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Comment: housing crunch
Evening Standard28 Apr 2008
Our survey today suggests that the London housing market is beset with uncertainty. The credit crunch has prompted lenders to withdraw from the market and to raise fees and charges on their remaining offerings, with an inexorable effect on would-be purchasers' buying power. It emerged this weekend that buy-to-let mortgages have virtually disappeared for novice landlords, while financing existing investment properties will become more expensive. That has meant a fall of a third in the number of properties being sold compared to last spring.
For estate agents, the sharp fall in turnover is bad news, though the lettings market remains strong. While activity has clearly fallen, however, the picture on prices is less clear, with forecasts for the fall in London prices ranging from five to 15 per cent. If further substantial falls follow in 2009, that would take most people who had bought since 2004 on a 100 per cent mortgage towards negative equity. That does not mean that borrowers will necessary default: repossessions will depend more on how many people lose their jobs in the slowdown.
Eventually, the market will unblock, albeit after prices have fallen. But banks are unlikely to respond to the Government's plea for them to be more generous towards borrowers. Big lenders will focus instead on reducing their smaller competitors' market share. Instead of hoping for better terms from the banks, the Treasury should be worrying about the erosion of competition in the home loan market.
Reader views (1)
How culpable is the Evening Standard in driving the prices up and the mess we find ourselves in.
I wonder also how subjective you are to the advertisers in your Wednesday Property supplement.
Every time the price went up by a quarter of a percent we had writers such as Mira Bar-Hillel telling daft readers to ‘buy now or else you will never be able to afford it’ fuelling the frenzy and any bad news was conveniently tucked away in some small inch square.
I was wondering when she was going to stick her head up the parapet and lo, now she is saying don’t buy, at least she is being objective and offering some decent advise for a change.
What will be interesting to find out is how many journalists out there (not the ES of course – your writers are above scrutiny) who are landlords and are now in the process of liquidating their portfolios and because they have the power to dictate to a certain extent where the market goes. And hey presto they start to buy again once the market has reached rock bottom.
- Ola, Lon, 28/04/2008 15:03
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