Fundamentals remain strong as experts hold out hope for housing
The British housing sector has been the subject of several gloomy headlines recently - with many analysts reportedly predicting a price crash for property this year. What's more, much recent research seems to back this point of view up. The International Monetary Fund has said that property in the UK is "overvalued" by around 30 per cent - and notes picked up by photographers belonging to housing minister Caroline Flint just yesterday have appeared to predict a "best case scenario" of a ten per cent fall by the end of the year.
This situation has been universally blamed on the credit crunch - the global financial crisis that has seen many mortgages and mortgages for professionals lenders having a hard time raising revenue on the money markets. These balance sheet concerns have translated into many mortgage products being withdrawn and lending criteria being tightened - a process that has shut out many potential buyers.
With this in mind, it is perhaps understandable that many homeowners and buyers, including those looking to take out mortgages for professionals, are feeling pessimistic about the overall outlook for housing. However, within the last week there have been striking signs that, far from seeing a disastrous crash plunging millions into negative equity, the property market is set to bear up well in the UK over the months and years to come.
A survey from the Royal Institution of Chartered Surveyors (Rics), for example, has picked up much media attention this week - with most reports choosing to highlight the study's finding that more of its members than ever before have seen house price falls rather than rises over the past month.
Casual readers of these stories might be forgiven for thinking that the Rics report painted an utterly gloomy portrait of the sector's prospects. Nevertheless, careful reading of the study reveals quite a different picture. While 95 per cent of surveyors did indeed register price drops for April, it was noted that the actual price value of these falls remained small. "Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest," Ian Parry at Rics noted. Moreover, the report also noted that the "tight supply" of housing was preventing larger declines - a factor which leaves demand in the sector high.
Further chinks of light were also uncovered at a recent debate on the future of the property market held at Manchester's G.Mex centre, which gathered together several industry experts. In a surprisingly upbeat discussion, several speakers took care to draw attention to the strong fundamentals of the market - which see British consumers continuing to enjoy low interest rates and low levels of unemployment.
Alastair Dickens, managing director of ISIS, said that the underlying economic conditions of the sector were "still pretty good". He added: "People still need somewhere to live. We all have to re-adjust to what we had previously was a very easy and benign financial market." Agreeing, Paul Nielsen at Yorkshire Bank said: "There is still going to be a strong element of demand in the UK, we're an island with limited space and there are still going to be more and more people looking to buy their own properties."
In a nod towards the buy-to-let market, one of the sectors that has been the target of many gloomy headlines, he added: "There are a number of people who are unable to get on the property ladder and as a result they are going to look to rent property and so consequently there's going to be continued investor demand as well."
This situation has been universally blamed on the credit crunch - the global financial crisis that has seen many mortgages and mortgages for professionals lenders having a hard time raising revenue on the money markets. These balance sheet concerns have translated into many mortgage products being withdrawn and lending criteria being tightened - a process that has shut out many potential buyers.
With this in mind, it is perhaps understandable that many homeowners and buyers, including those looking to take out mortgages for professionals, are feeling pessimistic about the overall outlook for housing. However, within the last week there have been striking signs that, far from seeing a disastrous crash plunging millions into negative equity, the property market is set to bear up well in the UK over the months and years to come.
A survey from the Royal Institution of Chartered Surveyors (Rics), for example, has picked up much media attention this week - with most reports choosing to highlight the study's finding that more of its members than ever before have seen house price falls rather than rises over the past month.
Casual readers of these stories might be forgiven for thinking that the Rics report painted an utterly gloomy portrait of the sector's prospects. Nevertheless, careful reading of the study reveals quite a different picture. While 95 per cent of surveyors did indeed register price drops for April, it was noted that the actual price value of these falls remained small. "Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest," Ian Parry at Rics noted. Moreover, the report also noted that the "tight supply" of housing was preventing larger declines - a factor which leaves demand in the sector high.
Further chinks of light were also uncovered at a recent debate on the future of the property market held at Manchester's G.Mex centre, which gathered together several industry experts. In a surprisingly upbeat discussion, several speakers took care to draw attention to the strong fundamentals of the market - which see British consumers continuing to enjoy low interest rates and low levels of unemployment.
Alastair Dickens, managing director of ISIS, said that the underlying economic conditions of the sector were "still pretty good". He added: "People still need somewhere to live. We all have to re-adjust to what we had previously was a very easy and benign financial market." Agreeing, Paul Nielsen at Yorkshire Bank said: "There is still going to be a strong element of demand in the UK, we're an island with limited space and there are still going to be more and more people looking to buy their own properties."
In a nod towards the buy-to-let market, one of the sectors that has been the target of many gloomy headlines, he added: "There are a number of people who are unable to get on the property ladder and as a result they are going to look to rent property and so consequently there's going to be continued investor demand as well."
