The Housing Market

 

Purchase price negotiation

Whether you're going for a multi million pound property or one costing a whole lot less, every penny counts. And that's where negotiating comes in.

The negotiation process is pretty intimidating for most people. Often, people haven't done the research, so they don't know what figure to pitch at. They don't know whether to go in at the asking price, above the asking price, or below the asking price.

'When you're thinking about offering on a property, you have to think about the value and where you're going to place your offer. A lot of people like a bargain, and feel as though they can offer way under the asking price. But you do have to be careful, because some people find that offensive. If it doesn't have the right effect, they won't take you seriously and they often won't look at your offer any further.

'When you are offering, the best way to make your offer as solid as possible is to put it in writing. Then you can lay out, in the form of a letter, why you are making the offer, why you are a good buyer, and the reason you're making this particular offer at this level.

'It's often good to think about the vendor and what's going to appeal to them. What timescales are they looking at? Would they answer to having a deposit put down to secure the property and take it off the market? Are they looking for a quick exchange and a long completion? There are quite a lot of factors to think about and it's useful to make your offer more attractive to the vendor.

'The golden rule, really, is to keep as level headed as possible and, if you've done your research, keep to those figures and don't get too excited.

 

The Current Housing Market

House prices have risen in January for the first time in months, but is it a short term bounce or is the housing market beginning to recover?

Is The Market Recovering?

2009 is looking like it will see the bottom of the housing market in the UK. Analysts forecast house prices will drop around 10 to 15% in 2009 alone, which would indicate a peak to trough decline of 25 to 30%. The RICS said it expected the average cost of a home to drop by at least 25% from its peak in October 2007 to the lowest point.

Peter Bolton King, Chief Executive of NAEA, said: '2009 is likely to be the year the recovery begins and the fall in house prices will begin to bottom out. Officially, house prices have come down since their peak by around 13% but speaking to agents it seems clear that in some areas at least prices have come down by more than 20%.'

'We haven't seen that kind of fall, in such a short period of time, ever before. However it is also clear that parts of the market are perhaps beginning to bottom out, and it seems possible to me that once the recovery begins, we could see a bounce as pronounced as the fall.'

Hot on the heels of this prediction, prices rose in January 2009 by a robust 1.9%. However, according to Halifax, prices in the three months to January were 5.1% lower than the previous three month period. Commenting on the report's findings, Martin Ellis, housing economist at Halifax, said: 'It is always important not to place too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first 10 months in 1990 even though the overall trend in prices was downwards. There are some very early signs that market activity may be stabilising, albeit at quite a low level. Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the housing market.'

What's The Latest With Interest Rates?

In particular predicting Bank of England interest rates is a perilous exercise. No one, or almost no one, saw the 1.5% rate drop of November 2008 coming. And few people called the new record low rate of 1.5%, announced on 8 January 2009, followed by the further 0.5% drop in the first week of February.

Neil Young, CEO of property portfolio managers, Young Group, commenting at the time of the historic interest rate drop to 1.5%, believes that with rates so low, and with little scope to fall further, lenders now have more certainty.

He said: 'In a recent poll 69% of respondents expect the Bank of England base rate to be at or below the current level of 2.0% at the end of 2009, and most predict it to stand at 1.0% at that time.'

Stuart Law, Chief Executive of Assetz, said: 'I believe rates could reach 0% by the summer, although borrowers should not expect their mortgage rates to go close to this level. As base rates tend towards zero, banks will be determined to build in higher profit margins than they have in the past.'

Thursday 5th March 2009

UK interest rates lowered to 0.5%

The Bank of England has cut interest rates to 0.5% - a fresh all-time low - and says it will now boost the money supply to help revive the economy. Interest rates have now been reduced six times since October, and the latest half a percentage point cut from February's 1% had been expected. The Bank said it would expand the amount of money in the system by £75bn in an attempt to boost bank lending. This policy, so far untried in the UK, is called quantitative easing.