Talking to many friends and contacts in London it is apparent that the Residential Sales market is slowly but surely starting to turn the corner. Buyers have realised that now is a fantastic time to buy as it seems apparent that, at least here in London, sales prices have bottomed out and (in some cases) are already making a recovery. People can therefore buy with little fear of the dreaded ‘Negative Equity’ (a later article will be dedicated to this delightful phrase) and can hope for some reasonable growth in the not too distant future.
However stock is stated as agents’ biggest hurdle at present. There are not enough new instructions coming on the market at the right price and there is therefore not enough choice to offer people. The conundrum is this: Most people who have bought in the last 3 years in London simply cannot afford to sell!
Why? Several reasons:
Most people buying in the last 3 years will have lost value and have therefore (at best) lost most if not all value gained over this period and would therefore make a loss once costs of selling and buying are factored in. At worst, are in negative equity and simply cannot sell.
Many bought on mortgages offering anything from just a 10% deposit to mortgages offering £120% LTV. Even high earners with impeccable financials will struggle to secure a 90% LTV mortgage at present. Not enough deposit, no property.
Banks are still erring on the cautious side with valuations and getting to a price that ALL parties agree on (Vendor, Buyer and Bank) is difficult.
To fully recover the industry needs an influx of good fresh stock on a regular basis but when this will start to happen again- who knows!? If you are in a good property position though, now is a good time to sell with multiple buyers to each property. Get yourself an agent and get selling- later you can boast that you were instrumental in rescuing both the property market and the UK flagging economy!
Kristjan Byfield at Base Property