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Rising prices creating false sense of security
The industry could see a short term dip in UK property prices due to a number of factors
There was a lack of stock in the market late last year, with the limited number of instructions outstripped by buyer demand, slowly driving up property prices.
However, I believe this is short-lived as an early influx of properties to the market from those that held off until after the Christmas period, coupled with the impending general election, could see prices temporarily dip.
In my opinion, rising prices have created a false sense of security within the industry and there is likely to be a small drop before we see a recovery in the second half of the year.
The money flow is still too slow, with the industry needing lenders to offer a range of competitive products to help meet the demand created by the increased housing stock levels.
Even though reports suggest that some prospective movers don’t believe the election will affect their plans, there are those that would rather hold off from incurring unnecessary cost in anticipation of the Conservatives winning the election and honouring their pledge to scrap HIPs.
Abolishing HIPs would see the welcome return to the days of speculative vendors dipping their toes in the market and help to stimulate the market.
However, it is not just the cost of the HIP which has caused problems for homeowners, as many are finding themselves trapped in or close to negative equity with others not willing to move whilst they are on their current variable rate mortgage deal, as this is likely to result in having to sign up to a new, less attractive mortgage product.
Regardless of the election result, I believe the second half of the year will see increased activity. There will be an increase in forced sales from those that can no longer put their life on hold in the hope of improved market conditions.
We still need lenders to do more on loan-to-value ratios and increase the availability of buy-to-let products to help the first time buyer and investor landlord, who are the key to stimulating the housing market.
Richard Kitt is managing director of Tyser Greenwood Surveyors
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