Consumers set to benefit from development collapse, says Assetz
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The company says that as lower interest rates take effect, coinciding with increasing pressure by banks on developers to sell existing stock and the cost of LIBOR continuing to fall, the cost of financing property purchases is set to dip even further in the run up to Christmas.
It says that this, combined with banks putting pressure on struggling developers to reduce housing stock could meand discounts of 30 - 40% bringing about the lowest prices for new build housing ever in the UK.
Stuart Law, chief executive of Assetz says: "The perfect moment has arrived for investors to re-enter the market, as developers rush to sell off stock at rock bottom prices, combined with a new lower cost of borrowing.
"This period will only last three to six months, before stock runs out, but it could work to kick-start the entire property market as competition among buyers returns."
He says that long-term investors whose priority is income before capital gain will find the deals attractive especially as the interest rates offered on bank savings accounts plummet.
LAw adds: " The price of new build homes is very likely to rise strongly over the next five years, as housebuilders' capacity shrinks and the flow of development grinds to a near-halt, exasperating the supply/demand imbalance.
"Even when the market recovers, it will be years before the housebuilding industry gets back up to capacity this will place a premium on new home prices and deliver strong capital growth in the medium term."
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