11 June 2015
With a new majority Government in place and a growing economy, one would expect the housing market to be buoyant. However, the London market has been at the very edge of affordability for the average first time buyer for a while now and there seems to be a real bottleneck whereby banks won’t lend above 70% loan to value and are demanding strict affordability tests, making it harder than ever for new purchasers to get their ‘foot on the ladder’.
This is compounded by a slow-down at the prime-end of the market where the new 12% SDLT (Stamp Duty Land Tax) rates above £2 million have ensured that transaction volumes at this level of the market are well below their historical averages.
What we are seeing is the realisation from many potential first time buyers, even junior executives and highly qualified young professionals that they will have to rent for the foreseeable future as they cannot collate a large enough deposit to purchase their first home despite the fact the mortgage repayments would be very affordable at today’s rates, much more so than the rents they are paying.
In the medium term either banks will have to start offering mass market mortgages on a higher loan to value ratio or there will need to be an adjustment in prices as swathes of new homes come online over the next year.
Currently there is no shortage of wealthy investors, both UK based and foreign willing to purchase new-build London property, but how long can they be relied upon to keep the London market afloat? Increased supply will eventually squeeze rental returns to the point the prices will have to fall.
If you need to sell your home quickly for whatever reason, now may be the best chance you have to secure a high price for your property.
Whether you need to sell to complete a chain, move for work relocation, need to exit an investment property, are getting divorced or have inherited a home, by selling to a member of the National Association of Property Buyers you can be assured of a transparent, straightforward and ethical process.
Image courtesy of Jonathan Rolande, House Buy Fast.