The freeze that is taking place in the property market has meant the market has seen its lowest number of buyers for nearly 30 years. This is despite the very favourable mortgage rates currently available. In recent years there was a significant property slump through 2008 and 2009 and the price of houses was falling significantly.
Compared with 2008, there were only 700 more first-time buyers entering the market in 2011. However, there does seem to be some positive news for the start of this year as many people are keen to buy a house before the advantage of the stamp duty break expires in March.
A report from the Royal Institution of Chartered Surveyors has read, “Despite the favourable mortgage rates, the requirements for a mortgage still means people are finding it difficult to buy their first property. There are numerous problems still in the market which also makes the issue of buying a house more complicated.”
The price of property is only falling a small amount every year but when you look at the mortgage data it seems as if the market is still in a great amount of trouble. People are generally unable to secure mortgages because the banks are demanding such high deposit rates.
Credit checks are also becoming stricter, meaning fewer people can get a favourable mortgage rate. Furthermore, the general fear about the state of the economy is making people nervous about investing in property.
Over half a million mortgages were recorded last year, which is a six percent decline on the figure for 2010. When compared with the property boom that was taking place in 2007, this is a 60 percent decline on the number of mortgages being issued every year.
The figure for 2011 is the worst that has been seen since 1974. Residential property is very different from the buy to let market which has shown that landlords are buying 20 percent more properties than they have in the past.
Mortgage figures are not a perfect reflection of what is happening in the housing market. Estimates say that around 40 percent of sales that are occurring are people who own a large home looking to downsize. This generally means that they do not require a mortgage to make the purchase. The estate agents Savills has stated that the number of cash buyers could be higher than estimated.
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