Is property ready to bounce back in 2009?

Thursday, 08 January 2009 07:00

House prices are not expected to rise in 2009, but interest from buyers is expected to increase.

House prices fell 15.9 per cent in 2008, according to Nationwide, and analyst predict further falls in 2009 and even into 2010.

However, industry experts are predicting an upturn in interest from buyers in 2009, as house price drops make buyers savvy to bargains.

Property website Rightmove reports a rise in interest from buyers this week, with 44,000 emails sent to agents via the site on the first working Monday of 2009, January 5th, a rise of 121 per cent on the first Monday of 2008.

Miles Shipside, commercial director of Rightmove, said: "The limited availability of finance and nervousness surrounding investments hampered the level of property transactions last year, but 2009 is set to be the year of the quality property deal.

"Homehunters are aware it's a year of opportunities as our statistics show that enquiries about properties are flooding to estate agents at record levels."

He said the rise in enquiries was most likely from cash-rich and mortgage-ready buyers that have been holding on for the last few months, and are not being held back by lenders' reticence to lend.

Mr Shipside claims: "A depressed market provides the rare opportunity to secure a quality home or a great investment that you normally would have to pay through the nose for."

Estate agent Cluttons now predicts a rise in interest over February and March.

This burst of activity is expected as many homeowners face the reality they may be forced to sell, and cut prices to ensure a sale.

James Hyman, at Cluttons, said: "As homeowners face up to the fact that the market is not going to improve significantly in the short term, we can expect an increase in properties coming onto the market at realistic prices - around 25 per cent from the peak price of August 2007.

"This will bring about a return of competition among sellers - who prices lowest, wins."

However, he warns low prospects of house price growth will keep a lid on house prices.

"While transaction levels will increase moderately in the first half of the year, we will not see a return to healthy activity levels for some considerable time," Mr Hyman said.

"People will no longer be building equity quickly and moving on every two to five years, as they have done in the past."

A major influence on the property market remains the supply of new mortgages.

While interest rates may well be falling, the best deals remain limited to those with high deposits - home movers or those remortgaging - and not higher risk borrowers and first-time buyers.

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