…you might just sell it (if you live in London).
That’s because our capitol is being touted as the first area in Europe to recover from the slump in the housing market. And what a slump, London house prices in March were 14% lower than a year previous but a recent rise of 3 – 4% has prompted analysts to speculate about the presence of green property market-related shoots.
Great news if you own a property in the UK; house prices rose 0.6% in June.
Excited?
Trying to sell your house can be a trying experience
Ok, so it’s not earth-shattering news and 2-year projections show that prices are likely to continue to fall with a full recovery in the housing market unlikely before 2011. Home-owner in Wales are some of the hardest hit with average house prices in rising just 0.5% in July to £169,109 which is still 6.1% down on July 2008.
The Welsh also experienced the most severe price drops in the UK at more than 4% and if you’re trying to sell your house, it doesn’t end there. There’s still a chance that house prices could fall in the second half of the year as well if mortgage lending remains tight, repossessions hit the market and unemployment continues to rise.
The 2011 recovery projections have been put together by the University of Glamorgans, Dr Stuart Paris, who has developed a model that can predict changes in the housing market. The model uses variables including:
- Unemployment levels
- The ratio between house prices
- Average earnings
- Bank of England base rate
- Inflation
- Relationship to average earnings
…to predict the direction of the future housing market. Scary.
Anyone looking for a fast house sale could be waiting a long time yet if the latest research by PricewaterhouseCoopers LLP is anything to go by. Despite the 2.6% increase in house prices in May, they reckon prices will continue to fall into 2010.
To get the full low-down on the survey, have a read of this article.
The Bank Of England’s property expert Professor David Miles has gone on record saying he thinks there’s hope for the UK housing market. His comments come amid the appearance of the smallest of small green shoots even thought the economy remains weak.
Professor Miles said: “Expectations are crucial in the housing market and they look a bit better now than a few months ago. My hunch is that we have seen most of the overall aggregate house price falls.”
But to make sure he didn’t get anyone’s hope up, in the same breath he warned that the housing market will only see very minor growth in the coming years due to the severity of the mess we’re in. Which means if you were hoping to sell your house fast on the open market, you may be waiting quite a while still.
To start us off, here are 3 things you already know:
- we’re still in a recession
- home-buyers are hard to come by
- the number of repossessions is up 50% on the first quarter of 2008 with 12,800 recorded in the 3 months of 2009
But here’s one for you… do you know the value of the most expensive property to be repossessed in the UK?
Go on, have a guess.
£2m? £3m? £5m?
nope, the most expensive house to be repossessed in the UK was a £20mil mayfair mansion which was taken from businessman Cevdet Caner. He’d obviously not heard of the sell and rent back house option offered by professional house buyers!
Ironically enough, Caner actually made his fortune in the buy to let market boom but following the collapse of his company in the recession; his £20m home was seized and he was evicted.
Court-appointed bailiffs officially took posession of the six-storey luxury flat in London’s exclusive Mayfair district and the house is to be put on the market together with a £20 million price tag. It all started in December last year, when administrators were appointed to sort out debts of £1.2bn that Caner owed various creditors. He fought the sale and eviction of his house, claiming that he had tried to repay the mortgage but had been stopped by his mortgage lender.
The loss doesn’t get any easier for Mr Caner to swallow when you look at what he spent on the property. He bought it in July 2007 for £16m and spent £6m refurbishing it, which can only make him now wish he’d decided to sell and rent back the property so he could enjoy the work and money he’d put in to it.
Inline with their policy of pumping shed loads of cash into the economy and crossing their fingers, The Bank of England committee voted to keep the base rate at 0.5% yesterday. Great news if you can afford to pay your mortgage I suppose but not much help for those that can’t.
Talking of which, Halifax announced the results of their most recent House Prices survey yesterday which showed the average UK house price in the three months to May was still 3.1 per cent lower than the figure for the previous 12 weeks, not good news if you were hoping to sell house fast and release your cash.
Howard Archer, chief UK and European economist at IHS Global Insight, commented: “There’s sharply higher and rising unemployment, very low wage growth and an unwillingness of many people to commit to buying a house.” This doesn’t make great reading for those who are hoping to sell house fast to pay off debts or avoid repossession and with few buyers confident enough to buy and few banks confident enough to lend, the housing market slump could still be way off it’s lowest point.