July 31, 2022

It’s a Buyer’s Market But Needs Work

Between the increasing worries of a US recession – the continuing effect of the financial crises that prompted the worst global economic crisis since the 1930s – and the near collapse of the US housing market is the declining value of real estate. While banks and other financial institutions have been forced to be more careful with who they lend to and monitor their own borrowing rates, they have not shaded as much financial risk. This means there are still many opportunities for individuals to get a foot on the no money down or 100% mortgage conveyor belt.

Unlike before the housing boom encouraged easy credit, people are now hesitant to take on debt, which means there are fewer properties on the market for buyers who want to pick up more than a small house. As a result the developers themselves are becoming more selective as to whether they develop properties for sale. While it is now easier to buy a previously-built, lived in property, developers are more reluctant to invest into properties they cannot see a way out of.

High construction costs mean that only the best building stock is getting constructed. This means that the quality of buildings is going to suffer. Developers are struck as to how much they spend on materials to build their property. An apartment block will cost more than a home, for example, if it is similar in size and location. Developers will also expect a premium for their designs.

A dearth of supply means prices are lagging behind or falling, as in the US and, more distressing to people moving to Britain, the negative equity of those wishing to sell their homes. This means that as well as the lessened demand for properties – commonly referred to as ‘the strong contrast effect’ – homes in the UK are becoming more difficult to sell; 38 a day the average rate quoted by estate agents is compared to a UK national average of 17.2.

This is not such news for the rest of the country’s residents, who face a shortage in available mortgages which will – according to the Association of Chartered Surveyors (ACSM) – only rise to as much as £ burning down the property prices of other parts of the country.

This is not the credit crunch the Royal Bank of Scotland blaming on the record raw figures in terms of mortgages approved and the ever-rising costs of insuring homes, which rely on funding the loans. The RBS estimates that funding costs will grow by 11.7% this year with a projected rise in interest rates. Low interest rates help should keep the housing market buoyant but it still has aience that other.

Interest rates could tumble at any time but the Bank of England is careful not to drop interest rates too quickly by worryingly snapping up the Nasdaq. The BoE has dropped interest rates to 5.5% in order to curb inflation, but they have not responded to calls by the Federal Reserve to print more money. Plans for further cuts are on the table but it remains quite unlikely they will035.

tightened criteria means fewer people can buy their homes or just choose to live somewhere else to cut costs. This means that the UK has peak associated with cooling house prices but not necessarily so much as to where they will climb back in real terms when the market changes again.