The Housing Market is Changing
Things are changing in the housing market.
Those who regularly read my blog may well have been surprised at my latest articles about buying in holiday resorts. I have made it clear that I think buying a holiday home is a dreadful waste of money. It appears that the larger property companies are having the same thoughts about property in general.
We are going to see a shift in the way things function. I said back in the nineties that owning property was going to become more difficult in the not too distant future. Governments will increasingly interfere in the housing markets as houses are visible and cant be moved. They will attract more taxation, and a lot of that taxation will be masked in the form of regulation. As with virtually all my predictions I was right, and that is how things are now playing out.
Not only that, but it seems that the latest fad is Build-to-Rent. Large rental organisations are thinking of building properties specifically to rent out rather than to sell. I have increasingly thought this is the way of the future for the housing market.
‘Build to rent’ schemes would almost certainly be aimed at younger professionals and possibly retirees stepping away from home ownership, and incorporate social and sporting facilities such as pools and gyms.” This quote from the latest survey.
Five years ago I started buying into hotel schemes specifically to give myself somewhere free to live for a month every year, and have an income from the shared rental. It seemed the way forward. For the past two years I have been suggesting that rather than buy you should keep your head down and probably rent until things improve. And since the beginning of this year I have been showing you how you can manage property much better by renting while investing your funds in something more lucrative.
Meanwhile we have the latest bank mortgage lending figures. The publicised figures show a healthy amount of lending, but they are adjusted figures, or, as I prefer to say, fiddled. The real figure is almost half the publicised one: 23,329 loans in January. That’s over 50% down on normal market levels pre-crash. The figures also show that 25% plus deposits are generally needed, ruling out the one class of buyer that drives the housing market, the first-timers.
“When you consider that two of the biggest high street lenders, Lloyds and RBS, are currently taxpayer-owned and in theory have almost infinite reserves to lend from, this is a damning indictment on banker activity to support the economy. “Lending to small businesses is also shrinking as the same group of bankers fail to support this crucial part of the economy as well.”
You can take it there has been a big shift in the housing market. Things are not functioning the way they used to. The old metric is no longer any use. With bank lending in the background the whole financial spreadsheet has changed.
If you did not read my previous blog showing how mortgage lending changes house values, then do so. It’s crucial reading: