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Recovery in sight for turbulent property market

Stock is expected to grow slowly from the current very low levels, as low interest rates allow owners to reduce debt and to begin to reconsider plans to move.

Prices are also proving more attractive to the many "reluctant" landlords who let their properties rather than sell at very low prices during 2008. As tenancies and fixed-rate mortgage deals end, more of these are expected to test the sales market.

Andrew Stanford, head of Cluttons’ residential professional division, said: "The volume of stock coming to market has been very low in 2009 and market pricing recovered quickly this year as equity-rich investors looked for bargains. We expect stock to increase in 2010, but with vendors’ pricing expectations still high, this may leave optimistic buyers frustrated, especially where mortgages are a significant part of financing purchases and restrictions remain tight on mortgage loan-to-values."

Prices are expected to rise more from 2011, with the three following years seeing prices up by 3%-4% p.a.

As interest rates remain low, the mortgage market will gradually recover. Values will be attractive for foreign currency buyers in London and good for UK buyers with equity to invest.

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