The signs that last year seemed to be predicting a very gloomy outlook in the economy and consequently the housing market, are now showing a much more optimistic picture for those who are buying and selling homes.
There is now increasing confidence in the market with just a third of first time buyers saying that access to mortgage finance is a major hurdle; thats a substantial reduction on last years figure (50%). These first time buyers are the people who are actually experiencing the hurdles and they are saying they are managing to get their loans. This is very important for confidence in the housing sector as it spurs on others to seek and get a mortgage.
Confidence is a key component in any market. Any potential buyer has to believe in the product and that they can pay for it. When the payment term, as in a mortgage, can last 25 years or even more, confidence is crucial.
Confidence that house prices will increase is also growing. That fact alone means that families which have put their plans to move home on hold while the market has been depressed, will now be watching it more closely. They will be looking at homes to buy and be aware that others are doing the same. This in itself can stimulate the urge to buy sooner rather than later.
Building Societies and other mutual lenders are doing their bit by offering mortgages with lower deposits to credit-worthy customers. This sector took a 23 per cent market share of gross lending in February; up from 18 per cent in February, 2012. It equated to £2.5billion; a figure up nearly a third on the previous years.
There is further evidence of these changes: A survey by Rightmove of 100,000 asking prices, showed a 1.7 per cent rise in the last month, the biggest rise since March, 2008, just before the collapse of Lehman Brothers and the onset of the banking crisis.
This information coupled with news of the brightest start to the year for all UK first time buyers since before the credit crunch in 2008 cannot now be ignored. We are seeing a trend. A BSA Property Tracker Survey shows 45 per cent of us believe house prices will go up over the next year. It is also true that there are a third more mortgages on the market since the Governments Funding For Lending scheme launched last summer. Other initiatives aimed at boosting the market like FirstBuy and NewBuy are also playing their part.
Together all these factors mean that that intangible, long-elusive feeling of confidence is coming back. The market place is brighter when people are happier. Perhaps, even in the face of other bleak economic news, the housing market will lead the recovery.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.