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A look at the housing market across north London
A look at the housing market
Reports of a housing market in crisis are rife, but it’s not all doom and gloom, especially in perennial hotspots such as London and the Home Counties.
“Whilst no one is denying that the housing market is in a tricky situation but it is important to keep it in perspective,” said Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA).
HOUSE PRICES
Despite repeated reports that house prices are plummeting, in reality, London's property market has remained surprisingly upbeat, demonstrating resilience in this first part of this year. Interest rate cuts have helped maintain the market. There are plenty of new buyers searching for property, and although some agents say that the market will do little more than tread water, other say that prices will continue to rise in hotspots such as London and the home counties.
In north London, Camden appears to be the hottest spot, with prices up 1.7 per cent. In the East, Dagenham remains a vibrant property market, largely because of its affordability, and that fact that it is commutable into central London, despite many homes there being under the stamp duty threshold.
While the mainstream property market stutters under the combined pressures of tightened lending criteria, buyer caution and seller apathy, the prime London market has put in another solid performance. Average monthly asking prices have risen 3.1 per cent, with all regions achieving positive price growth.
The most exclusive areas of prime London continue to flourish, proving that the demand from ultra-wealthy buyers remains strong in the capital’s hotspots, with annualised growth in Belgravia up 32 per cent and prices in Mayfair up 47 per cent.
Like the prime London property market, the prime country market is continuing to achieve monthly growth in asking prices, despite difficult economic conditions and a subdued mainstream market. February 2008’s rise in asking prices of 1.1 per cent constitutes the largest monthly increase since July 2007.
Indeed, the market had stuttered in recent months as the volume of property for sale accumulated to record levels, staving off any chance of significant price growth being achieved.
But since the turn of the year, the build-up of stock has started to alleviate, reducing to more traditional levels and culminating in a return to positive monthly price growth. The South East is the area where asking prices are benefiting from a more constrained supply, with monthly prices rising by 2.6 per cent. In particular, locations within the Home Counties, such as Buckinghamshire (up 4.2 per cent), Berkshire (up 4.2 per cent), Surrey (up 5.0 per cent) and Bedfordshire (up 6.1 per cent), are seeing above-average price rises.
Along with the news regarding house prices, there are other economic factors underpinning the housing market that are still strong, according to the National Association of Estate Agents’ (NAEA) Peter Bolton King.
Following the release of the recent Royal Institute of Chartered Surveyors (RICS) housing market survey, Peter Bolton King, called for steadiness amongst property market professionals and said that there is some good news.
“The positive news is that the RICS survey showed that just under a quarter of its respondents appear to have reported a rise in house prices, which shows how regionalised the picture regarding prices is, said Mr Bolton King.
“We are already aware from our own members that house prices are being affected differently throughout the country so to find such regional discrepancies comes as no surprise.
“We do need to exercise discretion in the figures, for instance the report states that the East Midlands is showing falling prices, yet the recently released Halifax house price index showed a 2.2 per cent rise in the same region. This also needs to be set against the fact that these areas have seen huge price rises over the last ten years.
“The market is battling with the credit crunch, which has undoubtedly had an effect on confidence. However, the key factors that underpin the housing market still exist – low unemployment, historically low interest rates and a pent-up demand for houses.
We can see from the figures that it is not all doom and gloom out there and we need to tread very, very carefully before making long-term judgements on the market at this current, unsettled, time,’ added Mr Bolton King.
Halifax too says that a slower housing market must be taken in context, as house prices have risen by 179 per cent over the past ten years from an average price of £70,000 in late 1997 to £195,000 today.
Sharing the NAEA’s beliefs, Halifax claims that strong fundamentals underpin the housing market and sound economic fundamentals support house prices as the economy remains in good health and employment levels stay high.
It also says that the level of employment, a key driver of housing demand, is expected to stay at a record high in 2008.
There is a degree of scaremongering around, and, in light of the credit crunch and the Northern Rock incident, some are saying that the housing market is about to collapse. However, house prices adjusted for inflation have continued to rise.
Particular sectors and regions will vary as always, but the ever over subscribed London and the Home Counties remain as hot as ever.
RICS say that they think house prices will end the year broadly unchanged but should prices start to drop, pent-up demand from first-time buyers will buoy the market.
RICS does not believe that any drop in house price will be extended. It said that as in 2005, when the property market took a breather, unless there is a sharp rise in new sales instructions to accompany the drop in new buyer enquiries, it is unlikely there will be a great fall in house prices.
MORTGAGES
Caroline Flint, the housing minister, will join forces with the chancellor, Alistair Darling, next week to step up pressure on Britain's mortgage lenders to offer existing and new borrowers a fair deal. They will tell the Council of Mortgage Lenders (CML) that buyers must be treated fairly and that people are not stretched beyond their means. The lenders will be told to ensure that principles of responsible lending for customers are upheld and applied.
Despite the availability of mortgages being questioned in light of the current market conditions, there are still a number of good deals being offered by lenders. For first time buyers, Abbey is offering a 10 per cent minimum deposit, with a 5.69 per cent variable rate for the first two years, followed by 7.84 per cent after the two years.
Halifax is offering several first time buyer choices, which includes a refund of your valuation fee, no conveyancing fee and £500 cashback. One of the mortgages they offer to first time buyers for a maximum loan to value of 97 per cent starts at 5.99 per cent, followed by the standard variable rate, which is currently 7.25 per cent.
Nationwide are offering a two year fixed mortgage with an initial rate of 6.70 per cent, followed by the base mortgage rate (BMR) which is currently 6.74 per cent. They are also offering a three year fixed mortgage starting at 5.95 per cent, followed by the BMR, which is currently 6.74 per cent.
WHAT DO THE LOCAL AGENTS THINK?
Steven Sears of Parkheath Estate Agents in West Hamstead said: “All that we are hearing in the media is that the property market is crashing.
“The greatest problem with the reporting is that they are relying on national statistics to make these sweeping statements rather than looking at each area on an individual basis to see how the property market is performing locally.
“Property always has and always will be governed by local trends and it is important for the public to talk to their local agent about the market in their area.
“We have ten offices; all of them in prime locations and prime areas. This month alone we have already agreed 21 new sales deals. Properly priced and marketed properties with realistic vendors are still selling. Last weekend we had 2 open days and had 32 people attending which resulted in both properties going under offer.
“The reality is that the ratio between buyers and sellers remains good. Experienced agents know that this is a 'normal' market, just not a 'boom' market that young agents have been used to.
“Parkheath have been through the property crash at the start of the nineties and this market is without a doubt not the same market that we experienced then.
“All that this market requires is an agent who values the property properly, who is both local and experienced,” added Mr Sears.
Andrew Hunt, Sales Manager of Kinleigh Folkard & Hayward’s Muswell Hill branch, says: “Confidence is certainly a major factor in the current sales market but over the past six months, demand for property has fallen; there can be no question that we are in a buyers market and so the pent-up demand which we saw in 2006 and 2007 is no longer there.
“There is a very gloomy perception of the market but where sellers are being realistic on the price there are sales being agreed. Pricing and presentation have never been more important when bringing a property to the sales market,” Mr Hunt went on to say.
Mark Sumray of Benham & Reeves in Highgate, says: “There are important economic factors that are underpinning the market.
“The inner London boroughs will never have more land to build upon, we only have the current housing stock that exists, therefore with an ever increasing demand for homes in the London region and in particular the areas we cover around Hampstead Heath property will always be in demand.
“Property like any other commodity will fluctuate in value in line with the economic position.
“However this latest housing "crisis" is caused more by affordability and the new prudent lending criteria of the mortgage market.
“Demand still exists from buyers looking to live in the area, speculative buyers and investors are understandable being more cautious and are looking to profit form the current situation.
“The old adage applies again, homes are "for nesting and not investing". In the long term and the last 60 years will bear testament, there is only one way for values to go and that will be up. We are an island with limited land and are still the financial hub of the world, our tax breaks for home owners, and continued demand make the UK market a better place to invest.
“So whilst the mortgage market remains tight (and yes it will have a slight effect on values) prices will be squeezed, but not too much, because even in today's climate, if something is too cheap, there is more than one buyer, market forces will then take over.
“Listen to your estate agent and ask them for a realistic price that you can sell for, if they give the correct advice your home will sell.
It maybe a little less than your neighbour achieved last year, but the one you are buying might be cheaper too.,” Mr Sumray added.
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