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Homes buyers showing interest - but slow lending stalls the market

By Western Morning News  |  Posted: November 13, 2012

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The Westcountry housing market is on course to bounce-back after new figures revealed the biggest surge of would-be buyers in more than a year.

According to the Royal Institution of Chartered Surveyors (RICS), buyer demand rose last month at its fastest rate since summer 2011.

RICS says the period also saw more properties coming to the market and believes purchasers across the region are looking to test the pre-Christmas market.

Andy Goundry, a partner at Truro-based Goundry Pearce and fellow of the National Association of Estate Agents, said there had certainly been a pick up.

"October and November have seen an improvement in the market," he said. "This is good because November is the time we would generally be expecting things to slow down a little.

"But there is more coming to the market, the number of buyer enquiries have definitely increased and the volume of sales have increased."

However, Mr Goundry sounded a note of caution, adding that while most in the industry would agree with the RICS's assessment, an increase "from a very low base" still "wasn't a huge amount".

He added that the outlook for the new year was dependant on external factors, like the economy improving and lenders freeing up money for first-time buyers.

"I think it is definitely an improving picture, but I think we are in for a pretty difficult first quarter," he said.

"Lending is the big issue. First-time buyers are as rare as hen's teeth. Lending is still the key factor for many people.

"I have clients who would not be offered the mortgage that they have now, therefore they are locked in to their current property.

"This is something that really needs to change."

According to the RICS, whose members conduct the surveys vital as part of any house purchase, October witnessed a considerable rebound in new buyer enquiries with a net balance of 21% more respondents reporting rises.

The institute says the optimism shown in recent months may slowly be translating into an upturn in activity.

Alongside this, RICS said the number of homes coming onto the region's market also rose.

Last month, 15% more respondents reported rises rather than falls in the number of vendors placing their properties on the market, up from 2%. RICS researchers also said house prices across the UK were generally continuing to stabilise, although a balance of 7% more surveyors reported drops than those who saw rises.

The organisation said house prices in the South West have now been in negative territory since June 2010.

Steve Allen, manager at Bradleys estate agents in Plymstock, said their local experience was in line with the RICS survey but only up to houses priced at £250,000 – the point at which stamp duty paid to the Government leaps from 1% to 2.5%.

He was however cautiously optimistic about the prospect for the new year.

"I am quietly hopeful it will be a bit better," said Mr Allen.

"I don't think that we are out of the proverbial woods yet and I think there is a cautious element to the market.

"Prices are very sensitive and buyers want value for money. It's all linked to the economy and if the economic climate is more rosy the housing market will naturally follow."

Ian Perry, the RICS housing spokesman, said nearly a quarter of surveyors in the region were predicting continuing rises over the next three months.

He added that Government backed schemes to boost lending were a positive sign but added more needed to be done to help first time buyers.

"The number of potential buyers going out and viewing property saw a welcome boost last month.

"It seems that with Christmas around the corner, those who are in a position to buy decided to get out there and see what is available.

"That being said, overall activity is still very low in most parts of the country and what the market desperately needs is for this to translate into actual sales."

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  • SmartyC  |  November 13 2012, 3:27PM

    *****"I have clients who would not be offered the mortgage that they have now, therefore they are locked in to their current property. "This is something that really needs to change."***** What really needed to change was the policy of lending ludicrous amounts to people that hadn't a hope of paying it back. That's what drove prices to untenable levels and banks to a position of needing to be bailed out by the tax payers. So actually what needs to change (and is), is not a return to irresponsible lending, but a drop in property values to genuinely affordable levels. In the last crash (early nineties) prices dropped by about 30%. This boom was much much bigger. Judge for yourself therefore whether the 10-15% drops so far are as far as they'll fall, or whether there is much more to come yet...

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