Life is not about waiting for the storm to pass, it's about learning to dance in the rain
A Market Comment by our Joint Senior Partner, Andrew Dewar
2012 will likely mirror 2011 in terms of transaction volumes, with little change to prices. The shortage of stock in many price brackets and locations is the main reason why values have stayed firm through 2011 and why they will probably do so in 2012.
That said, nearly four and a half years on from this recession taking hold, there are thousands of people who are financially able to move, but who have put their lives on hold whilst waiting to see what happens. Many of them will move in 2012, unwilling (some unable) to keep their life plans on hold any longer.
Mortgage finance will continue to be tightly controlled especially with the higher loan to value mortgages. Many lenders however are looking at schemes to help First Time Buyers and those who are stuck in equity traps.
The Financial Services Authority published its mortgage market review on Monday 19th December 2011, after which there followed the usual speculation about the effect this may have on lending and the housing market. In essence, lenders had pre-empted most of the changes with criteria and systems altered 12-18 months ago.
From 2013, all mortgage borrowers will need to prove affordability with greater emphasis on their outgoings. This is not something to fear and will ultimately lead to fewer repossessions and a more secure market. This will then free up more capital to allow banks/building societies to do what they are supposed to...assist people to buy property.
No one can accurately predict just what will happen against the backdrop of the financial turmoil around the world. There have been some spectacular falls in stock markets around the world, with no immediate signs of recovery. Such events have had a profoundly negative effect on the value of most pension schemes with some significant stocks and shares having been wiped out altogether.
Whilst property is not immune to falling prices, unlike equities the building will always be there, therefore a value will always be maintained. During the 1989-1993 recession, Surrey property prices dropped on average by about 28%. Between 1993 and 2007, Surrey's average house prices increased in the region of 275%. From late 2007 until late 2009, values dropped again by about 20%. However, despite very tough economic conditions, most Surrey properties have recovered to their 2007 levels. This is largely due to the shortage of stock coming onto the market.
In summary, the Surrey property market will weather the storm and the sun will shine again. Don’t become immobile with fear, or tread water waiting to see what happens. If you think the time is right to move, come and talk to us and we will help you start to do so.
Joint Senior Partner
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