An improving housing market - are we finally out of the woods?

The Council of Mortgage Lenders recently reported an upturn in the housing market when it published figures confirming that its members approved some 16% of new mortgages in April this year compared to March. Associate and head of residential conveyancing Lorna Ganley investigates.

This closely followed the Royal Institute of Chartered Surveyors report that buyer enquiries during May rose for the 7th month running and at the fastest rate since August 1999. The Department of Communities and Local Government have also recently stated that there has been a 1.1% increase in the average cost of a home in the UK.

Much is being made of the revival in the media with both the broadsheets and television networks carrying stories of stabilisation while many estate agents are also telling us that there are significant signs of improvement.

This is also being helped along by boosts to the lending market in the form of competitive deals being released by high street lenders such as Nationwide and Britannia who appear to be aiming their new products at borrowers with either only a small amount of equity in their existing properties or a small deposit to offer on a new home.

So is the property market finally on the upturn after some 12-18 months at rock bottom?

We have certainly witnessed some of the worst times in economic history recently and there are certainly very encouraging signs of the green shoots of recovery. Indeed, at Harvey Ingram we have seen a significant increase in levels of both sale and purchase instructions over the last couple of months across all price brackets.

The new mortgage deals are boosting activity and encouraging first-time buyers back onto the property ladder, which in turn is having the knock on effect of raising interest in home-buying generally after months of widespread pessimism. We also seem to be seeing a more sensible approach to borrowers from mortgage lenders with some institutions beginning to offer 90 and 95% loan to value deals once more, however is it too early days to be reading too much into the new facts and figures?

Whilst all of the above is very good news on the back of a devastated market, it is still worth noting that many buyers are struggling to obtain mortgages and kick off their home-buying career!! Banks are still currently being very cautious meaning that less new buyers are joining the market comparable to historical figures and those already on the ladder are being forced to stay put in their existing homes and wait for the value of their homes to increase. Many of the transactions going through at present are private sales and purchases and indeed there is still an awful lot of trepidation!!

There is also a general fear that irresponsible lending will return again as some high street banks take steps to raise interest rates on their existing popular mortgage products in a move to force other financial institutions to follow suit thereby pushing prices up again in an all too familiar cycle!!

We should also not forget the wider picture i.e. a depressed economy generally and rising unemployment all of which will hamper a complete revival of the property market for some considerable time to come.

In summary therefore whilst we are certainly moving towards more stable times within the property market generally and it is generally accepted that the property market has now bottomed out and is on the way back up, it is worth still erring on the side of caution; an approach that is certainly echoed by many economists and analysts.

For more information on our range of residential conveyancing services or if you would like advice, please contact Lorna Ganley on lorna.ganley@harveyingram.com or call 0116 257 4453.