Fasten your seatbelts for a bumpy housing market ride
Getting a foot on the housing ladder is still clearly an aspiration for most would-be home owners and the situation isn’t likely to get much easier any time soon.
Back in June after the new coalition government had been elected housing minister Grant Shapps delivered his first major speech to the House of Commons in which he heralded the beginning of a new age of aspiration.
He told a packed House that the government “will work every day to help people achieve their aspirations to own their own home. You will not be ignored. The age of aspiration is back.”
Shapps may well have been setting out how he’d like the new world order in the UK to be but how hollow those words seem now.
The harsh reality is that many would-be homeowners are struggling and will continue to struggle to get on the housing ladder.
Mortgage deals are available but lenders are being stricter than ever before when it comes to deciding who they should lend to. More often than not and the slightest blip on your credit score – so maybe a missed credit card payment or a missed utility bill payment – and you’ll find yourself consigned to the reject bin.
Then there’s the size of the deposit to consider. Many of the best mortgage deals are still available at less than 80% loan to value but it’s becoming increasingly harder to save.
More than four out of ten adults in Britain struggle each month to make it to ‘payday’ – with the average starting the struggle 20 days after each payday, figures from insolvency trade body R3 show.
With rising inflation likely to increase living costs and the looming spectre of major interest rises on the way the struggle isn’t likely to get any easier.
But for those having a tough time getting onto the housing ladder spare a thought for those stuck on it.
Should the dreaded double dip ever happen the likely result on the housing market would result in a tidal wave of reluctant landlords coming onto the market.
More Th>an Business reckons that another housing market slump would lead to around 10% of British homeowners – around 1.75 million homes – would have no other choice but to let out their property and downsize. Meanwhile a whopping 34% say it would be something that they would consider.
The main reasons would-be reluctant landlords give for wanting to hold onto their property are to wait until the market recovers (44%); long-term financial security (33%); to pay off existing debts (27%) and to escape negative equity (20%).
Of course, the chances of a double dip are still pretty slim, but that really depends on which expert you speak to. As with house prices experts on the subject have varying degrees of accuracy and all seem to say a different thing.
One group of experts all eyes will be focused on this week will be the Bank of England’s Monetary Policy Committee when the minutes of its last meeting are published.
Since June MPC member Andrew Sentence has voted for a rise in rates and if that group of experts can’t agree on what’s best for the country and are still at odds over how best to tackle the financial crisis then you do have to start to wonder who really is steering the ship; and indeed whether they should be.
There’s not much to be sure about at the moment but one thing that is certain is that there’ll be more bumpy rides to come. Keep those seatbelts fastened-up!