Ian Bythell, Director at Petty’s looks candidly at the past year and comments on the ever-changing horizon affecting the property market.
Without doubt as we look back over the past year it is clear it has been somewhat of a rollercoaster ride for the property market. Negative media reports portrayed uncertainty and diminished confidence in the sector but if properties were priced realistically, sales were still being achieved which was somewhat overshadowed.
Trends and statistics still showed that there is a shortage of first time buyers therefore the rental market took a more prominent role with increasing demand. The confirmed plans to reinstate the Todmorden Curve has certainly boosted morale and reinvigorated interest in the region and without doubt this is set to attract further investment in the area providing an ideal time for investors to increase their portfolio or indeed step onto the landlord ladder for the first time.
Earlier this year the mortgage market hit rock bottom but there are signs of recovery showing. With confidence building in the sector and more independent lenders entering the marketplace there is set to be more choice for consumers in 2012 with some of the bigger players losing their monopoly and having to up their game.
With the tightening of the mortgage market, it is an interesting time for investors who are benefiting from paying lower deposits for the same return. Residential property prices are low and there is a buy to let wave across the country. With buy to let mortgages attractive, investment in property should be considered a possible pension fund in their own right. With a national housing shortage coupled with the fact that we have an island economy, bricks and mortar are sound investments.
The problems in the mortgage market are really at ground level where the restraints being put on lenders are hindering first time buyers unable to step onto the first rung of the ladder. With the changes coming into place to stamp duty and land tax in March 2012 when the current benefits will cease is not welcome news but with some residential properties currently on the market at affordable prices, now is the time to buy if you can get the finances approved.
The most recent announcement to impact the market is the mortgage indemnity scheme for new-builds announced by the Coalition. Under the scheme, lenders will advance up to 95% loan to value on new build property for first time and first move buyers, but will also pay 3.5% of the value of the property into a ‘kitty’. This indemnity fund will pay out to the lender if a property financed under the scheme is repossessed and there is a shortfall. If the shortfall is more than 3.5% taxpayers will pay the balance, up to a total of 9% of the value.
Whilst this is taking steps in the right direction to help those first time buyers, this is only applicable to the new build homes and I would be keen to see this extending to second hand properties to release the property chains. Only time will tell if this will help more people become home owners but as we are seeing positive movement in the property arena in conjunction with the plans to reopen the Todmorden Curve, we are certainly moving into the New Year with buoyancy and positivity.