House price drop fuels rising activity

David Brown, commercial director of LSL Property Services, comments:

“The modest summer recovery came to an abrupt end in September, reminding us there are still serious barriers to a sustained property market recovery. Outside London, prices are falling throughout England and Wales and this has contributed to a fall in the average house price of 2.3% in the last 12 months. This looks like bad news for property owners, but over the medium term, despite short-term fluctuations, the property market has been stable.

“It’s certainly not all doom and gloom for homeowners. Buyer activity is picking up as transactions have been much higher than we would normally expect at this time of the year. This is important because it shows the market is not on a course for terminal decline. Increasing activity means buyers currently feel properties represent good value and that shows there is still plenty of confidence among both buyers and mortgage lenders that prices won’t plummet in the coming months. Add to that the fact that mortgage finance is currently cheaper than ever before, and there are plenty of positives to focus on when assessing the market.

“That’s not to say the road to recovery is obstruction-free. Mortgage lenders’ willingness to lend at record low rates is based on expectations that the MPC will keep rates low for the foreseeable future and that the Eurozone crisis won’t become a disaster. While it’s probable these conditions will continue, it’s far from certain. But whatever the future holds for the wider economy, buyers and remortgagers know that locking in to a cheap fixed rate deal now gives them the best chance of securing their financial futures and getting onto the property ladder.”

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