When will the Property Market Start to Move Fast
What direction is the global property market heading?
The general consensus on this is that we are still currently in limbo. The world housing situation is very much linked with the global economic climate, which currently remains stagnant. It appears that the collapse of major institutions has been and gone, so many would expect a more positive situation then we are currently in. Other Global factors such as the European debt crisis and the middle eastern uprising has stunned the world, coupled with the fact that leaders are still licking their paws it doesn’t appear that the economy as well as the house market are going to be moving anywhere fast.
How long will it take for the economy to improve?
This depends on what regions of the world you are measuring. There certainly seems to be a major shift in power, particularly from west to east. It has been widely expected for the past decade that China will surge forward but no one imagined that Europe would ever be left in the dire state that it’s currently in. It appears that China and America who have a positive outlook and are largely unaffected by Europe will surge forward, Europe at the moment is heading in the other direction.
Is the rest of Europe going to make it difficult for me to sell my house quickly?
At the moment it’s safe to say that this is the case. The UK government have taken a very pessimistic stance and are not speculating on our future growth. They are firstly scared of the massive threat of the European economy collapsing so we have now dug our trench. Secondly, it does appear that we are actually taking steps to prevent house prices form rising in the way that they previously did. To be fair house prices have become over inflated and it appears that this next decade will be the first decade since the 1930’s whereby prices probably won’t double. New legislation has been enforced upon the banks and they now have far strichter lending criteria. This means that with less demand from buyers the market will be more subdued and those who wish to sell their house quick will find times tough. It’s simple maths at the end of the day, and if buyers have more choice then there is less chance that they will buy your house.
Interest only mortgages will probably be heavily restricted
The UK government have recently gone one stage further and are about to drop a massive bombshell on UK house buyers. In the past around 70% of mortgages have been interest only. This type of product requires the owner to voluntarily pay off the capital on their loan. In many cases this simply hasn’t happened, now people are realising that they are coming to end of their 25 year term and have to re-mortgage. Unfortunately, due to their age they can’t take out another lengthy loan and are now being forced to sell their home. I’ts almost certain that interest only mortgages will be pulled from the market as we are now starting to learn from our mistakes. Unfortunately this means that we will only be able to afford the monthly repayments on a smaller home but on the flip side more people will actually pay down their mortgage. The government also realise that people can’t just rely on equity growth to then eventually pay off their mortgage when they sell, as the general feeling is that that growth for the next 8-10 years could be very slow then it makes more sense to encourage new buyers to pay down their loan.
Existing first time buyer homes may also suffer
First time buyer homes can be classed as the bread and butter of the UK. They are usually the houses that are in the lower price bracket of £50,000 – £125,000 because of this new government initiatives could seriously affect the sale of these houses. New schemes that are designed to help first time buyers on the housing ladder are very appealing whereby you can attain a 95% loan but unfortunately these are restricted to new builds. Technically the government are trying to fix two situations. The current shortage of homes as the more new builds that are sold will encourage further developments and also a lifeline for struggling buyers. What they are forgetting about is the existing builds that the average seller owns and with the current deposit without a special scheme being around 20% it’s obvious what route many buyers will take.
The Buy to Let Market is improving
On a positive note the buy to Let market is really picking up. As a property buying website we are experiencing a high influx of enquiries from both those who wish to sell their home and also investors. Reason being Buy to Let mortgages are still very favourable. Mortgage approvals in this side of the market are back up at the levels that were experienced at the height of the market. It is important to note however that because it is a buyers market investors know this and as they are more business orientated rather than bothered about local schools and greenery it’s the price that you are are prepared to sell your house for that they are interested in.
As a tip don’t reduce the price of your home too much at the estate agent, instead offer your buyer a verbal discount once they have visited your home. This is because the RICS value will still be based on the advertised price and the verbal discount that you offer will give the property investor a more true reflection of a discount to the actual market value.
Don’t waste time on renovations
One of the only ways that a buyer can add value to their home in a stagnant market is to do it up themselves. Believe it or not but they would rather the opportunity to put a brand new kitchen themselves via a reduction in price then to buy it already factored in. Not only because they can renovate to their own specification and taste but because more and more people like the idea of a small project to do up their home.
At You Sell Quick we are keen to find property’s in all states as we have investors who are looking to buy with the intention of renovating. Feel free to present us with your home in any state and we will still give you it’s true market value in it’s current state and will not ask for further reductions.
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