The downturn in the housing market has been the subject of much talk over recent months. Reports from the Nationwide last week stated that house prices in 2008 fell by nearly 16%. However, Fisher German believes that there are opportunities out there which may help to stimulate the market in the early part of the year and stop the slide.
Matthew Allen of Fisher German believes that ‘another cut in interest rates to 1.5% last week, making the cost of borrowing and people’s existing mortgages repayments still cheaper will help. This will hopefully stimulate a little more impetus in the mortgage market and encourage people to borrow money based on the lowest rate in over 300 years.’
On the back of rapidly declining interest rates, there may be another type of purchaser who comes back into the market. Those savers who have suffered dramatically as a result of the falling interest rates may well be thinking that now is a good time to invest in property due to the poor returns from their savings.
As some properties are now looking very affordable, interest should be stimulated and some may even be described as ‘bargains’. Guide prices have fallen, in some cases, 10, 15 or 20%, with offers sometimes being accepted lower than this. For example, a £1,000,000 property six months ago might be bought today for £800,000.
This has led to a growing belief that now might be a good time to up-size. Without further consideration this might seem a little odd, wanting to purchase a bigger more expensive house in difficult times. However, up-sizing in a falling market can save thousands of pounds.
If you were to sell a £500,000 house and buy a larger one worth £750,000 you might lose 10% (£50,000) off the one you are selling, but you will save 10% (£75,000) on your new home and make a saving of £25,000. If one increases the up-size from £500,000 to say £1.5 million the possible saving is £100,000! Another advantage of up-sizing in a recession is being able to move to a better area, as homes in some of the best villages are slow to sell.
Robert Russell of Fisher German commented that he was ‘pleasantly surprised by the number of positive calls from prospective purchasers in the early part of the year. There appear to be a number of parties still in the market for good quality properties and prepared to offer sensible figures. Although 2009 could prove to be a difficult year with a predicted further slide in property prices, the main difference from the late eighties/early nineties crash is that this time interest rates are at record lows compared to the record highs which means that when the property market bounces back it will hopefully be stronger and more quickly than before’.
For further advice, contact Matthew Allen on 01295 226287 or email matthew.allen@fishergerman.co.uk
