This is leaving year-on-year prices virtually the same.
But Miles Shipside, director of Rightmove, says any hopes that transaction volumes may be on the springboard preparing to return to historic norms will have been dashed by lenders’ predictions that 2011 lending volumes will match 2010’s dire levels.
He says: “Mr Average will be left out in the cold in the buying and selling game unless the beneficiary of a hereditary hand-out. The current subdued market volumes are set to be the new norm unless the seemingly never ending discussions between government and mortgage lenders find some way of increasing ‘Mr Average’s’ access to lower deposit mortgages without pricing them out of the market.”
He says there appears to be a three tier market, with the more ‘elitist’ tier being courted by lenders attracted by low loan-to-values that help them build a more profitable and lower risk mortgage book.
He says in the more economically depressed areas of the country where forced sales are becoming more prevalent, some sellers are falling prey to the ‘bargain hunting bottom-feeder’ investors.
He says these cash-rich buyers seek out distressed sales and represent the third tier of the current market. When interest rates rise, increasing the likelihood of more forced sellers coming to market, they will benefit from greater opportunities. This may well happen in the second half of the year and will push prices down in the areas worst affected. There is evidence of growing competition to lend in this traditional first-time buyer market segment.
Nick Hopkinson director of PPR Estates, says: “Only super-premium London properties are achieving anything like asking prices due to a very limited availability of multi-million pound property being sought by cash-rich foreign buyers. This does not apply anywhere else. All the house price indices, therefore, need to be read with a high degree of caution at the moment as they are very likely to give a falsely optimistic reading of the market as transaction levels are so low.
“Mortgage lending remains strictly rationed with no real prospect of a lending ‘thaw’in 2011 according to the main lending banks. Rampant inflation, which is really running at over 5% for the man on the street, austerity cuts and tax rises are putting the squeeze on many struggling homeowners.
“Many potential sellers may well look back and wish they’d accepted a more realistic sale price last year once interest rate rises start to inevitable kick-in later this year.”