Whilst a few weeks ago it was reported that the housing market may stagnate this year, today research published by the Royal Institution of Chartered Surveyors says that the housing market may actually be ‘over the very worst’. The report states that twenty four per cent more letting agents are now predicting that property sales will increase in the next three months not decrease which is what was predicted originally. Chief executive of the house builder Taylor Wimpey, Pete Redfurn said that “Two weeks into 2013, consumer settlement towards the housing market is more positive than we have seen in recent times.”
Positivity in the housing market has been attributed to mortgage rates being cut in the past few weeks, with some fixed rate two year deals now offering just 1.99 per cent. Furthermore, the government’s Funding for Lending Scheme has increased confidence in the housing market, as the Bank is allowing financial giants to borrow up to six hundred million pounds as long as they loan the money to home buyers and businesses in order to improve the market.
Buyers from overseas have also helped the market, especially as they are investing in properties worth millions of pounds in London. For example, the new apartments built on the old Battersea power station were bought within a matter of days. Rob Tincknell, chief executive of the Battersea Power Station Development Company said: “It’s been like the start of the Harrods sale. We had people queuing from 6:30am on Thursday and the London allocation sold out in days.”
Whilst many are confident that the housing market is set to continue to improve, it has been pointed out that increased demand for housing is mostly in London, whilst in other areas of the country the housing market is still suffering. Furthermore, economists at Capital Economics are remaining cautious about the situation, saying: “The Funding for Lending Scheme has helped to ease conditions in the mortgage market somewhat, leading to a marginal improvement in housing market activity. But we expect unemployment to start to rise and real earnings to fall yet again this year. With housing still overvalued on most metrics, that points to a year of gently declining prices.”
For landlords that are planning on buying new houses this year, it is important that they are covered by landlord insurance as if the housing market does fall through there may be a knock on effect on the rental market and the amount of demand there will be for new houses.