Potential buyers are biding their time before stepping onto the market as lenders cut two thirds of mortgage deals.
It seems that the property market has finally hit a brick wall as would-be buyers play the waiting game before making their move up the ladder.
No longer is it just first time buyers who are feeling the squeeze as high interest rates, tighter lending criteria and relentlessly high house prices prompt property owners to stay where they are until these rocky market conditions subside.
According to figures released this week by the National Association of Estate Agents the number of potential buyers actively seeking new homes has dropped to its lowest level since the early 90’s crash, with the number of properties being marketed also experiencing a noticeable fall. What's more, the NAEA’s report also shows that the difference between average sale and asking prices is continuing to widen as prospective buyers have the power to push for extra savings in what has become a stalling market.
Despite these gloomy figures, Stewart Lilly, President of the NAEA reassured that “we still have a long way to go before we see the difficulties of the late 1980’s repeating themselves”, adding that “overall the market remains steady despite many external pressures“.
However, on the other side of the property ladder lenders are continuing to tighten their belts as they attempt to weather out the credit crunch and cope with the high cost of inter-bank lending. For the prospective borrower this has meant that over two thirds of the deals available last summer have now been withdrawn from the market with, according to Moneyfacts, just 5,725 mortgage options remaining, making secured credit much harder, and more expensive to come by.
Sub-prime and buy-to-let deals have seem the most dramatic cuts, with their availability being reduced by 81% and 60% respectively and, in addition to this, high loan-to-value mortgages have virtually become a thing of the past with 100%+ deals disappearing from the market completely and most lenders now requiring a minimum 5–10% deposit before approving an application.
This ill-matched combination of difficult credit and stalling homeowners has meant that mortgage lending is down to its lowest level in 9 years and, with house prices continuing to remain steady, it’s difficult to see how the market will turn around. In all likelihood only once mortgage rates return to a more affordable level will we see Brits stepping back onto the market and property becoming a realistic investment once more. However, exactly when this will be still remains to be seen.
