Is the UK housing market in 2011 a cause for optimism?
The UK housing market in 2011 is a real mixed bag with just as many positive news reports and research figures abounding as negative. Since the recession started and job losses began to take their toll, the housing market has been subject to almost constant scrutiny with every bank, building society, estate agent and financial pundits voicing their opinion and expounding their predictions.
With so many conflicting reports it’s almost impossible for the casual observer or would be first time homeowner or buy to let landlord to get an accurate picture of the UK housing market in 2011.
The Good
1. The Return of 95% Mortgages
All but disappeared at the height of the economic downturn, the 95% mortgage is slowly making a return to the high street with a number of lenders cautiously extending a glimmer of hope to those with only a 5% deposit. Out of the 10,000 plus mortgage products on offer, only 32 of them are given with a 95% Loan to Value (LTV) but this is still significantly higher than the six that were on offer in June 2009, according to The Guardian Newspaper.
2. The Increase In Mortgage Products
Although much has been made of the fact that it’s now more difficult to get a mortgage – particularly for those who are buying a house for the first time – there are actually now more mortgage products to choose from than at any other time since 2008. This increase in types of mortgages available can only be good news for the state of the UK housing market in 2011 as it points to increased competition and a wider range of choices for those looking to take out a home loan.
3. Lower Interest Rates
The website Moneyfacts has reported that interest rates on new mortgage deals have fallen to their lowest rates in 23 years – a fact that more than any other suggests the UK housing market in 2011 can be a more favourable landscape than it has been made out to be. According to Moneyfacts the drop is interest rates has been seen across all types of mortgages, from 95% mortgages down to 80% mortgages.
4. The Buy To Let Market Has Been Reborn
Swept aside at one point, a number of banks and building societies are welcoming the buy to let applicant back into the fold with more mortgage products and more mortgage approvals for those buying a home with the sole purpose of renting it out. The resurgence of buy to let in the UK housing market in 2011 is a positive for those able to take advantage of lower house prices and real estate bargains, as well as those looking to start a new career as a property landlord.
The Bad
1. The North South Divide Has Increased
While prices have dropped across almost all of the country, there is still one place on the British Isles where the average house price rises month on month – London. While figures relating to house sales from The Land Registry in July showed an average of an 8.8% decline in house prices in the North, house prices in London were rising by 1.9% monthly. Prices in the capital continue to flourish and homes in and around London’s commuter belt tend to spend less time on the market than those for sale further North.
2. House Deposits Have Increased Substantially
While the UK housing market in 2011 can boast that it has borne witness to the return of 95% mortgages – something unthinkable in 2009 – this disguises the massive increase in the average deposit required. Data from First Direct reveals a tenfold increase in the amount of deposit required over the last two decades and now stands at a massive £65,000.
3. Rental Property Has Increased In Value
Property rental is a hallmark of the 2011 UK housing market with the majority of non-homeowners believing they’ll never be able to buy a home, according to the ‘Generation Rent’ report. Those in this position and saving for a deposit will find it harder than ever as a survey of 18,000 rental properties conducted this summer by a national letting agent has revealed a record rise in rent. This increase has left many struggling to pay their monthly lease, without considering other bills and the desire to save money for a house deposit.
