Bespoke Mortgages

Insider's View

18th January 2010

Traditional quiet period is lively this time around

By Sally Laker, Managing Director, Mortgage Intelligence Holdings December and January are traditionally quiet months for those involved in the housing market. Buyers and sellers are usually more focussed on christmas shopping and the January sales than buying houses, but that trend could be set to change this festive season. “The market is much more active than it normally is at this time of year,” says Liam Bailey, head of residential research at estate agency Knight Frank, in a recent Sunday Times article. “Buyers want to get on with their lives after renting for 18 months or so, and right now they can get a good deal on mortgages.” Nicola Oddy, who works for house-buying agency Stacks and is based in Cornwall, has also been unseasonably busy. “There are easily twice as many houses in the £750,000 to £1m bracket on the market as there usually are at this time of year,” she says. “And they are selling.” The market has shown a steady recovery in much of the country in the past few months fuelled by a shortage of supply and record low mortgage rates. We’ve even seen the reappearance of gazumping - a phenomenon normally reserved for boom times. But while most analysts agree that prices can’t continue to rise as fast as they are without creating another bubble, opinion is divided on whether the market will flatten out or crash once more, in a W rather than V-shaped recovery. Rightmove reported last week that asking prices fell 1.6% between October and November, the first drop in three months. This still leaves them higher across most of the country than they were at this time last year with the exception of the North and the East Midlands, which are down 0.6% and 1.6% respectively. By contrast, prices in the South-East are up 3.8%. What will happen to prices during 2010 is anyone’s guess and it may depend on which part of the country you live in. My view is that on the whole the market will show a modest improvement of around 2% as the availability of mortgage funding improves and the shortage of housing stock continues. Savills forecasts falls of 6.6%, with the smallest drops and strongest subsequent recoveries in London, the South-East and the south of England. Meanwhile, Knight Frank says prime London and country house markets will continue toshow modest price growth of 3% but that the mainstream market will fall. According to property investment firm Assetz, house prices are likely to rise by about 5% but with downside risks. Poor levels of supply will underpin prices in the face of substantial demand. I also expect to see the buy-to-let market pick up as the availability of funding eases and demand holds firm. Individuals will rent and wait to see what happens to prices while first-time buyers struggle to stump up big deposits in the face of a continuing lack of high LTV mortgages.