With this is mind, banks will, for obvious reasons, remain inclined to give out very few loans and so fewer mortgages will be purchased. Martin Gahbauer deems it would be extremely surprising if house prices continued to rise in the near future on the basis that unemployment is on the rise. BBC News reports that an increase in purchases, whilst there a prediction of further growth in unemployment, could mean that people will not be able to meet their mortgages repayments which will lead to a downward pressure on the market. Consequently there could be a reverse impact on the healthy growth that has been recently encountered in the housing market.
Advising the nation
Homes Counties agent Nick Salmon, concludes that, “Sellers can now afford to be optimistic when they price their home, but they should not dare to be greedy if they want their house to sell”. Nick Salmon, like many others are advising people to keep their guard slightly up, whether this is fueled by media exploitation of the financial crash is unknown. However, the general opinion from sources is not to be too hasty too quick and to remain rational, with huge consideration of the predicted rise in unemployment, when deciding whether to buy or sell. Mortgage purchase history is not showing enough strength to advise people to rush to take out new mortgages
Despite what has been said by economists and in particular estate agents, would they advise their customer not to sell/buy a property right now?...So where does the truth lie?
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You introduced your presentation well and your blog reads even better. I like the questions in the introduction as a way of spiking reader' interest. There is good comparison of coverage but I'd like to see your opinion. Can you answer the opinion you set yourself? Well done. 7/10
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