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Fasten your seatbelts for a bumpy housing market ride

Sep 24, 2010

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!

9 Responses to “Fasten your seatbelts for a bumpy housing market ride”

  1. Eileen Says:
    Nov 30, 2010 at 2:57 pm

    Andrew I think you need a reality check, Do you think it is such a great thing to over inflate the housing market? I truly believe that a house is a home not something to speculate on. Second home owner should be tax highly on making money out of making the lives of some families a misery by never been able to own their own homes. This is what the goverment needs to prioritise. Not the selfish Fat Cats!!!! There are too many greedy people in this country making money for nothing!!!!!!

  2. Eileen Says:
    Nov 30, 2010 at 3:07 pm

    Andrew Do you think it is a good thing to over inflate house prices? It is people like you that make me angry. The reality is a house should be a home not something that people can sit back and make money out of families, not been able to buy there own homes. The government need to Highly Tax these people and allow more people to be home owners. Too many greedy people in this country!!!! Why dont you buy some more houses please if thats what keeps you happy?

  3. UK Property News - 25/09/2010 Says:
    Sep 25, 2010 at 1:24 pm

    [...] Fasten your seatbelts for a bumpy housing market ride – FULL STORY [...]

  4. Chris Says:
    Sep 27, 2010 at 9:15 am

    Is this an article? Or is it just an opinion by someone? I think the latter… Title says get ready for bumpy ride, I dont quite understand this? The article does not really say anything?

  5. Graham Halsey Says:
    Sep 27, 2010 at 9:29 am


    You can add another scenario to the list: took me 2 years to sell my 1 bed flat, now in rented and find that the deals that got me on to and kept me on the property ladder no longer exist. Yet the rent I pay is a third more than the mortgage premiums I was paying! My deposit + increase in equity from my house sale is no longer enough and deposit rates are so poor there isn’t even any interest to help me out.

    “I’m a first time buyer after 10 years of ownership” – a title for a future article?


  6. Dan Says:
    Sep 27, 2010 at 2:30 pm

    “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.””

    Yes, lets re-inflate the housing bubble that lead us to the brink of financial armaggedon all in the name of “aspirations”

    Here’s another idea, stop ****ing about with the free market and let it fall to a level where people don’t have to sink under the weight of the debt – in the name of having a place to call your own (even though, it’s really the banks until you pay off the mortgage, if you EVER pay it off!)

  7. Dave Says:
    Sep 27, 2010 at 4:19 pm

    Lets just face it ,house prices are overinflated , who is to blame for this ,well who decided that a certain house that cost say £20k in 1970 is now worth £200k !! why ? its 40 years older !! when you buy a car does it go up in value ,Ok prices for house’s should rise by not by the rates they have done over the last 30 years .
    We need to start getting real over house prices and stop paying the over inflated non realistic prices of todays market.

  8. Andrew Says:
    Sep 27, 2010 at 6:04 pm

    Dave, Get with it man, in 1970 you could buy a new car for £100!! It’s all relative.
    House prices will continue to rise, they always do. Unfortunatly they go up and down, but if you strike a line through the graph they always rise.
    If i had a load of money spare I would be snapping up property left right and centre. They are not going to drop any less and theres some real bargains to be had.
    I know at least 10 people that are desperate to move but are hanging on because of all the media dulldrums, wait unitil the media start reporting that wages are now increasing and things are not as bad as they thought : ) Happy days, up starts the good feeling factor and boom goes the house prices!! They double on average every 7 years, based on that in 2025 the average house price will be 1 million, yes that’s right 1 million, you may not believe this but that’s only 10 years away, and to get from the average house price of £175,000 now they gotta a lot of catching up to do.
    We all just got to wait for that depressing cloud to lift, people feel good about themselves and bang the rocket recovery will begin : )

  9. Nick Says:
    Oct 11, 2010 at 2:45 pm

    Andrew, get with it man. 2025 is not 10 years away.

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