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Lenders Fear Double Dip UK Property Crash
August 12, 2009Article by Ray Withers
Property investors with the cash should consider buying as they can negotiate below market value deals with motivated sellers who need to move on while the UK property investment market is probably at the lowest ebb.Lenders and surveyors are tight-lipped about a surprise trend of rising house prices because they fear a double dip recession might throw the market back in to chaos.
Two of the biggest mortgage lenders – Nationwide and Halifax – have both reported small month-on-month rises in house prices over the last quarter.Neither will come out and say the house price crash is over because they fear sellers are playing a waiting game to get a better price and as soon as the property market is officially ‘rising’ a flood of properties will go up for sale.Too many properties will make an oversupply that might push prices back down again – hence the fears of a double dip house price recession.
The Halifax’s July survey calculates the average UK home was worth £159,623 – £5,100 more than in April, a rise of 3.3% in just three months.The Nationwide’s survey for the same period suggested that the average UK home in was worth £158,871.That was £11,000 more than just five months before in February, a rise of nearly 8%.According to the Royal Institution of Chartered Surveyors (RICS), the property market is simply following supply and demand.
Fewer houses are available but the number of buyers registering an interest with estate agents is rising. A lack of demand with buyers chasing properties pushes prices up.As soon as the market reverses when sellers are encouraged to advertise their properties, the credit squeeze by lenders will limit the number of buyers and push prices down again.”There is a reluctance on the part of many vendors to put their properties on the market,” says Simon Rubinsohn, RICS chief economist.
“We are not wholly surprised. Our own survey has shown new instructions have fallen month on month, and the rise in new buyer enquiries we saw gave a good steer about the improvement in demand early this year. “We think prices will continue to edge up and at the end of the year may be higher than 12 months before, but in 2010, our best guess is prices will not go up further or may even slip back,” Mr Rubinsohn added.