Gordon Fowlis, Regional Managing Director, Your Move, comments:
“Historically more people move home over the summer, and that pushes up prices. This year, that trend has lasted longer than normal, with the market making up for lost time after a turgid spring, and more buyers looking to take advantage of cheap mortgage rates introduced over the summer. But, to a very significant extent, the market is still being propped up by wealthier buyers who are being able to take advantage of exceptionally low mortgage rates. Sadly for lower income buyers, lenders have very strict criteria attached to these mortgages which means they can’t hope to get approval for them.
This suppressed level of activity at the lowest end of the property ladder means we expect prices at the end of the year to be lower than in 2010. Credit conditions are constricted, and the malaise in the eurozone is threatening to sweep over the channel. Against this backdrop, banks are still focusing on targeting wealthier buyers with bigger deposits, which will leave lower income buyers out in the cold as winter sets in. For every first time buyer, three buyers are created further up the market. Gridlock at the lowest end of the market resonates all the way up the chain, and prices won’t resuscitate to their pre-2008 levels until more first time buyers can access mortgage finance.
The market is showing commendable resilience to the economic turmoil surrounding it. The desire to own a home still ingrained into the national psyche, but the lack of availability of mortgage finance is bottling up demand. If mortgages were more widely available, we would be seeing no shortage of buyers.”
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