Normal service resumes in the housing market

Great article illustrating the change in the market over the last few months and the relative difference in value/prospects time between London and the rest of the UK:

“In a downturn, properties are mostly bought and sold for three reasons: debt, divorce or death. In the past few weeks, however, people registering with estate agents are citing less dramatic motives, such as needing to be near a good school, moving to the country or simply wanting a larger — or a smaller — house.

This evidence that people are once more viewing properties for the “normal sorts of reasons” is another sign that the market is stabilising, according to Savills, the estate agent, in research published yesterday. Savills’ growing conviction that there has been a “real change” in mood follows more positive price, lending and transaction data from the Land Registry, the Department for Communities and Local Government, and the Royal Institution of Chartered Surveyors (RICS) and others.

RICS members also highlight that more people are interested in buying because “they want to get on with their lives”.

Lucian Cook, Savills’ residential research director, even discerns a few signs of a “herd mentality”, with buyers eager not to be caught out by a sudden uplift in prices. He hopes that they are making a reasoned assessment of conditions.

The return from the slough of despond to something resembling normality is evident in almost all locations. But the pace of improvement continues to be fastest in London, although there is also a rebound in areas such as Tunbridge Wells and Winchester, towns within easy commuting distance of the capital.

Homeowners in London and the South East typically have a larger cushion of equity, or more cash than those elsewhere, putting them first in the queue at mortgage lenders, which continue to ration finance. Last month in London, Savills handled the exchange of contracts on 42 per cent more properties than in April; the May tally was 32 per cent up on the same month in 2008. Homes in areas as diverse as Putney and Belgravia are coming on to the market and going under offer within days at their asking prices, so long as these valuations reflect the market decline.

However, some homes are fetching much more than expected. A terraced house in Portobello Road in Notting Hill was offered at auction last month for £700,000. It went under the hammer for £980,000.

The increase in activity is encouraging a few previously reluctant sellers in the capital to put their properties up for sale. This will represent the first significant test for the tentative recovery, which, until now, has been powered by a shortage of homes for sale.” (Anne Ashworth, The Times).  http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6481784.ece

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