Is the recovery coming?
Is the recovery coming?
This is a question my clients continuously ask me. They seem to be getting more anxious and frustrated every day. Especially the clients who have loads of equity but may not meet the strict affordability requirements. They may also have bad credit which lenders are simply not interested in at the moment.
I watched a programme last week which investigated the problems young people or first time buyers are having trying to get on the property ladder. It labeled them as "boomerang kids". This is because the only way they can save a deposit is to move back home. This will enable them to save the £750 per month that they were spending on rent. But it would still take them 3 years to save the deposit. Although their parents agreed it was with some reluctance.
What's the solution?
They interviewed some lenders and also a building contractor. The outcome was both seem to blame each other. One saying there's no point as there's not enough funding to sell the properties and the lender said that we need more affordable housing. There is some truth in both of these arguments but the staggering figure was that we need as nation to be building somewhere in the region of 240,000 new properties per year. Unfortunately we only built half that in 2011 and will do similar in 2012. Surely if the government pumps the money into building affordable homes rather than saving the sorry backsides of the banks then we would would solve part of the problem. Back in the 1920's both the US and the UK built there way out of the depression.
On a positive the US property market is showing strong signs of recovery. Many regions are seeing strong sales and price increases leaving analysts talking about a sustained recovery. Like the UK, the US is experiencing a bit of a lending drought but is still further on the road to recovery than the UK. That said, it was the US who was first hit with the credit crunch. Hopefully this will mean that we will start to follow in 2013.
Another positive is that "State Bank of India" (SIB), India's largest bank is to enter the residential market in 2013. Albeit they will only target London and the South East to start with. Their plans are to build up 5% of the UK market within 10 years. This in my opinion is great news. Yes, they are only dipping their toes in to start with, but its a start.
In conclusion we still have a long hard road ahead of us and we live in hope that things will get better sooner rather than later. I for one will remain as optimistic as possible and will continue to look for the positives that keep us all smiling.