Residential Property Loan Agreements Higher or Lower over Last Month?
Tuesday, August 25th, 2009 Subscribe To Our Feed
Some slightly contradictory signals emerge from the mortgage lending statistics this week casting doubt on the trend in house prices and the prospect of owners achieving quick sales on their properties. On the one hand the number of mortgages granted improved again to 45,000, but the actual money lent showed a small decline.
The explanation would appear to be that the down payment required by lenders, many requiring 25%, together with the recent declines in house prices has caused a reduction in volume regardless of an increase in transaction numbers. If this is the case then the recent improved confidence about the bottoming out of house prices does seem justified.
One additional explanation could be what might be called the “bargain buyer” effect. Once there is a general acceptance that property values have reached the lowest point, buyers are tempted back into the market to make a sound investment. Some of these may be investors or cash buyers who have no need of a mortgage. In other words there may be a decent number of sales which simply are not included in the mortgage approvals figures. These buyers will of course try to cash in on those wanting or needing to Sell Property Fast.
Those seeking the bargains will by nature seek out the best priced property in given areas, looking more for value for money than appeal. They will also barter with sellers to secure the best possible price. The effect of this is that many of the cheapest properties will be taken out of the market potentially in a very short space of time and buyers making a decision to buy in a few months time may be faced with a shortage of very cheap properties. That would be the time I’d decide on if I wanted to Sell my Property fast.
The likely consequence is that in a few months time the amount of available properties consists of more of the stubborn sellers, those who decided not to reduce selling prices to precipitate a sale but who rather stuck to their price and decided to wait out the market issues.
This may become visible in a short term upward spike in property prices followed by the much favoured gradual increase in line with inflation.
In any event the figures do now seem to point clearly in the direction of a stabilised housing market. The feeling is that those looking for a bargain will now have to get in quickly and complete a Quick House Sale before a price recovery gets going in earnest. Sellers will also begin to be bullish about the probability of achieving good asking prices and will be liable to turn away very low offers.
As with any business, prices are determined by supply and demand. As these levels settle there can now be said to be clear signs that the price falls are at an end and that the market has at least stabilised.
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