Home Economics: the worst of the house price crash is behind us

An important milestone was passed last month, according to the Royal Institution of Chartered Surveyors (Rics). For the first time since May 2007 — before the credit crunch — more surveyors expect house prices to rise, rather than fall, in the next three months.

In a generally upbeat survey, Rics members reported rising demand, increased sales, limited supply and falling stocks. It is still, in many ways, a strange market, with prices apparently stabilising at levels of activity much lower than normal.

There are many measures of prices, but the broad message is one of stability. Chesterton Humberts’s monthly “poll of polls”, which takes the full range of indexes into account, showed a 0.1% increase in June, the first rise since April last year. Douglas McWilliams, chief executive of the Centre for Economics and Business Research, which compiles the figures, said: “We may yet experience further small falls in prices, but the worst of the house-price contraction is almost certainly behind us.”

You would imagine that estate agents would be celebrating, but they’re not. They are more worried about the lack of sellers. So far, even the promise of getting something close to asking price is not luring vendors out of their shells, even though buyer inquiries are increasing at the fastest pace since Rics began asking the question 10 years ago.

Perhaps this will pass. Sellers may be holding off because they have heard so much about intense mortgage rationing, they don’t believe there are enough buyers out there with the wherewithal to purchase. Certainly, funding is still a problem for lenders. Even here, however, there are signs of a thaw.

Darren Winder, an economist with the financial adviser Cazenove, has been monitoring the mortgage multiples operated by the Halifax, Britain’s biggest mortgage lender. He found that slotting in an income of £35,000 in the “How much can I borrow?” part of the Halifax website last week gave an answer of up to £168,000, 4.8 times income. The corresponding figure was £150,000 just a few days before, and £120,000 earlier in the year.

Halifax, now part of Lloyds and majority-owned by the taxpayer, is clearly taking its responsibility to keep the flow of mortgage finance seriously. Some would say a bit too seriously.

The number of angry tenants complaining about their lettings agents to the Property Ombudsman has risen by 44% this year. Christopher Hamer, whose jurisdiction covers 6,255 lettings offices, received 110 calls a week about rental disputes in the second quarter of 2009. The main offenders are agents who do not explain charges and fees clearly. Hamer says the increase in complaints mirrors the increase in renting, a result of the economic slowdown.

For once, luck is on the side of the first-time buyer — the annual average house price paid by people getting their foot on the ladder was 14% lower in May 2009 than a year ago, according to government figures. The sellers of those properties have not done as well: the average price they paid on their next house went down by only 11.6%. So, unless their new homes are much bigger, many upsizers have lost out. (David Smith, The Times)  http://property.timesonline.co.uk/tol/life_and_style/property/article6718312.ece

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