| back
to Page 1...
Significant risk of greater falls in housing
market says Savills
Savills Research has issued a revised forecast for
the property market anticipating total falls of 6 percent
over two years, provided the Bank of England takes all
necessary steps to halt the credit crisis.
Unlike other forecasters, Savills believes the current
credit constraints, rather than affordability issues,
to be the major downward pressure on the property market.
The company’s central forecast remains for a
-4 percent fall in mainstream market values in 2008,
and a further -2 percent fall in 2009.
However, this scenario assumes the impact of the credit
crisis is primarily restricted to the financial sector.
The probability of a flat market in 2008 is now zero
and Savills says homeowners are relying on the Bank
of England to exercise pressure and make available further
funds as necessary to ease the mortgage situation and
ensure the market does not decline further.
If preventative action is not taken and the impact
of the credit crisis is more widely felt, there is a
significant risk of greater falls in value in the housing
market.
A worst case forecast would predict a 10 percent fall
in mainstream market values in 2008 and a further 15
percent in 2009 if general consumer confidence continues
to weaken and the economic impact of the current credit
squeeze is more widely felt.
Such falls would though make a bounce back in the next
few years more likely.
The Savills Research model also anticipates a rapid
recovery, particularly in the case of the worst case
property scenario, with surplus household income recovering
quickly. A full recovery in property values is therefore
forecast by 2012 at the very latest, with property remaining
a strong investment.
Yolande Barnes, Director, Savills Research, said: “The
Bank’s recent £50 billion bond swap initiative
has an awful lot riding on it. Our current forecast
of -6 percent to the end of 2009 can only be achieved
if we see decisive action from the Bank of England to
ensure normality returns to the mortgage market. A failure
on their part could have very serious consequences for
the national housing market and economy in general.”
Put EU integration on hold says CML
The Council of Mortgage Lenders (CML) has urged the
European Commission to shelve its White Paper proposals
on the integration of EU mortgage markets.
The CML says that conditions have changed so much in
the months since the White Paper was prepared and published
in December last year that it would make no sense to
proceed.
Instead, the CML urges the Commission to focus its
efforts for the time being on work to support financial
stability. New mortgage market proposals should only
be developed following a detailed analysis of the economic
and mortgage market changes that are emerging.
Andrew Heywood, CML Deputy Head of Policy, said: “Many
European mortgage markets have changed so dramatically
in recent months that the only sensible step at this
stage is to drop the proposals and start again from
a basis of analysing likely future market conditions.
“Proposals to further the integration of markets
are unlikely to produce net benefits in the present
climate.
We believe that the Commission itself recognises this,
and will not bring forward proposals in the immediate
future. They have also launched a broad programme of
work on financial stability, which is a sensible and
timely development.”
Refurbishment opportunities excite buy to let landlords
A survey of buy to let landlords has revealed that
70 percent view the current property market conditions
as an opportunity to expand their portfolios.
The survey, carried out by property fulfilment company
i-PropertyAssets, also showed that refurbishment opportunities
were the most likely way for a buy to let landlord to
add to their portfolio with 40 percent preferring that
option.
Repossessions and property auctions were viewed as
an opportunity by 30 percent, while just 12 percent
saw off plan / new build property as a way to expand.
The remainder chose commercial, luxury and other options.
Around 50 percent of landlords surveyed said they expected
house prices to fall over the next 12 months, but only
5 percent expected a “sharp decline”. 36
percent expected no change and 13 percent anticipated
weak growth in the markets in which they were invested.
More than 20 percent of buy to let landlords declared
they were “not worried” by the credit crunch,
while 41 percent were “most concerned” about
mortgage costs, 31 percent about capital growth.
Property investors anticipated a much sunnier outlook
in terms of rentals, however, with just 6 percent concerned
about yields. 62 percent of respondents anticipated
growth in rentals in the next 12 months, while only
8 percent thought there would be a decline. 31 percent
expected levels to remain the same.
i-PropertyAssets Director Peter Bennett said: “I
think what this survey shows is that, at least amongst
intelligent property investors and buy to let landlords,
there remains confidence in the UK property market.
“While it’s a given that house prices will
fall in some areas, the results of this survey show
that there is no real concern about a proper crash.
In fact, landlords appear to be looking forward to increasing
rents and while they’re concerned about the availability
of finance do not appear to be worried about their existing
portfolios.
“The current credit crunch might be restricting
borrowing and buying – but it isn’t dampening
the appetite to do so amongst property investors.”
The results of the survey came from 250 respondents.
45 percent of respondents own six or more investment
properties. 40 percent of respondents own property in
London and the South East. 34 percent own property in
the Midlands and North West.
|
