Since the start of the year, many people have been pointing to a recovery in the housing market, green shoots of recovery etc and generally talking up Britain’s impending exit from recession. However most of the noise relating to property purchase, seems to have come from people with a vested interest in the property market taking off again who themselves must have been pleasantly surprised by prices starting to move north last summer. However in February, the increases of the last 7 months came to an abrupt halt. Is this a sign that the little mini rally the property market experienced has run out of steam? In fact many economists were surprised when the market started to recover last year as it was not expected to do so and predictions for the following 12 months are pretty flat and gloomy as well. Many still believe that house prices are still on the high side and we will have further drops to look forward to. U.K. lender Halifax, who are part of the Lloyds Banking Group of companies, have reported that house prices fell 1.5% in February from January and rose a lower-than-expected 4.5% in annual terms. Gains of 0.60% were made in January. Halifax attributed the fall to a combination of one-off factors such as cold weather, snow restricting movements, ( many people were unable to get out and about to view property). The re-imposition of stamp duty on lowest-priced properties, with a rise in the number of new properties on the market also has made the situation worse.
Home owners are still finding moving home to be particularly challenging, mortgages are still fairly difficult to come by and lenders have severely tightened up their lending criteria. Confidence amongst buyers remains low, no one wants to purchase property and see it decline in value further particularly when realistically the only way for interest rates is up. Moving home at the moment may be the preserve of the brave and those needing to move out of necessity. The Bank of England’s January mortgage approvals data, which registered a second straight monthly slowdown, add to the evidence there were fewer would-be buyers in the market at the turn of the year, it is also thought that many would be purchasers are holding on until the result of the general election is known.
