This is the third in my series on the prospects for the Housing Market in England and Wales in 2009.
Now is the time to reflect and predict what will happen over the next few months.
The Good News:
Reassuringly, the doomsday scenarios of further falls in house prices of between 10% and 30%, which some commentators were predicting at the beginning of the year, have evaporated.
What we have seen over the past few months is steadily increasing house prices, measured by both the Halifax and the Nationwide Building Society monthly indices.
But the picture is far from universal; London and the South East have captured most of the gains. But, there have been bigger rises elsewhere for country property and sharper declines for city centre flats.
This data, accords with my view, that what was happening in spring was a slowing in the speed of price reductions.
My summer assertion that those who were still waiting for a floor to be reached in the Housing Market had almost certainly missed the best bargains seems an obvious conclusion some 4 moths later.
There has also been a mini surge in properties on to the market in August and September, with numbers perhaps inevitably falling back in October ahead on the run in towards the Christmas and New Year festivities.
Some beleaguered first time buyers have been saved by the so called Bank of Mum and Dad, where others first time buyers have been forced to sit it out, with high percentage deposits still demanded by mortgage lenders.
Mortgage lending has increased but is still way off what could be described as normal market conditions.
The Not So Good News:
The market conditions which conspired to produce such benign conditions need some explanation.
The availability or rather lack of availability of mortgages has had a significant impact. Self Certified loans have assumed the mantle of bad boys, and have all but disappeared. Buy to let mortgages are out of favour as well with most lenders.
The necessity for a HIP before a property can be marketed has also had an impact, but not as great as some Estate Agents would have you believe.
Both have resulted in a serious shortage in the amount of properties coming to market for sale. Hence, this shortage, at first stopped prices falling and then secondly, led to small increases.
The inevitable tailing off of new stock of properties onto the market in late autumn will continue this upturn in prices, however modest in total.
There is evidence that the mortgage companies have staved off wholesale repossessions, but with unemployment still not yet peaking, there will be room for more property onto the market to potentially weaken prices.
The so called accidental landlords, forced to rent to avoid loses on their investments may be encouraged enough with hardening prices to put their properties on the market.
Twist Stick or Bust then?
We are still technically in recession, alone among the major European economies. These figures may well be revised upwards, and we are I suspect at present witnessing weak growth.
With such economic uncertainty, it is highly unlikely that interest rates will rise and may be depressed well into 2010 and possibly beyond.
This may lead some to put their properties on the market in the New Year, or buy ahead of any further price rises.
For many more, the prospect of mortgage refusal or an unfavourable mortgage rate will deter them enough to wait and see a little while longer.
Equitrax, the credit checking agency has estimated that almost half (45%) of home buyers had their first mortgage application refused.
If you add to the mixture, a general election in May, the likelihood is that fewer properties will be available for sale. As all Estate Agents will tell you general elections severely dampen housing market activity.
Price rises for most properties will inevitably follow. Perversely, however, if sentiment disappears it is perfectly possible, (with fewer properties for sale but also fewer buyers), prices may start to drop.
What will also have a bearing on how the housing market performs are the inevitable increases in taxation after the general election in May 2010.
Furthermore, with Stamp Duty being a major disincentive to move, people may decide unless forced by one of the 3D's, debt, divorce or death, to stay put.
Most analysts are now pushing their forecasts for a sustained albeit slow recovery in the Housing Market into 2011 and 2012.
Should you Sell?
Hometrack the housing market research, company shows the average time to sell a house now to be just over 8 weeks, down from 12 weeks at the beginning of the year. It is predominantly a Sellers' market, so securing a sale should be easier than any time this year. As always price and location are still the crucial factors.
Should you Buy?
The winners so far this year have undoubtedly been cash purchasers or low loan to value buyers picking up the best mortgages.
You will still certainly benefit, if you can get mortgage finance, by buying now against future price rises next year. However, you may prefer to choose from a wider range of available properties coming to market next year.
A watching brief would be advisable. If you do not need a mortgage or have mortgage funds but no property to sell, then if your dream property comes up, you should go for it!
As a wealthy buyer who purchased a property in Belgravia, at the height of the boom in 2007 commented, "when you are buying quality you can never pay too much-you can only pay too soon!"
Author Resource:
Paul Hajek has been a lawyer for 26 years
He has been managing partner of Clutton Cox Solicitors in Chipping Sodbury, Bristol for the last 23 years.
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