EA news warns of double dip recession and housing market slump.

Spartacus_Mills

THE National Association of Estate Agents has called on Chancellor of the Exchequer Alistair Darling to aid the housing market recovery and avoid sending Britain into what it fears could be a ‘W-shaped’ recession. In a five-pronged submission delivered to Downing Street in the run-up to the pre-Budget report, the NAEA calls on Mr Darling to:

Immediately extend the current Stamp Duty holiday;
Conduct a longer-term review into the function of Stamp Duty;
Intervene in mortgage markets to encourage banks to lend again;
Improve access to finance for first-time buyers;
Suspend Home Information Packs.

Peter Bolton King, the NAEA’s chief executive, said: “The current Stamp Duty ‘holiday’ for properties up to £175,000, is due to cease at the end of this year. This, coupled with the reversion of VAT to its original rate of 17.5 per cent and possibly beyond in the future, threatens to cause damage to the fragile recovery we have so far seen in housing sales, just at the time when further stimulus is drastically needed.

On the question of intervention in the mortgage markets to encourage banks to lend again, Mr Bolton King added: “The lack of available mortgage finance is significantly hampering the supply of, and access to, mortgages. “Despite considerable public pressure, banks continue to restrict access to mortgage finance and charge rates far higher than the current level of interest rates. A more interventionist solution is now required to force banks to lend again.

“First-time buyers are central to a properly functioning housing market but the lack of mortgage finance is particularly impacting on this group. “High loan-to-value mortgages are being withdrawn and the consequent rise in the amount being demanded in deposit means it is becoming increasingly difficult to gain a foothold on the housing ladder. “The NAEA calls on the Government to actively encourage lenders to provide high loan-to-value mortgages to enable first-time buyers to enter the market. “We recognise that high loan-to-value mortgages carry additional risk for the lender, so we are calling on the Government to actively promote the use by lenders of Mortgage Indemnity Guarantees or mortgage insurance on properties with a high loan-to-value ratio. “We also call on the Government to examine the viability of running a state-backed MIG scheme for lenders.”

On HIPs, which have been the subject of much speculation over what their future will be should the Conservatives win the General Election next year, Mr Bolton King said: “The cost of the Packs punishes sellers, while more than three quarters of buyers do not consider them before they decide whether to buy a property. “During a recession this is an unacceptable situation. The NAEA calls on the Government to immediately suspend HIPs while the UK economy is in recession, and to commit to re-examining their viability once the economy is out of recession.”

It seems they are concerned at the fragility of the recovery.

alibongo54

In the industry we have been advised that they expect house prices to drop by 20% in 2010 - but it is only a forecast.....

Wookster

alibongo54 wrote: »

In the industry we have been advised that they expect house prices to drop by 20% in 2010 - but it is only a forecast.....

That is quite a sizeable drop. And unemployment will continue to rise for some years still.

lostinrates

alibongo54 wrote: »

In the industry we have been advised that they expect house prices to drop by 20% in 2010 - but it is only a forecast.....

May I ask which forecast is being used for the 20%? Who is doing the advising?

StevieJ

Have you never encountered lobbying before

http://en.wikipedia.org/wiki/Lobbying

treliac

For how long can we continue to be propped up? When should the economy be tested / sink or swim on its own?

We can't go on pumping debt into the ecomony and if the withdrawal of artificial stimulus sends us into decline .... surely at some point we've got to learn to stand on our own two feet.

I want to know what the score really is and for us to work out how to deal with it. If there is real pain to come, I'd rather face up to it earlier rather that later.

Okay, if we can really pull out of this with current policy, then fine. But I doubt it. IMO [STRIKE]Labour's[/STRIKE] Brown's fundamental concern is about winning another term. And I'm sick of feeling conned by a Government which operates on 'knee jerk' policies and unachievable targets.

vivatifosi

That's my concern treliac. I'm neither a bear nor a bull by nature, I respond to the market and how confident I feel in it, being by nature fiscally prudent. At the moment that makes me more bearish.

It is good news that more people are finding jobs, its interesting that house prices are going up, but what I really want to know is how we are going to pay back the debts. If I'm making a decision to buy a house, whether or not the price is going up (or down) is just one part of my decision. The other two are: 1) what is going to happen to my post tax income - in other words am I going to be taxed up to the hilt and have less to spend on my mortgage than is currently the case. The second is what interest rates are going to do and whether I'll end up with a big sum to pay back with rates going up. Of these, the one that concerns me the most is the taxes one and it is really hard to make decisions when the government spins so much and is putting so much off in the vain hope of re-election.

Thrugelmir

treliac wrote: »

I want to know what the score really is and for us to work out how to deal with it. If there is real pain to come, I'd rather face up to it earlier rather that later.

As ususal its in the small print. What will be the effect of freezing tax free personal allowances and the levels at which higher rate tax is paid ?

This coupled with above inflation rises in council tax , higher national insurance contributions for employees, potentially high increases in water rates, energy costs and not forgetting higher interest rates.

These can only point at one thing. Less disposable income for many.

Cleaver

Spartacus_Mills wrote: »

It seems they are concerned at the fragility of the recovery.

Or are seizing the opportunity of fragility to try and push through reforms that they would like to see at any point in time that would help their business.

tommy75

Shouldn't the EA's system of selling not be overhauled too? They clearly use many tatics to sell a house such as block viewings which is fair enough if above board, but using their own mortgage advisors to see how much money they can get off you and then pretending there are other bids to bump up your offer is clearly fraud under the publics nose. It is now clearly a del boy business for underachievers. If I wanted off the wall cheating, I'd go to a car auctions where you start around the reserve price even if your the only person there.

mbga9pgf

alibongo54 wrote: »

In the industry we have been advised that they expect house prices to drop by 20% in 2010 - but it is only a forecast.....