Suggestions to stay afloat in a sluggish property market

A sluggish property market invariably means home sellers need all the more support and advice that they can get.  Indeed, in a turbulent market, doing it yourself without any expert help can be a great achievement, but novices to the housing market need to keep in mind that they can endanger their precious asset’s worth by making a wrong decision. If you are unsure, you should seek a professional’s inputs.

The Telegraph sought suggestions from a panel of property experts on getting the best price when you sell one’s home. According to them, it is essential to compare quotes from reliable online resources and also keep a keen watch on comparable properties in a locality and what price they have managed to fetch recently.

Experts also point out that it is a good idea to call your insurer for checking that you are covered in the event of the DIY (do it yourself ethic) strategy going wrong, and definitely to make sure that any structural changes will not cause your policy void.

What does the statistics indicate about the property market?

If the figures are any indication, the property market is going through a difficult phase, and the lingering credit crisis has made it even tougher for people to sell their homes. According to one estimate, well over one million unsold properties are there on the market, and homeowners are taking the longest time on record to sell their homes.

There are reportedly 1.03 million properties (out of a total of 25 million) that are up for sale in Britain, indicating a 15 per cent increase on a year ago. The statistics well highlights how the credit crisis is severely affecting people looking to sell their homes.

It took an average of 71 days to sell a house a year ago, but the time span has climbed by two weeks; sellers now take up to 85 days to locate a buyer. That in fact, is the longest time recorded for this time of year.

Nationally, properties could well fall by at least around five per cent this year, market analysts believe. They point out that the drop might be comparatively smaller for London.

Be realistic about the price your property will fetch to strike a deal

Property market specialists underline the fact that investors need to be realistic and practical about what their properties are worth in context of the prevailing market conditions. The key is to be realistic about the price your property will fetch to strike a deal.

Mortgage strategists advise sellers to bear in mind the fact that they also would most likely be buying at a lower price. One of them adds: “If your buyer is looking to knock say £10,000 off the asking price, demand a reduction further up the chain.” More than this, the key is to set the proper asking price.

Property market experts caution that too high (a price that you set) and it will only deter would-be buyers, making your task that much difficult. On the other hand, too low a price and you will end up getting much less than you could have easily received. To avoid this, try to obtain three or four different valuations, which can easily be done online. Importantly, avoid being ‘sucked in’ by the highest valuation.

Housing market correction: Is the end in sight?

The 2.5 per cent fall in house prices in May is a ‘real shock’, according to market experts. The figures show just how rapidly house prices can decline, they point out. The figures were reported by Nationwide. Reacting to them, Howard Archer of Global Insight stated: “This will fuel concern that we are now heading towards a sharp correction in house prices.” warned. Archer feels that prices will fall by 7 per cent this year and 9 per cent in 2009.

Mortgage approvals for house purchases stay at historically low levels, whereas agreed sales are falling. To compound the problem, buyer interest is continuously declining. As a result, it is taking much longer to sell a house. Sellers are achieving a depleting percentage of their asking price.

The sheer size and extent of the drop in prices, even without the economy having slowed down significantly, indicates that this housing market correction might get deep and prolonged, some experts believe. Economist at BNP Paribas Alan Clarke summed up the mood, stating, ‘the news just keeps getting worse.’

Cooling of mortgage availability beneficial in the long run

Recent negative weak economic news flow is adding to the ‘gathering momentum of negative sentiment about the property market, experts indicate.  The housing boom that started in the mid-1990s means that house prices remain still almost 5 per cent higher than those two years ago, and nearly 10 per cent higher than May 2005 levels. According to Fionnuala Earley, chief economist of Nationwide, the tighter lending conditions that have resulted from the credit crunch, are making it tougher for potential buyers to secure a mortgage.

However, market analysts argue that the cooling of mortgage availability could prove to be beneficial in the long run. An expert says, “More stringent underwriting criteria should finally lead to fewer overstretched borrowers and thus a more sustainable and stable market.”

Nationwide released figures that portrayed a gloomy picture of the UK’s housing market. This immediately resulted in shares in Britain’s housebuilders like Taylor Wimpey sliding. The firm has already seen a sharp fall in activity in April. Some builders also have started cutting staff to get ready for a prolonged downturn.

Abbey opts to reverse cuts made to its mortgage rates only a couple of weeks ago

Abbey has decided to reverse cuts that it made to mortgage rates a couple of weeks ago, pushing up borrowing costs. The Abbey has raised rates on its new fixed-rate deals by between 0.15 per cent and 0.56 per cent from 29 May.

Market observers point out that Abbey has been promising some of the most competitive rates recently for homebuyers who are able to provide a 25 per cent deposit. It cut flexible & tracker rates by 0.05 per cent on 16 May and also some fixed-rate deals by nearly 0.17 per cent.

It put the blame on increasing inter-bank borrowing costs, which hold the key to mortgage rates, for its most recent changes. Some experts do not agree with this. According to them, while swap rates have gone up by around 0.5 per cent in the past month that could well justify this hike, Abbey only seems to be adding to confusion and partly to volatility by bringing down rates on fixed deals last week only to increase them again.

Property owners need to be proactive, suggest experts

The property market is facing an oversupply, with number of properties on sale outscoring the buyers. So, how should a seller should deal with the situation? Do not just sit ideal, rather be proactive, is the word of advice from experts. They suggest that sellers need to do their own research on the value of their home as well as its selling points that will hold the prospective buyers’ attention. Try to get necessary information about local schools and transport links and have all that (information) to hand.

Sellers should have their ears to the ground. You need to understand why a potential buyer has decided not to go ahead with an offer. There may be something that you can adjust to make your property more sellable.

Sellers could also consider an open day: This certainly is a good means of getting many people to view your property at the same time and can make it appear as though there is lots of interest and curiosity about the home that may impress the buyers and prompt them to make an offer.

Britain’s major buy-to-let mortgage lender receives much-needed financial boost

Bradford & Bingley is Britain’s eighth-largest bank and also the biggest entity in the flourishing buy-to-let market. B&B has been going through tough times largely owing to unfavourable market conditions. However, the firm has received a major financial boost with reports that one of the world’s major private equity houses is all set to acquire a stake of nearly 20 per cent in it. The reported initiative by Texas Pacific Group is certain to come as a major relief to Britain’s leading buy-to-let mortgage lender.

The developments took place even as the firm’s chief executive decided to resign apparently for health reasons. The former building society boasts well over three million customers. It has been hit by the ongoing credit crisis, and was forced to go for a rights issue asking current shareholders to infuse £300m equity. The new plan in a way is a ‘scaling back’ of the capital infusion plan. Owing to the contribution from TPG, Bradford & Bingley would end up raising more capital than under its previous plan.

Analysts try to grasp the finer points of the deal between TPG and B&B

Analysts are trying to understand the finer points of the proposed deal between Texas Pacific Group and Bradford & Bingley, the UK’s top buy-to-let mortgage lender. Close to £150m of funds are going to be infused into B&B, according to media reports, which state that its existing stakeholders would also be asked to offer about £250m of new capital.

The expected price of the new shares for Texas Pacific Group and for Bradford & Bingley’s existing shareholders is just above 50p per share, which is well below the original rights price (82p per share).

According to BBC Business Editor Robert Peston, the reason it (B&B) needs all this money is that its profits are going to far lower this year. The analyst adds: “The City was expecting profits of about £250m this year. Unfortunately, owing to the downturn in the housing market, B&B is probably only going to register about £150m of profits. That is a big drop, but nonetheless, it is still in profit.”

Will the house prices remain flat or fall further?

Buying a property is one of the biggest decisions in one’s life. It is the time when one decides to invest his hard earned money or thinks of raising finances for owning a property. Many people confront problem of raising finances. They need to know how to arrange for monthly repayments and even paying off capital.

Timing your decision to buy property is very important, but equally difficult. Finding best price for a property is a difficult proposition. According to Halifax Building Society average price of £70,000 in 1997 has gone up to £197,000 in 2007. The increase is almost 182%. On the other hand, the prices have been relentlessly falling for last few months, and may fall further. So, timing the market is never easy!

One important development, favourable to the first time buyers is that base interest rates of Bank of England may fall further to stimulate growth in economy. The first time buyers will be thus in an advantageous position. Martin Ellis, chief economist at the Halifax, feels that the current state of the UK economy is sound hence the house prices will remain largely flat during 2008.