Independent voices say we are not headed for property armageddon says Letting Focus

Sometimes, it really pays to listen to someone who has not got a vested interest in the success or failure of the property market.
Why?
Estate agents (and mortgage brokers for that matter) are always loathe to talk down house prices too much while stockbrokers and fund managers are usually keen to do the opposite - in the hope that would be property buyers are so scared that they put their money in the stock market instead.
So, let’s listen to some independent voices shall we?
Just last week, the National Housing and Planning Advice Unit (NHAPU) recommended an additional 500,000 homes be built over the next decade in order to meet demand.
Their Chariman, Steve Nickell said, “Over the short term, house prices are going down but, long term, if there are insufficient numbers of houses around, then property will become more valuable.”
Of course, any recovery in house prices depends on mortgage lenders doing what they are supposed to do – lend money to buy houses.
But as of yet, that has not happened and one side consequence of that is that housebuilders have pretty much stopped new projects.
Realising the trouble that house builders are in, investors are once more to the fore and it is they who rumoured to be back buying in bulk - rather than owner occupiers who cannot get mortgages easily.
To give you an idea of this shift, the FT reported last week that in London, the proportion of housing sold to private occupiers fell from about two thirds in the first half of 2007, to just a quarter in the first half of 2008.
So, when the credit freeze unfreezes there is going to be a lot of pent up demand for property out there - and a lack of stock to meet it.
Of course, the doomsayers love to worry us about a coming negative equity situation – like the one we had in the early 90s.
However, a typical homeowner who bought in 2004 has an average “equity cushion" of 48 per cent of the value of their property, according to research from GE Money Home Lending. And based on today's prices, the average home bought in 2000 with an average deposit of £27,000 still has a 58 per cent buffer.
So, it seems house prices would have to fall a lot lower before we see the spectre of negative equity coming over the hill once again.
Finally, the last OECD report said that Britain's labour market will hold up better than that of other OECD member states, such as the US.
Whilst total employment will continue to rise by 0.8 per cent in 2008 and 0.1 per cent in 2009, joblessness will go up because the total pool of labour will grow more quickly over the same period. But it will be less than the OECD average.
So, it’s not all bad news, folks.
My advice is, if you must listen to the “experts”; please listen harder to the independent voices than those people with vested interests.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of landlord consultants’ lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 2 years has been the UK’s top selling property title - buy the UK's top selling property investment book.
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert property journalist , property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I can provide landlords advice
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property mentor programme at my website.What’s unique about lettingfocus.com is that we offer you help as an independent property coach because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week.
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