So What Is the Future for the UK Housing Market?
Firstly, the stories coming out regarding the housing market seem to at long last be providing consistency. This consistency is mainly around the number of transactions and there seems to be no improvement.
A number of factors have contributed to the low levels of activity in the housing market:
The continued threat of unemployment and poor economic growth
Sellers holding out for a bigger sale price and the latest Nationwide survey seems to suggest they are winning, with prices increasing by 0.6% of the past six months
The lack of demand for new housing with many of the National UK home builders sitting on large land banks with no immediate signs of them starting development on scale in the near future
Banks in the current climate are still reluctant to lend to the masses and are very selective to who they lend to. The government effort to encourage the banks to lend seems to be failing.
The average age of a first time buyer in the UK is edging towards 40 with many unable to secure funding for a variety of reasons.
So the outlook on the whole is not positive for the UK housing market?
There are glimmers of hope; London is seemly immune to what is happening in the rest of the country. Many buyers from the Middle East and Eastern Europe are widely reported by the media to contribute to the growth in house prices in boroughs such as Chelsea and Kensington.
However, the growth in London is not exclusive to the more upmarket parts of the City. My analysis of the is that many professionally qualified contractors from around the world such as India, Australia, New Zealand, South Africa play an important part in the UK housing market and in particular in London.
For instance my organisation is continuing to see significant growth so why is this?
For me its all about motivation, our client base stems from all around the world and for many cultures that we deal with, renting is dead money. Many of clients are keen to understand quite quickly if mortgages for contractors actually exist. Once they establish they do, they are happy to make some lifestyle changes to ensure they build a deposit. Many contractor mortgages are available at competitive rates if you have a 25% deposit. So for many contractors whose origins are outside the UK there is a strong motive and desire to buy.
Overall, I believe the housing marketing will remain broadly flat for the foreseeable future unless we can motivate the masses to buy for the first time, whether this be through government intervention or free market forces. If this can be achieved we may address the short term issues but in the long term we need to educate future populations and encourage a change in culture. It is OK to rent for many in the UK seems to be the cultural trend.