The last couple of years have been turbulent times for the housing market. This is not a problem confined to the UK, as property prices have crumbled the whole world over. The credit crunch has closed its jaws, reducing access to lending and increasing global unemployment. Repossessions and negative equity have rocked the stagnant waters of the housing market.

More recent signs are pointing towards a tentative recovery. Is this the light at the end of the tunnel? This article examines the state of the UK housing market in Q4 2009.

The volume of property sales has been incredibly low over the last two years. Buyers have been unsure of their own job security throughout the recession and banks have restricted access to lending.

The Council of Mortgage Lenders reports that year on year gross mortgage lending was down in October 2009. But there is a mixed story behind this headline. New mortgages have increased as more buyers come into the market, but remortgage volumes have been in sharp decline. Many existing borrowers struggle to remortgage due to a lack of equity with their property’s declining value.

In response to the housing market struggles, the government has suspended Stamp Duty on homes under £175,000. This has meant savings for many first time buyers and provided them with an incentive to jump on to the property ladder. This Stamp Duty holiday is due to end at the end of the year, and it remains to be seen whether its return will have a negative impact on the market. Experts suggest that the holiday should continue in order to encourage more first time buyers into the housing market.

Low interest rates, Stamp Duty relaxation and a dearth of property on the supply side have lifted prices. Property website Rightmove reports that property asking prices have indeed been rising. They report that the average asking price for homes in England and Wales is now 1.6% higher in November 2009 than it was at this time last year.

The British Bankers’ Association report that mortgage approvals have hit a two year high. October 2009 saw nearly twice as many approvals as October 2008. Buyer confidence is returning.

These are positive signs that the UK housing market is beginning to buck the downward trend. The recovery remains weak, however, as it has not avoided the seasonal winter house price fall. Analysts expect that this seasonal slump will continue to erode asking prices over the coming months and we will be seeing the gradual recovery continue in the spring.

Property
uk housing market, uk property