UK Property Market Recovery

UK Property Market Recovery
by Melissa Chappell, published October 9, 2009 -
www.propertyinvestingoverseas.com

The UK property market appears to be slowly recovering from the severe drop the sector has experienced in recent times. Although the market does not appear ready to spring back to its former glory, signs of recovery are slowly relieving homeowners of a large burden.

The recovery has been established from the latest housing sales statistics released recently, displaying increases in all areas of sales. Calculating the statistics of the number of average sales in the three month period until the end of July, the trimester resulted in an average of 2 additional sales to the previous trimester in the months ending in June.

While the increase in the average number of sales is quite low, the fact that sales are increasing monthly, provides a positive outlook for the remainder of the year. Some debates have emerged from the release of the statistics relating to the under supply of housing currently on the market. This shortage of available housing for sale is presumed by analysts to be from owners preferring to hold onto their properties whenever possible, waiting for the market to improve.

Interest rates, restrictions on mortgage lending criteria and growing unemployment are claimed to be the main causes of mortgage arrears, urgent sales and repossessions. Incidentally they are the same areas, along with an increase in the general economy, required to turn around in order to assist with market recovery.

Negative equity seems to be the biggest factor facing UK homeowners in the current market, with mortgage debt higher than the home’s value. If the current growth figures do not continue to rise in the coming months, around 1.3 million homeowners could be affected before the recovery of the economic crisis.

The general overall outlook for UK housing predict that the market will stabilise in 2011, yet reports vary as to whether 2010 and the remainder of 2009 will see a drop, or slow but steady growth. The acceleration in growth is expected to see housing prices increase by around 20% in 2014 compared with the present pricing situation.

Sustained growth is on the wish list of all UK homeowners, hoping to escape the current desperate situation. Those wishing to leap onto the property ladder, taking advantage of undervalued or repossessed homes have been restricted by the current mortgage market. With the majority of lending providers reluctant to offer more than 75% LTV, accessing the initial deposit has made entering the market difficult.

The slow recovery of the housing market following 18 months of continuously falling prices has been hindered by the rental market, providing cheaper options in comparison to mortgage repayments. Expected to be rectified by the end of the year, reforms in the sector should see a continued positive outlook, with current growth rates sparking hope across the nation.