LATEST PROPERTY MARKET NEWS

Cash buyers scent rich pickings in property.

This grab-a-bargain-now strategy is based on the belief that if you catch a market within 10 per cent of its bottom, you are doing well. This trend is set to increase the proportion of homes owned without a mortgage, which stands at 45 per cent in England.

Savills, the estate agent that forecast a year ago that property values were set for a 25 per cent decline, is finding that buyers are prepared to deal if the prices are reduced by that amount, according to Yolande Barnes, residential research director.

Ms Barnes believes that interest at this level could be a factor militating against another steep decline. Property is acquiring safe-haven status, with the moneyed classes spooked by the Icelandic banking scandal and weary of poor stock market performance.

First-timers left behind by bargain-hunters.

Buyers lining up, but mortgages out of reach .

James Hyman, residential partner at Cluttons, the property consultant, said: “The risk element of property investment is beginning to be removed. Stock market values are down, banks are not offering any form of return and with rental values holding up in London, in many cases it is now once again becoming cheaper to buy than rent.” However, like other agents, Mr Hyman insisted that the market remains fragile.

The recent increase in viewings after months of torpor that was reported by Savills yesterday is also being experienced by other agencies. The Royal Institution of Chartered Surveyors' monthly survey of its members revealed a rekindling of enthusiasm among buyers.

But many of those eager to clamber on to or ascend the ladder are unable to proceed as a result of the continuing shortage of mortgage funds. Yesterday's figures from the Council of Mortgage Lenders (CML) showed that lending slumped by 48 per cent last year; in recent weeks, there has been little sign of improvement.

Ms Barnes said the housing market was in stage one of its recovery, with life returning to the “über-towns” of the South East, such as Cambridge, Guildford, Oxford, Sevenoaks and Winchester. These are within reach of London, with good schools and handsome family homes close to the town centre.

But she added that the process would not extend nationwide for a decade; prices will not be restored to their 2007 levels until as late as 2019 in some locations. “We are far from seeing green shoots but the seeds are about to be watered,” Ms Barnes said.

Lucian Cook, of Savills, believes that “funds are massing” and overseas investors are once more active in the market. In stage two, the revival will spread outside the capital to the top tier of properties in locations, with owner-occupiers using equity to move upwards on the ladder.

Other sectors will start to feel the benefit in stage three when mortgages become more plentiful. Only in the final phase of the upturn will prospects brighten for first-time buyers and amateur buy-to-let investors.

— The number of mortgages granted to homebuyers nearly halved last year, falling to the lowest level since 1974 as banks and building societies reined in lending despite several big lenders receiving billions of pounds in taxpayers' cash.

Some 516,000 home loans were granted to buyers in 2008, down from 1.01 million in 2007 and the lowest number since records began nearly 35 years ago, figures from the CML show. The number of first-time buyers, crucial to the health of the housing market, also plunged to a record low.

source: Times online

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