Housing market is staying strong through the summer


Summer PropertyESSEX estate agents claim that the local housing market is currently at a high, in spite of the traditional six-week quiet summer period.

With housing prices climbing steadily and buyer confidence improving, the market shows every sign of moving out of the recession.

However, opinion differs as to whether or not this trend will continue as the opposing forces of the Mortgage Market Review, a scheme which ushered in more in-depth background checks for mortgage applicants, and the Government-led initiative Help to Buy, act on the market.

“Housing prices are the highest we’ve had,” says Jeffrey Penneck, Director of Penneck Estates in Southend. “But they’re peaking off at the moment. Realism is taking effect; estate agents are being cautious on price increases, and the market is reaching its natural hiatus.

“We should see an upturn beginning in mid-September and lasting until the middle of November,” he adds. “People are more confident than they were a year ago.”

“Buyer confidence is there and will remain,” agrees Nicholas Court, founder of Court and Co. Property Solutions, which has branches in Chelmsford, Brentwood and Shenfield. “We have multiple buyers for every property. Prices are still on the rise; we’ve just sold a flat for £30,000 more than was paid for it a year ago. Property is still an asset class, and it’s an asset that people want to own.”

Mr Court was also positive about the effects of the Mortgage Market Review (MMR) on business for his company, despite recent concerns that the MMR is restricting the recently-implemented Help to Buy scheme.

Designed to enable first-time buyers to get a foot onto the property ladder more easily, Help to Buy was introduced in England in April 2013, allowing buyers to secure properties up to the value of £600,000 with just a 5% deposit, covering the other 95% with a mortgage.

Under the new MMR regulations, the application process for this mortgage becomes much longer and more invasive, and the availability of products is subsequently restricted.

“MMR has slowed things down,” says Mr Court. “But this isn’t necessarily a problem.”

With the new regulations, the lenders can be sure that buyers have the means to pay back a mortgage and Mr Court anticipates that this will reduce the ‘fall-through’ rate of housing transactions – where a housing sale is unable to be completed, and is most often due to the inability to secure mortgage finance.

“Our company’s fall-through rate is very low,” he says. “Only 6% compared to a national average of 35%. MMR will keep that low, but I also anticipate that it will reduce the national figure to around 20-25%.”

As for Help to Buy, he admits: “We haven’t seen many sales through the Help to Buy scheme, though it is something we have advertised.”
Jeffrey Penneck, meanwhile, expressed some reservations about the future of Help to Buy, adding: “I think the government is putting the brakes on Help to Buy. It did what the government wanted and kick-started the market – well, it overheated the market.”

This government “braking” has been evidenced by a quieter month of Help to Buy sales in June for Penneck Estates.

When asked whether Mr Penneck thought that the scheme would last in the coming years, especially in light of the 2015 general election, he replied: “I think it will be around at least until the election is over. After that, it depends on which party comes in as to what they’ll do with it, but I think we’ll see a tailing-off.”

by Rebecca Sentance


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