Is the housing market getting better
What will happen to the housing market for the rest of 2015 and throughout 2016?
Many experts are stating that the housing market throughout 2015 has been better than that of 2014 however, it is still a long way from been back to the strength of 2006.
It is nine years ago since we saw the housing market boom and three years ago since the property crash which wiped tens of thousands of pounds off the value of people’s homes.
Two significant signs that the housing market is making a recovery are
- The amount of properties undervalued by surveyors has significantly reduced over the last six months. When the housing market crashed it was well documented that mortgages were hard to obtain. One of the main problems purchases encountered was the property they were trying to buy would often be valued lower than the agreed purchase price. If the vendor did not agree to reduce the price then the sale would fall through.
- Investor demand has fallen. Over the last twelve months the amount of investors purchasing property has fallen rapidly. The reason for this is because there are more people buying houses to live in themselves and are willing to pay more than the investor.
As well as the two points detailed above throughout 2015 we have seen unemployment drop inflation grow, all of these economic improvements will have a positive effect on the housing market.
Before the start of 2015 36% of consumers said that 2015 would be better for selling a home than 2014, only 16% thought it would be worse and the rest thought there would be no difference, So far the 36% are correct.
Even though we are seeing slight recovery in the housing market there are still hurdles in the way hindering buyers from getting on or moving up the ladder. One of the largest hurdles is saving up a deposit. The amount lenders now require from the homeowner to obtain a mortgage has increased significantly since a number of lenders hand their fingers burnt. During the property boom certain lenders were giving out mortgages to consumers without them having to put any money in themselves. As previously explained not having a job is now a smaller hurdle due to the lower levels of unemployment in the Country.
Different fundamentals have driven the recovery
Since the crash different fundamentals have helped the recovery. In the early stages it was the investors. During this time there was also the emergence of the we buy any house industry. These companies and individuals capitalised on all the undervalued properties knowing that the market would one day recover for example Fast Move. These sales helped boost the overall sales figures. However, now we have seen the distressed sales dwindle as the market improves and we see a healthier mix of house sales.
What now replaces the investors to help the housing market continue to improve are the fundamentals such as job growth and larger salaries. However, these factors are still not strong enough to take over completely from the investors. Therefore the market is still reliant on investors to still continue to purchase a number of properties to sustain growth.
What levels of increase have we actually seen throughout 2015?
In April 2015 prices increased 3% year over year. The experts state that prices Nationwide are just 3% undervalued relative to fundamentals. This illustrates that there are fewer bargains and gives room for prices to rise without been undervalued.
Although consumers feel throughout 2016 we will see further increases in the housing market house buying affordability will worsen for a number of reasons.
- The level of increase will surely outpace growth.
- The strengthening economy may see an increase in interest rates throughout 2016 and this is back up with recent statements made by the Bank Of England.