HOUSE PRICE CRASH HYPE
David Lawrenson, property investment and buy-to-let expert warns landlords not to believe the house price crash hype.
The media is still doing their best to talk up a recession and a fall in house prices.
However, out in the real world, the real market (outside the awful oversupplied and in places fraud ridden new build sector) is stubbornly staying relatively strong.
Indeed, the UK property market is gaining momentum according a preview of figures from the National Association of Estate Agents (NAEA) monthly housing market survey. Buyers on books, housing stock and sales all increased in January in an upward trend.
What the figures say
The National Association of Estate Agents (NAEA) say that after a seasonally slow December, the market is beginning to pick up again, with the number of house buyers up 11% in January and first time buyers accounting for 14.5% of all sales, a rise of just over 3% for the same period last year. Well, of course the NAEA’s job is to talk up the market, naturally. But even if you look behind the figures a landlord will still not see a big fall off in activity.
OK repossessions are up and filling the auction rooms, that is true – and yes the papers love to scream this from the rooftops. It sells papers after all. But the fact is that repossessions are low by historic measures. OK, they are almost three times up on 2004, but hey, interest rates were unusually low at that time, so that’s kind of what you would expect.
Repossessions still low
According to the FT “the increase merely takes repossessions from an extremely low level to a pretty low level”. They highlight that as a proportion of outstanding mortgages, only 0.11 per cent (one in a thousand) were repossessed in the second half of 2007 – exactly the same proportion as in the first half and actually four times lower than the peak of repossessions which occurred in the second half of 1991.
The FT goes on to say that analysis of the figures show that “at no point in the 1990s was the rate of repossession any lower than it is today.” So, these are the real facts behind the tabloid headlines.
What’s my take on all this?
Well, I was hoping for a stalling housing market so that I could get some good property deals.
At the moment there is only a slight slowdown and vendors will listen to offers but so far the market is still staying relatively strong. That may change during the year.
Meanwhile to find out what’s really happening in the property market, do what I do, stick to the FT and avoid all the nonsense and hype in the other papers.
And definitely avoid the Get Rich Quick in Property courses and companies.
David Lawrenson is the author of Successful Property Letting – How to Make Money in Buy to Let the UK’s top selling buy to let book and runs a property investment seminar and consultancy company at www.lettingfocus.com.