'The housing market will come back
to life next year'
There will be substantial increases in property sales compared with
the second half of 2008, predicts Assetz.
L
Last Updated: 5:07PM GMT 22 Dec 2008
WHAT DOES 2009 HOLD FOR THE PROPERTY MARKET?
HIGHLIGHTS
House prices will continue to fall modestly in the first half of 2009 with the bottom of the market likely to begin forming after the summer
Substantial increases in property sales compared to figures for the second half of 2008
Interest base rates to continue falling into the early part of next year – to 1pc at the January MPC meeting and possibly to as low as 0pc by spring 2009
People on standard variable rates and older tracker mortgages where no minimum base rate is stipulated (around 50pc of all borrowers) will benefit from interest rate cuts
Bank lending levels will increase in 2009 with a flurry of announcements from banks in the first three months of the year
STUART LAW, CHIEF EXECUTIVE OF ASSETZ, COMMENTS:
“Following a decade of near continuous house price growth and a relatively stable economy, we now find ourselves in a period of economic recession. The world is going through a major seismic change, which will dictate a more risk averse banking community for many years to come, meaning lower mortgage availability and larger deposits required from buyers, as banks attempt to rebuild their balance sheets.
“However, the measures taken by the government and the Bank of England this year, as well as further measures to be taken in 2009, should ensure that the economy suffers a relatively short recession, albeit one with quite a number of side effects. Ultimately though, the overall impact of the global recession will determine the swiftness of recovery here in the UK.
“We are certainly not going to return to the boom times in the near future, but we should see a modest increase in property sales levels, mortgage offers and indeed general interest in property in 2009, compared to the extremely low levels seen in the last half of 2008. However, we are unlikely to see a return to a healthy level of activity in the housing market until 2010, or even 2011.”
House Prices
“I expect house prices to continue falling modestly in the first half of 2009, but that some kind of bottom will form over the summer period. Whether we see any level of growth from here, or indeed some kind of sustained stability, depends on many external factors from the global financial markets, the rate of job losses here in the UK, and any increase in bank lending actually taking place early in the year.
“With all the current uncertainty in the various branches of the credit crunch, predictions themselves can only be made with a very moderate degree of certainty. I see 2009 delivering a minus 5pc on house prices, but falls for the year as a whole could in fact range from between zero and 10pc, depending on how events play out.”
House sales
“All the ingredients are in place for an improvement in sale figures next year.
“The need for housing has not disappeared overnight, and the substantial degree of pent-up demand from buyers will need to be realised sooner or later. Couple this with an unprecedented level of highly motivated sellers, including developers, and we can only be heading in one direction – increased property sales volumes.
“While I do not expect an explosion of sales in 2009, I do believe that lower mortgage rates and higher levels of lending will ultimately enable the pent-up demand to translate into significantly increased sales volumes for the year as a whole, compared to figures for 2008.”
Mortgage Rates
“I expect rates to be cut again by 1pc in January to an all-time low of just 1pc. Rates could well reach 0pc by spring, as the Bank of England attempts to catch up with optimum interest rates after its dithering over the last twelve months.
“Mortgage rates are coming down, although no amount of government pressure will make them go close to reaching the base rate. As base rates tend towards zero, banks will be determined to build in a higher profit margin than they have in the past. However, the payable mortgage rates for borrowers will still be extremely attractive.
“The Bank of England’s interest-rate changes will directly benefit existing variable rate and tracker mortgage holders, and at the same time permit lower and long-term fixed rates to be released.
“We are going to see some historically low fixed rates coming onto the market from January onwards. It would be a very wise move for home owners and investors alike to secure long-term fixed rates at some point in 2009, as inflation is bound to return in years to come, leading to potentially higher mortgage rates.”
Mortgage Lending
“It is not just about mortgage rates but also about the amount of money that is available to borrow. One way or the other, bank lending will increase in 2009, whether it is assisted by the government, the Bank of England or the banks themselves. We have already seen HSBC declare a much higher lending target for next year, and I expect to see many other banks follow suit over the Christmas period.”
WHAT DOES 2009 HOLD FOR THE PROPERTY MARKET?
HIGHLIGHTS
House prices will continue to fall modestly in the first half of 2009 with the bottom of the market likely to begin forming after the summer
Substantial increases in property sales compared to figures for the second half of 2008
Interest base rates to continue falling into the early part of next year – to 1pc at the January MPC meeting and possibly to as low as 0pc by spring 2009
People on standard variable rates and older tracker mortgages where no minimum base rate is stipulated (around 50pc of all borrowers) will benefit from interest rate cuts
Bank lending levels will increase in 2009 with a flurry of announcements from banks in the first three months of the year
STUART LAW, CHIEF EXECUTIVE OF ASSETZ, COMMENTS:
“Following a decade of near continuous house price growth and a relatively stable economy, we now find ourselves in a period of economic recession. The world is going through a major seismic change, which will dictate a more risk averse banking community for many years to come, meaning lower mortgage availability and larger deposits required from buyers, as banks attempt to rebuild their balance sheets.
“However, the measures taken by the government and the Bank of England this year, as well as further measures to be taken in 2009, should ensure that the economy suffers a relatively short recession, albeit one with quite a number of side effects. Ultimately though, the overall impact of the global recession will determine the swiftness of recovery here in the UK.
“We are certainly not going to return to the boom times in the near future, but we should see a modest increase in property sales levels, mortgage offers and indeed general interest in property in 2009, compared to the extremely low levels seen in the last half of 2008. However, we are unlikely to see a return to a healthy level of activity in the housing market until 2010, or even 2011.”
House Prices
“I expect house prices to continue falling modestly in the first half of 2009, but that some kind of bottom will form over the summer period. Whether we see any level of growth from here, or indeed some kind of sustained stability, depends on many external factors from the global financial markets, the rate of job losses here in the UK, and any increase in bank lending actually taking place early in the year.
“With all the current uncertainty in the various branches of the credit crunch, predictions themselves can only be made with a very moderate degree of certainty. I see 2009 delivering a minus 5pc on house prices, but falls for the year as a whole could in fact range from between zero and 10pc, depending on how events play out.”
House sales
“All the ingredients are in place for an improvement in sale figures next year.
“The need for housing has not disappeared overnight, and the substantial degree of pent-up demand from buyers will need to be realised sooner or later. Couple this with an unprecedented level of highly motivated sellers, including developers, and we can only be heading in one direction – increased property sales volumes.
“While I do not expect an explosion of sales in 2009, I do believe that lower mortgage rates and higher levels of lending will ultimately enable the pent-up demand to translate into significantly increased sales volumes for the year as a whole, compared to figures for 2008.”
Mortgage Rates
“I expect rates to be cut again by 1pc in January to an all-time low of just 1pc. Rates could well reach 0pc by spring, as the Bank of England attempts to catch up with optimum interest rates after its dithering over the last twelve months.
“Mortgage rates are coming down, although no amount of government pressure will make them go close to reaching the base rate. As base rates tend towards zero, banks will be determined to build in a higher profit margin than they have in the past. However, the payable mortgage rates for borrowers will still be extremely attractive.
“The Bank of England’s interest-rate changes will directly benefit existing variable rate and tracker mortgage holders, and at the same time permit lower and long-term fixed rates to be released.
“We are going to see some historically low fixed rates coming onto the market from January onwards. It would be a very wise move for home owners and investors alike to secure long-term fixed rates at some point in 2009, as inflation is bound to return in years to come, leading to potentially higher mortgage rates.”
Mortgage Lending
“It is not just about mortgage rates but also about the amount of money that is available to borrow. One way or the other, bank lending will increase in 2009, whether it is assisted by the government, the Bank of England or the banks themselves. We have already seen HSBC declare a much higher lending target for next year, and I expect to see many other banks follow suit over the Christmas period.”
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