Estate agents predict sales increase thanks to cheap loans and foreign buyers

A spring bounce is being predicted for the housing market against the background of a glut of cheap home loans and a boom in demand from foreign buyers.

Banks have cut mortgage rates in recent weeks, with some two year fixed rate deals at just 1.99 per cent, on the back of the Bank of England’s Funding for Lending Scheme.

The Bank is allowing finance giants to borrow up to £60billion at a low interest rate on the proviso it is loaned to home buyers and businesses.

Separately, buyers from the Far East, Europe and India are racing to buy new-build properties worth hundreds of millions of pounds in London.

Some £600million worth of homes, which are to be built on the Battersea power station site, have just been snapped up within four days.

Prices ranged from £343,000 for a studio to £6million for a luxury penthouse, while the chief executive of the Battersea Power Station Development Company, Rob Tincknell(correct), said: ‘It’s been like the start of the Harrods sale.

‘We had people queuing from 6.30am on Thursday and the London allocation sold out in days.’
A team of the developments’ agents are now moving on to Singapore to sell the final 200 properties of the 800 to be built on the site.

The positive signals were echoed by the chief executive of the house builder Taylor Wimpey, Pete Redfern, who said: ‘Two weeks into 2013, consumer sentiment towards the housing market is more positive than we have seen in recent times.’

A report published today by estate agent members of the Royal Institution of Chartered Surveyors (RICS) argues the housing market is ‘over the very worst’.

It said 24 per cent more agents are predicting that property sales will increase rather than decrease over the next three months.

RICS said prices held steady in December, and a net balance of 12per cent of agents reported increases in new buyer inquiries rather than falls.

The group said that its findings add weight to previous forecasts that prices will rise by 2per cent during 2013 and provides evidence that the market has started to ‘bottom out’.

However, it pointed to a gaping market divide between London and the rest of the country.
Strong demand from overseas buyers meant the capital continues to record relatively strong price growth. By contrast, there were falls in Wales and the North East.

Significantly, prices in the West Midlands stabilised last month, making it the first time in more than two and-a-half years that prices have not fallen.

The number of mortgage approvals has been climbing in recent months on the back of the Funding for Lending Scheme.

Most of the new mortgage deals have, so far, been aimed at borrowers with bigger deposits, however lenders such as Barclays, the Yorkshire Building Society and the Co-operative Bank have recently announced loans for people with smaller deposits.

Peter Bolton King, RICS global residential director, said: ‘As we start the New Year, confidence in the housing market does appear to be improving, helped in part by the impact of the Funding for Leading scheme.
‘Indeed, our members are predicting that transaction levels will continue increasing in many parts of the country and it may be that we are now over the very worst.’

Predictions for the housing market in 2013 have been mixed, with other surveys suggesting that prices will be flat or show a small drop this year.

The Council of Mortgage Lenders expects sales to pick up amid better credit availability and lower mortgage rates. However, it cautioned that demand could be held back by the weakness of the economy and any rise in unemployment.

Economists at Capital Economics, who have a long history of pessimism about the property market, remain cautious.
The firm said: ‘The Funding for Lending Scheme has helped to ease conditions in the mortgage market somewhat, leading to a marginal improvement in housing market activity.

Source www.dailymail.co.uk

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