Residential property market may experience modest recovery
Despite seemingly positive news released earlier this week by the Royal Institute of Chartered Surveyors (RICS), which showed that 31 percent of surveyors indicated a rise in activity among those looking to buy homes or buy-to-let units, an analysis in The Economist suggests that it may take some time before the housing market recovers. When Britain last experienced recessionary times during the early 1990s, it took a full three years for the residential property sector to recover and for prices to start rising again. In fact, there are signs that it may take even longer for a full recovery this time around, as it is far more difficult to obtain a loan or buy-to-let mortgage now than it was during the last recession almost two decades ago. Banks are issuing approximately 50 percent fewer loans and noticeably small amounts.
Simon Rubinsohn, representing RICS, noted that any figures suggesting a rapid recovery should be taken with a grain of salt. The housing market has slipped so very low than even a seemingly noticeable recovery in either property values or sales would still mean that prices and overall activity are both “abysmally low” and far from normal levels. Last month, nearly three fourths (73%) of estate agents found that housing prices continued to decline, albeit this seemingly dire figure is still positive news compared to the fact that precisely one year ago, 94% of these same agents recorded falling values. Although there are signs of an improvement, the Economist stressed that even these March figures represent some of the worst performance indicators for the residential property and buy-to-let sectors since the late 1970s.
Thank you to The Economist for the initial report.