The recent upswing in the property market seems to be sustaining, to a certain extent, but the most definite thing that can be said about the market is that it is changing. So the people in that market need to change also.
Mortgage approvals continue to rise, but repossessions are also on the increase. Buy-to-let mortgages are down and the landlord profile may be changing, with small landlords being squeezed out as securing loans in that sector becomes more difficult.
People with money are looking for bargains. The banks unfortunately are still gun-shy, and being ultra-conservative in their lending, which is slowing the recovery of the market. Doubtlessly there are people who are in difficulty, as witnessed by an increase in sell and rent back arrangements, where a home-owner in financial difficulty can sell to a company and thus avoid repossession by the bank. The (former) owner is then able to rent their home from the new owner, often at a rental much lower than their mortgage repayments. Caution is required with this scheme to ensure vendors get a fair price for their homes, as some companies will pay less than 50% of the property’s market value.
So, where to from here? There are indications that buyers feel less pressured with the apparent oversupply of properties. They are looking for real value, not gimmicks. And they are looking for realistic pricing. Vendors who are hanging onto hopes of that buyer that will pay over the odds because they have fallen in love with the property, are finding that their potential customers have moved on and are looking elsewhere.
Banks are providing somewhat of a road block by their extreme caution in lending, but the flip-side of that coin is that buyers will be less likely to end up in financial strife. In time, the overall market will no doubt adjust to lower levels.