Are UK house prices on the way down? Yes says Minister

Are UK house prices on the way down? Yes says Minister

Grant Shapps has recently commented on what the Government think happen with house prices in 2011. According to the minister the Office of Budget Responsibility and the Treasure suggest there will be modest dips in house prices in 2011 and rises beyond. Not good news if your home is for sale at the moment and not sold.

But is the minister correct? And if he is spot on and what is the Government doing to help? Firstly, one of the main problems in 2011 will simply be a supply of mortgages. The council of mortgage lenders (CML) have recently said that from April next year onwards, lenders will begin to have to repay the funding given through official support schemes. This is likely to limit the availability of credit to help mortgage lending next year and beyond. Now this is a real issue even if you want to move home lenders are becoming so selective, and non approval of a mortgage will stop many. First time buyers have been absent for some time and as banks see them as bigger risks, less of them will be able to buy in 2011. According to the Royal Institute of Chartered Surveyors in November 2010 buyer enquiries from 1st time buyers fell for the 6th month in a row. Paisley Estate Agents also recorded less buyer activity over the last few months.

The CML are also worried about the impact of the Financial Services Authority new era of discerning lending which some fears mean NO lending. They also estimate a minute fall in number of sales from 890,000 to 830,000 but a more unsettling estimate of lending being reduced from ?9Billion to ?6Billion.

The main obstacle in the market is generally down to mortgage availability. What is Mr Shapps doing to aid this? Do we not own most of the banks that lend in the UK? David Cameron told us before last years election the banks would be forced to lend. Not seen it Mr Cameron or Mr Shapps have you? One direction if you care to listen is why not suspend some of the re-payments from the support schemes on the basis of the banks lending double to first time buyers? Say RBS is due to re-pay ?400M on 1st April. They repay ?200M just now as long as they lend ?400M to 1st time buyers over the next 12 months.

So whats the view from a Paisley estate agents? We spoke to an a few of online estate agents including Paisley Estate Agent scottishhousemove.com and pretty near market is flat at the moment and sellers and buyers are bargaining hard. Sellers are willing to slash their prices as long as they can get suitable discounts off their purchase. House builders are still offering great incentives to buyers, tell them you have nothing to sell and what the asking prices tumble. So 2011 will probably be the toughest year since 2007.

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