Walking up and down our high street this week, I was a bit taken aback to witness a hive of activity in our local estate agents. For months there have been only one or two agents sitting miserably in their offices, with little to do but twiddle their thumbs. And it may be my imagination, but offices previously staffed with at least four or five agents, seem to have cut back to two or three.
But as I strolled past, the agents were either busy on the phone or deep in conversation with customers who looked like they meant business, while outside potential buyers stood glued to property details in the window.
My curiosity piqued, I entered the lion’s den and questioned an agent about how the local market was doing. “We’re having a fantastic week,” he said, beaming at me. “December was dire but we’ve sold lots of properties since then.”
I was wary of his patter but it confirmed my other recent observation – that a handful of local properties languishing on the market for over six months have apparently sold this month.
So what’s changed besides spring being in the air and a sudden desire to tramp about other people’s houses? Mr Estate Agent admits the increased activity in our town is unusual, but reckons it’s a handful of factors – the ‘3 Ds’, as he calls them: death, divorce and debt forcing people to sell. Sadly, of course, repossessions doubled in the third quarter of 2008. But there are also other factors, he says – the realisation among buyers moving up the ladder that bargains may be had and, he claims, some investors are switching bank cash into property, with some buying up to eight properties at once.
If this is true, at least in our area, I find it astonishing, considering how dire the UK housing market appears to be. But then again, many retired people I know are cursing the Bank of England’s decision to slash interest rates as they are missing out on hundreds of pounds of interest each month on their savings. Normally happy-go-lucky baby boomers I know, who enjoy eating out several times a week and splashing out on new clothes, are turning frugal and cutting back because they have a hole in their budget. So moving cash into property and securing an income from rent may be one way to claw money back, however risky it might seem.
But it’s still a different story for first time buyers. Despite the news about Northern Rock returning to the mortgage market and considering lending 90 per cent loan to value, mortgages are still hard to come by. Lenders are demanding deposits of 15 per cent, while Gordon Brown is trying to pull the plug once and for all on 100 per cent mortgages. On the bright side, if there is one, stamp duty is suspended on properties worth up to £175,000 (until 2 September 2009) and many developers are offering breaks, such as lending buyers the deposit. Similarly some private sellers are offering part exchange, paying the stamp duty for buyers or even ‘subsidies’ towards future mortgage payments.
However, even if you’ve secured a mortgage, and hope to snap up your dream house for a song, is now the right time to do so? Many of us still fear redundancy – three people I know lost their jobs this month – and are trying to keep costs down rather than increase mortgage payments. And if you’re selling, will you get a decent price? Then again, perhaps as a seller you may be looking to release equity in your home, downsize to a smaller property, or ultimately if you’re struggling with debt, you may have no choice but to sell. What do you think? I’d be interested to hear your thoughts.
Are you buying or tempted to buy or sell a property now? What is the market like in your area? Are you moving your cash into property or have you been forced to sell? Leave a comment and let me know.
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