Be Cautious of the UK Housing Market

2012 has seen a rise in the UK housing market but even though the market has been resilient, you have to be cautious. In 2012, the housing prices dipped by 1% but considering the effect of the recession, the dip was only marginal.

The past few years have seen stagnation in the past few years. The reasons – low rates for mortgage and lenient lenders, increase in employment and others. As the standard of living of people has seen no downfall and has, in fact, become better, no forced sales have come to light. And while this is good news for the economy in general, the stagnation comes as a side effect to it.

Also, lenders became lenient because of the stagnant patch which is why more people could keep their homes. Also, there are no new homes and this fact has done nothing to help matters.

However, the demand for property has not seen any lessening. Since rented accommodation around London is very expensive, people prefer buying their houses. Also, given that the supply isn’t as high as the demand, this side of the real estate hasn’t been hit that badly. This is why people have been hiring the best estate agents in London for the purpose of investing in the housing market.

So, what is the prediction for 2013? According to the Bank of England, a survey of credit conditions shows that more and more lenders are offering home loans at competitive rates. Since banks are offering the lenders cheap borrowing, they are able to give the same benefit to their customers. This is the promising ‘Funding For Lending Scheme’ will obviously needed some time to work its magic results after its introduction last year. It has proven to be successful so far.

It is predicted that 2013 will be favoring borrowers as regards home loans. Consumers will find it easy to get mortgage. But for first time homebuyers, the lending conditions continue to remain tough. In fact, if you notice, they are tougher than they were before the recession because first time buyers are mostly students and are still depending on their guardians to provide for their initial security deposit.

At present, however, incomes are still not stable and most consumers are working towards repayment of the debts incurred during the recession. So, you won’t find many people willing to take more loans or be confident about it. Thus, you can see that when people start curbing their expenses, the market is hurt.

The last recession lasted from the end of 80s to the beginning of the 90s. Housing economy took one decade to bounce back. It seems that the long adjustment period will occur again. Most consumers are still recuperating from the aftershocks of the last economic cycle but the situation would hopefully be better after that. Until then it is a slow and safe approach that is recommended for all.