Is It A Good Time For Property Investment
Is Now A Good Time To Invest In Property
In todays economic conditions the word investment is not used as freely as it was a year ago. Combine this with the word property or house and its even fewer.
So why does property investment seem such as scary proportion at this point in time.
All investment opportunities in all industries have ideal conditions. When prices are low - this is the time buy.
The problem with the property and housing market is that the residential home buyer is obviously connected to this market.
Property sales involving ordinary home buyers in the UK has fallen by 53% in the past year, according to the latest government figures.
In September nearly 60,000 homes were sold, over twice as many were sold the same month last year.
That was also a 62% fall from the recent peak in sales, of 154,000, seen in December 2006.
Currently the credit crunch has plunged the housing market into its sharpest slowdown for many years.
Housing Market Decline
Despite a recent cut in interest rates, attempts by the government to assist the banking system, and a reduction in the burden of stamp duty, there is no sign yet of the property market coming out of its worrying decline.
Providers of mortgage products such as the Halifax and Nationwide have reported that prices are still in decline around a tenth of what they were this time last last year.
A recent survey by the Royal Institution of Chartered Surveyors (RICS) found that estate agents were having problems trying to sell a property a week.
In addition, the best leading indicator of future activity - the number of new mortgages approved for house purchase but not yet lent - is down by 70% on a year ago. This indicates that prices still have not reached a low point.
Lack Of Money
The key factor in the sales slump has been the lack of funds in the past year available to banks and building societies to lend to borrowers, especially first-time buyers.
With house prices falling, lenders have been demanding that borrowers put down deposits that are much larger than normal, to protect themselves if someone becomes unemployed and the home is subsequently repossessed and sold at auction.
At the start of the year, mortgages worth 100% or even more of a property’s value disappeared. Now even the traditional 95% mortgage is in danger of disappearing.
Many lenders now ask borrowers to put down at least 10% of the purchase price of a new home. The most favourable deals, at the lowest interest rates, are generally available only to those who can put down 25%, or sometimes even 40%, of their purchase price.
“There are some signals that housing market activity could be close to hitting a floor but there is a danger that a sharp rise in unemployment could precipitate a further round of fear on the part of buyers,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).
Is Now A good Time To Invest In the Housing Market
Despite the unhealthy conditions if property were any other commodity - the time for investing is fast approaching.
Once the market is on the floor the only way is inevitably up.
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