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Is This Finally The Right Time to Buy? - 12/02/2009
The speed of the property market’s fall last year shocked homeowners, with nothing of that scale ever having been witnessed before. What started as a difficulty in the sub-prime mortgage market in the USA became a global economic crisis, and whilst mortgage availability became a problem, it was the spiralling lack of confidence that had the most profound effect on the market, fuelled substantially by the media. A self-fulfilling prophesy was created and once this happens, the effects, as we have seen, can be swift and severe. However, the flipside is that whilst the economists are currently predicting a long slow recovery, the same media-driven effect could well provide a welcome stimulus for the UK property market. It works like this: as soon as property-crash headlines become old hat, they will be replaced with more newsworthy rumours of recovery. Anything that bucks the trend sells newspapers! When this happens, buyers will conclude that the market has bottomed and will want to buy again, before prices rise. Vendors hearing of this activity will be less inclined to reduce their prices or accept low offers. The official figures will then reflect a slowing in the decline of prices and a tipping point will have been reached, with more buyers piling in. Momentum will then take over, with the banks believing once again that property, albeit re-indexed, is reasonable security, and mortgage availability will rise. So if you are in a position to buy, now would be an excellent time, for the overwhelming reason that as long as vendors believe the market has further to fall, they will continue to be prepared to negotiate. But as soon as they get even a whiff of recovery, they will harden their stance and there will be no more bargains to be had. Judging by the current rise in activity levels, and the recent fall in interest rates to their lowest rate ever, our prediction is that the tipping point will occur sooner rather than later.
