Uphill Battle Planned for UK Housing Market to Return to Levels of Six Years Ago
The UK housing market is facing an uphill battle to return to levels of activity last seen in 2007. The fundamental data is still not present, but there are promising signs that recovery is taking place even now. Overall, mortgage lending has picked up in the last few months. Remortgage lending is still at a modest level, yet some economists think the last few months could mean the year 2013 might start off on a positive note.
Grainne Gilmore, residential research head at Knight Frank, believes first time buyers and those not able to produce the required deposit are currently facing the most challenges.
Gilmore commented on the mood of the current market and the fundamentals which are still lacking for growth to begin again, saying: "Some five years after the start of the financial crisis, the housing sector in the UK still does not bear the hallmarks of a fully functioning market.
"House prices have been flat or modestly declining across the UK since 2010. This stasis is underpinned by unusual economic conditions, rather than a genuine equilibrium in the market.
"Those with only a small slice of equity in their property have struggled to remortgage, given that many lenders have scrapped the high loan-to-value (LTV) deals seen before the financial crisis. Instead, lenders in general now lend a maximum of 75% LTV.
"Only a handful of deals are available above this threshold and the most competitive deals are for those people who have 30% or 40% equity.”