Housing Market - Are We Reading A Bit Too Much in Recent Reports

 Recession is official over in some European countries, like France and Germany. People are beginning to be optimistic about the immediate future in UK commercial market, leading to higher employment and a rise in property prices.

But we think that UK is structuraly quite different from these European countries. Although news from France and Germany is good news, UK reflects different challenges. UK is a much more indebted country than its European counterparts. UK is highly dependant upon Financial sector, and US recovery is crucial to UK's prospects.

UK is also an export oriented economy whereas both France and Germany have large internal consumption markets. Although recovery in Europe is good news for UK exporters, an immediately full fledged recovery is not not cards.

We expect UK to comeout of recession either side of Christmas this year. This is because this will be the time when the fiscal stimulus, i.e. billions injected by UK government will start to show their positive effects.

Higher Interest Rates and Housing Market
Some people are concerned that the billions of pounds pumped into economy will inevitably give rise to inflation. To counter that, Bank of England may be forced to raise its base interest rates rather steeply. No one knows for certain but this remains a distinct possibility.

Higher interest rates will not help the housing market. However an ease of credit to first time buyers will help support it.

Many experts seem to agree with our observation. Quoted by Times on Line, here are expert views about the housing market in UK in general for rest of the year:

From Antony Crovella, United House Developments
Interest has been quite consistent for the past three months and, unless we see another significant financial disaster, I think September, October and November should be reasonably active. There should be no more price falls, but the market is still price-sensitive, which means things will sell only if they are appropriately priced.

From Charlie Ellingworth, Property Vision
The recession in London seems to be a downturn without a downside and is nothing like the brutal squeeze between interest rates of 15 per cent and falling asset prices that we saw in the early 1990s. The London market has been characterised by plenty of buyers, many of them with dollars or euros in their pockets, but very few sellers at all levels. If ultra-low interest rates are the prop, then the big question mark must be over interest rates and where they go from here.

From Simon Powell, Chesterton Humberts, Salisbury
The market will come back strongly in September and October for a condensed selling period as strong as anything seen so far this year. We will have the usual seasonal dip through the new year. Stock levels will be key in spring. There are increasing numbers of families who have had the ambition to move for two years or more and will not be be prepared to keep their plans on hold any longer.