Are the “green shoots” taking root? PHILIP MACDONALD, managing director of Abbotts, discusses.
Cautious comments from various housing experts are tentatively suggesting that ‘green roots’ are establishing themselves. The RICS (Royal Institution of Chartered Surveyors) was quite upbeat in its latest report on activity levels, which, they say, are definitely rising. At Abbotts we continue to share this optimism, with month on month increases in sales. First timers are being encouraged back into the market with some building society offers of 90pc mortgages – something we all thought had disappeared from the funding radar. Many will be able to secure genuine bargains on new build schemes: free carpets, white goods and legal fees are just some of the offers being made. Nevertheless, as I said only recently, replacing sold housing stock with fresh instructions could become a problem over time, as the slack is taken out of the market. It is not just private sellers who are needed, but developers to get back on their sites and push forward with small and large schemes.
This may take longer than expected because, not only were housebuilders one of the recession’s hardest hit industries, but many are now reviewing planning consents. Should they be building yet more flats when demand is for houses with gardens? Having the opportunity to review major schemes will, eventually, pay dividends in the longer term, but it will take time for new planning consents to be obtained, and to get all the specialist building trades back on site once they are ready to get going again. This year is already shaping up as the year when fewer new homes are built than at any time since the 1950’s. Compared with an average of 260,000 new homes (half of which were flats) annually before the downturn, the 75,000 which are likely to be started this year will leave a serious shortfall as demand grows. Over time, as I’ve explained before, shortages lead to price rises. And another problem: houses mean lower densities, which means that more land will be required if building levels are to return to the boom years. Like everyone else involved in property, professional estate agents like steady markets; we don’t like rapid price rises or falls, because they affect confidence. We are now entering a period where I expect prices to steady, and remain consistent for some time. This enables buyers to budget, and mortgage funders to lend without any serious concerns. For those who are renting, home ownership is better value for money. But, as with any major purchase, people should do their research, choose carefully, and buy the best they can afford within realistic financial constraints. And remember that experienced estate agents are there to advise; so listen to them. Affordability will be the name of the game for many years to come, so never over-stretch yourself. And remember to budget for maintenance and insurance because home ownership brings big responsibilities, unlike renting!
*You can contact Philip Macdonald on 01284 704815.