Is there good news on the horizon with regards to property sales levels?
December 29, 2008
Things have been looking very bleak in terms of property sales in the UK over recent months, and the level of property sales in the UK has gone through the floor for a number of reasons. In fact, just weeks ago the average number of property sales per estate agent per week had dropped to below one, and many homeowners trying to sell their homes were finding themselves experiencing real problems in terms of getting their property sold within a reasonable time, it at all!
The tight mortgage conditions that have come into play since the onset of the global credit crunch was one of the reasons behind the fall in property sales, and this was because many of the buyers that wanted to take out finance to purchase a property were unable to do so due to lenders being more cautious about who they would lend to.
The situation was not helped by lenders that were charging sky high arrangement fees for mortgages, and were demanding far higher deposits from borrowers than the traditional 5 percent. First time buyers were severely impacted because 100 percent and 125 percent mortgages were taken off the shelves altogether, and this really affected the ability of many first time buyers to get themselves onto the property ladder.
Another factor that affected the level of property sales in the UK was the ongoing drop in house prices, which is still continuing. Many people were nervous about getting onto the property ladder at a time when house prices were still falling, as they were scared that they would be plunged into negative equity shortly after buying the property. Rumours about a suspension in stamp duty further fuelled the situation, although the government did eventually make its decision and increased the exemption threshold by £50,000 to try and boost property sales.
One important contributory factor in the lack of property sales was that whilst house prices were falling many sellers were unprepared to accept that their homes were not worth as much as they were a year earlier. With many reluctant to price their homes realistically the housing market slumped further, with buyers unwilling the pay over the odds on properties in a declining housing market. However, recent reports have suggested that the housing market has started to increase in terms of property sales, although this is only a slight increase, and that this has been fuelled by property sellers now accepting that their homes are worth less, thus pricing them more realistically.
The level of property sales for the month of October increased slightly from 6 percent to 7 percent. These figures came from the Council of Mortgage Lenders, which also confirmed that the level of mortgage lending had increased slightly for that month.
One official from the National Association of Estate Agents said: : ‘Sellers are beginning to face up to the reality that their houses are not worth as much now as they were 12 months ago. They are ripping up last year’s price tags and beginning to come to terms with the new economic reality. That is a difficult thing to do - but the silver lining is that the market is now more transparent for buyers. Prices are becoming realistic, and we hope that this provides the boost needed to encourage those families who so desperately want to buy houses to get onto the market.’
- 50% drop in house sales in one year The housing market has been experiencing major problems over the past few months, with sales activity hitting rock bottom and house prices plummeting. A recent report has shown that house sales over the past year
- Future of house prices looks bleak Over the past year the housing market in the UK has fallen into a slump, with house prices having fallen month on month, leaving them considerably lower than they were at their peak this time
- What’s caused the slump in property sales? There is little doubt that the number of properties being sold in the UK has slumped, and many homeowners are now finding it increasingly difficult to sell their homes, with estate agents reporting the poorest
- Drop in property prices leads to increased sales According to recent reports there has been a drop in the amount that many homeowners are asking for their properties, and this has led to an increase in property sales. With property sales having slumped
- Mortgage default levels haven’t peaked yet Over recent years a rising number of people have fallen behind on their mortgage repayments, with financial problems being fuelled by the global credit crunch and the recession. This rise in the level so mortgage
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The slump has been a long time coming, coupled with the collapse of the pound, things are without doubt in a bad way. The only real way out is to get the cash buyers back into the market place. To do that, sellers need to price realistically and to sell. The fact that mortgages are increasing harder to obtain means cash is king, this isn’t going to fix itself overnight, and the world needs some positive press for a change instead of all the doom and gloom from the media.