After a two year period of stagnation with property sale completions down by as much as 50% at times, there is presently a built up demand amongst property purchasers. What’s more lots of potential first time purchasers have had their ambitions held back and now believe that residential property has become excellent value thanks to around 25% value falls. And lastly, government forecasts of the need for an extra 120,000 houses per year to be built have not gone away. All these factors seem to suggest an imminent resurgence in the property market and indicate that an early return to 2007 transaction numbers of approximately 1 million per year may be possible even in the short term.

What currently seems to be thwarting this amelioration is the availability of mortgage finance, particularly for first time purchasers. Mortgage approvals are on the increase month on month but are still at levels notably below the mid 2007 levels. This seems to be more to do with supply rather than demand as the banks continue to increase their lending to property buyers with some caution. The banks need to lend to be profitable and it is profit which will best repair their balance sheets, but it is vital that they lend carefully, it is widely held that their lack of caution in property lending was a major cause of the financial crisis in the first place. A Quick Home Sale is still possible if the owner prices the property sensibly and the purchaser has the money in place to complete the transaction.

Income multiples and lender assessment and credit scoring criteria seem to be set to return to an earlier time of caution and the availability of non status loans or impaired credit loans will be greatly restricted. Banks will carefully increase their lending in the property market but it will be only people with real affordability who will be favoured with such loans. This crisis has recently created a demand for “Sell House Fast” Companies who buy houses very rapidly indeed, but at below market value, using their own funds.

The impact of all this will be a measured increase in property transaction numbers over the coming months. However mortgage applicants will be restricted on affordability by more prudent income multiples and will need to continue to bargain hard for the property they want. Sellers will have to accept, especially if they want to Sell Property Fast, the reality that their property is now worth 25% less than two years ago, but they will gain by getting their next property at a similar discount.

So the merry go round of property transactions will continue and the mortgage market will certainly prove to be the main inhibitor on property values in the coming months and years. In time to come the past two years of falling property values will come to be seen as an essential market correction brought about by a return to older lending standards. In the meantime a slow rise in property values can now confidently be predicted.