The property market is ready for take-off

Turnbull2000

http://dofonline.co.uk/blogs/the-edge/mortgages/the-property-market-is-ready-for-take-off-3454353/

House prices are still nearly 20 per cent below their peak but 2013 looks like being the start of the new housing boom. That could be the best stimulus to the economy there is.

There are several reasons why prices will start to increase in 2013 however, one of which is that the number of buyers is rising again thanks to cheap mortgage rates. The interest rate cuts in the early years of the crisis were not enough to offset a deteriorating market, but the Bank of England’s Funding For Lending scheme has now cut rates even further so that mortgages are available for under 3 per cent.

This time the cheap money is fuelling a market ready to recover. The estate agents’ surveys and housebuilders are also reporting more prospective purchasers looking at properties. There is a huge pent-up demand from people who would normally have bought homes over the past five years but who have deferred their decisions. If they see prices start to move, there could be a wave of people rushing to buy a limited supply of homes, fearing that they will miss their chance if they do not hurry.

By the end of 2013 I think Britain will be reporting strong rises in property prices – the start of a new boom. Regulators will have the powers to dampen such bubbles in future, but don’t expect them to use them: the side effects are good for the economy.

I'm not sure the BoE and government will be able to welcome a new price boom within the next 12 months, but the stage is being set for strong growth leading up to the election in 2015. Double digit rises in 2014 could be Cameron's only hope.

HAMISH_MCTAVISH

Turnbull2000 wrote: »

I'm not sure the BoE and government will be able to welcome a new price boom within the next 12 months,

Agreed, the volume of lending is still far too low for normality to return to the housing market.

Mortgage rationing is still endemic, and less than half of what is required for a normal market, let alone "stimulus" levels above that.

but the stage is being set for strong growth leading up to the election in 2015.

Well, they're trying.

But the banksters continue to subvert the intent of the BOE and Government, and lending is simply not rising by any meaningful measure as they instead use cheap funding to prop up balance sheets and increase their margins to record high levels.

It will take further action to stop the banks profiteering and restore normal liquidity to the markets.

Something that Carney has been hinting at lately with his comments re economic "escape velocity"

Double digit rises in 2014 could be Cameron's only hope.

Agreed.

Although I think he's beyond salvation now.

Conrad

Hamish you keep blaming the Banks. Honestly your'e missing the big picture every time. I don't get why this is?

If you saw the applications that fail and how FSA regulation causes such, maybe you'd have a broader picture of things.

As to the new boom, B2L is fuelling it round my way where anything reasonable is snapped up.

HAMISH_MCTAVISH

Conrad wrote: »

Hamish you keep blaming the Banks. Honestly your'e missing the big picture every time. I don't get why this is?

If you saw the applications that fail and how FSA regulation causes such, maybe you'd have a broader picture of things.
.

It's not the FSA regs as such, but rather the banks interpretation of them. They are using the regs as a smokescreen in application rejections.

The last thing banksters want is a return to high volume, low margin, fully competitive lending.

Where the economy and consumers are best served.

Why would they, when they can currently lend a third as much money at three times the margin they did in 2007?

Hoover up all the BOE cheap funds, ramp up margins, get fat bonuses, and then Gin and Tonics all around.:)

Conrad

HAMISH_MCTAVISH wrote: »

It's not the FSA regs as such, but rather the banks interpretation of them. They are using the regs as a smokescreen in application rejections.

What is your evidence that they are miss - interpreting regs?

The TCF regs make it clear any ignoring of an applicants position that might one day be construed as irresponsible lending is a risk that cannot be taken.

Your argument is motivated by the political narrative that paints all bankers as baddies and to be frank I'd expect better from you. Reps plead with me for new biz.

Underwriters hands are tied.

You cannot interpret speed limits anymore than underwriters can circumvent rules on treating customers fairly.

james_toney

i know quite a few people who are getting into B2L now,

looks like we could inflate the bubble again

Turnbull2000

james_toney wrote: »

i know quite a few people who are getting into B2L now,

looks like we could inflate the bubble again

Thanks to Funding for Lending, it think we'll soon see BTL mortgage rates lower than inflation, and perhaps another half point off savings rates. Think there could soon be a significant upturn in 1-2 bed properties being snapped up by investors - be it people fed up of decimated savings and rubbish pensions, or established landlords expanding portfolios.

First-time buyers will only get a proper look in when 95-100% mortgages return. When this inevitably happens, the demand for property will be unprecedented - against a backdrop of the lowest new supply in modern history.

So if you've got the deposit, make a move now before prices resume rapidly upwards or investors take your place (and you end up buying someone else a property)

HAMISH_MCTAVISH

Turnbull2000 wrote: »

First-time buyers will only get a proper look in when 95-100% mortgages return. When this inevitably happens, the demand for property will be unprecedented - against a backdrop of the lowest new supply in modern history.

So if you've got the deposit, make a move now before prices resume rapidly upwards or investors take your place.

Yep, sounds about right to me.

james_toney

Turnbull2000 wrote: »

Thanks to Funding for Lending, it think we'll soon see BTL mortgage rates lower than inflation, and perhaps another half point off savings rates. Think there could soon be a significant upturn in 1-2 bed properties being snapped up by investors - be it people fed up of decimated savings and rubbish pensions, or established landlords expanding portfolios.

First-time buyers will only get a proper look in when 95-100% mortgages return. When this inevitably happens, the demand for property will be unprecedented - against a backdrop of the lowest new supply in modern history.

So if you've got the deposit, make a move now before prices resume rapidly upwards or investors take your place.

I think you are totally right. I was always thinking there would be a massive crash in house prices, now i dont think this will happen,

More QE will inflate any savings.

it all look quite scary

Thrugelmir

james_toney wrote: »

i know quite a few people who are getting into B2L now,

looks like we could inflate the bubble again

Compensates for a lack of first time buyers. Lenders have far more security with BTL'ers.

Problem lies in the future. As the property ladder will be broken. With not enough people in a position to trade upwards.

Turnbull2000

Thrugelmir wrote: »

Compensates for a lack of first time buyers. Lenders have far more security with BTL'ers.

Problem lies in the future. As the property ladder will be broken. With not enough people in a position to trade upwards.

The trend of people renting out rather than selling a property when moving will become far more common. Larger family homes will increasingly be retained, rented out and inherited.

Once inheritance tax is abolished, forced sales of portfolios will be eliminated as their children are handed a free, substantial income for life.