It is interesting to see how a change in the housing and mortgage markets over the past five years has impacted the requirements of today’s borrower.
The days when you could buy a house with no deposit and borrow in excess of the property’s value have thankfully long since disappeared.
The industries are working towards a long and sustainable market recovery with sensible lending to consumers, not the boom and bust type model seen before the market downturn.
One of the things that surprised me after the market downturn was how quickly this ‘culture of credit’ began to change. As soon as the availability of excessive mortgage lending dried up, consumers began to look really hard at their personal finances and save more. An increasing number of parents released capital from their own property to help their children get on the housing ladder.
We see how difficult it has become for people to save for an ever increasing deposit to buy their first home and people have to rent for progressively longer periods of time to do so. Based on these changes, the size of the rental market has increased considerably since the housing market downturn.
As a nation of homeowners and would-be homeowners, people often rent to fill the gap during certain times in life such as going to university, moving house or relocating for a new job. I firmly believe that those who feel they have the means to buy their own home still desire to.
The housing market continues to show signs of recovery – not just in London and the South East – but in other regions too. Countrywide saw increased levels of sales activity in 2013. New buyer enquiries have also increased as credit and government initiatives, such as Help to Buy Equity Loan and Help to Buy Mortgage Guarantee schemes, begin to impact.
On average, 9.7 buyers were chasing every new property coming on the market in November 2013, compared to 8.5 in November 2012 and just 6.5 in November 2008. This combined with positive house price trends and low interest rates have given consumers much needed confidence to return to the market.
In the area where I live, properties that seem to be selling fast are those that have been completely refurbished to a high standard; properties with a one-off design or cheaper properties in need of complete refurbishment.
Slightly older fashioned properties in need of TLC but are not priced accordingly do not seem to be selling as quickly. This is perhaps due to the cost of the type of refurbishment that buyers tend to want to make these days, which means that this type of investment can be an expensive one.
In today’s world, it seems to me that the discerning buyer wants maximum quality and style for their money, as they will typically be buying at the top of their range to achieve that.
Sally Laker is managing director of Mortgage Intelligence Holdings