The stuttering progress of the housing market this year both in terms of lending and property prices points to a much longer recovery time than many really expect. A recent report by Hometrack showed that demand for property dropped by 4.3% in November – the fifth monthly drop in a row and the lowest since January 2009. This lack of demand was reflected in the continuing downward pressure on sale prices with 54% of postcodes recording price reductions in the month.
Part of this could simply be down to seasonal pressures starting early, especially with the snow that caught everyone by surprise in November, but I think it points to a more fundamental truism, that the housing market has received a battering and will take many years to recover.
When we read articles that foster doom and gloom about the property market which dwell on the length of time it will take to get over it, we dismiss the speculation as pessimistic headline grabbing.
But if you look back to the last property crash in 1989, average house prices did not return to their pre-1990 levels until 1998.
So looking forward, if we see a return to pre-2007 house prices before 2017 we will be doing well by historic standards.
The good news is that the market is relatively stable if a bit static but recent statistics show that remortgages are up. Remortgages accounted for 29% of all lending, the highest since May, and repossessions are down for the fourth consecutive quarter to just under 9,000.
The spectre on the horizon is of course an increase in interest rates, which many of us expect before too long especially as inflation seems to be climbing again.
This could have a positive impact on the lending markets as more people find that they are worse off on base rate trackers than the rates available in the market.
Coupled with a recent increase in the number of lenders and mortgage deals this could be good news for the new year.