Wednesday, April 21, 2010

Guest Blogger: Paul Hajek of Clutton Cox Solicitors

My guest blogger today is fellow Primelocation "property blog" award winner (and Spurs fanatic) Paul Hajek of Clutton Cox solicitors.

He describes his practice as "small but perfectly formed" and you can read more about the conveying services they offer here.

Twist Stick or Bust? How to Deal in the UK Housing Market, Spring 2010

The Good News:

The average growth in house prices in the year to February 2010 was 9%, although the average house price was 13% lower than in October 2007

Hometrack, the housing market research company shows the average time to sell a house now to be just over 8 weeks.

The Stamp Duty blanket exemption for homes up to £175000 ended in December 2009, and has been replaced in the recent Budget with a further “exemption holiday” for homes up to £250000, but strictly limited to first time buyers.

Some major lenders have reduced their insistence on 20 -30% deposits.

Second homeowners spurred on by negligible returns on deposit accounts and the lack of value in the traditional second hand markets of France and Spain, have lead to an increase to a record high of 245,385.

The Not So Good News:

We are not out of the woods yet. Economic uncertainty is still a reality

There is evidence that the mortgage companies have staved off wholesale repossessions, but with unemployment still perhaps not yet peaking, there will be room for more property on to the market to potentially weaken prices.

Mortgages have been as hard to come by as last year and the number of agreed home loans fell slightly fell in February 2010, from 48099 to 47094.

Any sustainable recovery would need 60000 or so approvals per month

The so called accidental landlords, forced to rent to avoid loses on their investments, who have shown signs of stirring, may yet be further encouraged to put their properties on the market.

It is usual that activity is dampened prior to a General Election with a spike in activity afterwards.

In 2005, the quarter before the election prices were flat at 0.8%, but went up to 5.2 % in the next quarter.

We all know about problem with relying on statistics and what was different back then was the relative ease in obtaining mortgage finance.

Should you Sell?

The increase in supply is not sufficient in itself to see a re-emergence of a buyers' market.

A necessary rebuilding of the depleted housing stock, which Estate Agents were complaining of at the beginning of the year, is clearly desirable.

Over the last six months of 2009 the supply of homes for sale grew by just 1% while sales volumes grew by 20%.

If you are only selling, provided you did not purchase at the height of the market in 2007, a reasonable return on your investment is likely: the better return depending on how long ago you purchased the property.

There is no likelihood of significant house price inflation in the foreseeable future.

Should you Buy?

The winners in this recession have undoubtedly been cash purchasers or low loan to value buyers picking up the best mortgages.

The Housing Market is still dependent on improvements in loan availability and a return of greater economic confidence.

If you are a first time buyer who can avail yourself of the new “stamp duty holiday” the clock has started to tick. Now is a good time to purchase.

Again, the deposits required are not as stringent as in the last year and more people should benefit

Twist Stick or Bust then?

An outright majority in the General Election would for most commentators be the best outcome not only for the housing market in Spring 2010 but throughout the rest of the year

In such a climate of economic uncertainty, it is highly unlikely interest rates will rise in the short term.

A change in Government or no, the outlook is for nevertheless tax rises, either directly or indirectly. This may depress the market.

But, if more property were to come to market this could indicate a growing optimism. It would suggest a revival of confidence among some homeowners in their ability to get a mortgage, to stay in employment and ensure that they meet their repayments. These were cited as concerns which lay behind owners’ reluctance to sell in 2008 and 2009.

Yet again for most homeowners, employment stability and mortgage availability will be key features determining the strength or weakness of the housing market in the coming months.

A slightly different version first appeared on Paul Hajek’s Clutton Cox blog on 6th April 2010.  You can contact him on 0844 372 3011, email

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