The Worst of Housing Market had passed?
David Miles, property expert of the Bank of England (BoE) – suggested that the housing market had undergone the worst crash and will experience recovery soon.
The housing market is likely to see its recovery soon as suggested by David Miles – property expert of the Bank of England (BoE). Positive signs, such as the house prices and the consumer confidence index, within the market had become more convincing to lead to the prediction of “recovery”. Last month, the house prices had resulted a third time increase in four months; whilst the consumer confidence reviewed its index at its 14-month high.
Other than that, there are more live and online auctions recently – with defaulted properties provided by the owners and developers. It has been seen that landlords more optimistic about the market and are expanding their property portfolios under the economic climate. According to the data given by an auction firm, the rate of properties sold in the auction have increased significantly – with 79% of the properties sold in May to June this year compared to 49% in the previous year. This serves as another indicator of recovery within the housing market.
Although – in assumption – the recovery in the housing market seemed to be likely to happen, the housing market would still be possibly affected by the severity of the financial crisis. As a result, relapse (i.e. “Double Dip Recession”) may still be expected to occur.
It is now a critical period to predict the recovery on the housing market. Here are the different perceptions on the opposite predictions on housing market in the UK:
|On a recovery?||Double Rip Recession?|
|1. Mortgage approvals are increasing and are expected to rise||1. Unemployment rate and bankruptcies are still high|
|3. House prices indexes have indicated a constant increase in the last few months||2. House prices might still be higher than what most of the first-time buyers can afford, which would upset the market’s mechanism with a decrease in demand.|
|3. Home ownerships have always been extremely popular in the UK with prediction showing that the increasing demand would outweigh the supply in the market – thus, would result in rise in house prices.||3. Loan-to-value (LTV) mortgages are still too high for some of the first-time buyers|
4. Consumer Confidence Index is at its 14-month high, signalling an optimism among the public
|4. It might not be as straight-forward for the housing market to recover under the severity of the financial crisis.|