Cadman Homes, estate agents in Rugby have provided a report due out this week, demonstrating the strength of the property market recovery, and in particular the news that the “negative equity” trap that snared borrowers who bought their first home just before the credit crunch has all but disappeared. There is great demand for properties, but also a shortage of homes coming to the market.
The findings are published as official figures are expected to show Britain’s economic growth outstripped the United States and Europe in the first three months of this year. Before the release of the first official GDP data for 2014 on Tuesday 29th April, a range of indicators from house prices to advertising spend and manufacturing output suggest the economy has gathered steam this year, with the recovery becoming more broad-based as solid manufacturing output balances rising consumer spending.
The Rugby estate agents report that less than 1% of buyers are trapped in London, the south-east, south-west and east of England, and figures are low in Wales, Scotland and the Midlands too.
“We are seeing more and more people being mobilised to sell that were trapped even up to one year ago”, said Adam McHenry of the family owned firm, based in Castle Street Rugby.
According to data from the Countrywide Group, the number of first-time buyers whose properties purchased in 2007 are now worth less than the mortgage raised to acquire them has fallen from a high of 60% in the winter of 2008 to just 6%. Rising house prices brought the proportion down from 15% a year ago. The report says a total of 364,000 homes were bought by first-time buyers in 2007, and only 22,000 of them, mostly in the north of England, are still in the red.
“As a local estate agent, it is vital that we understand the economics behind the market, so we can advise our clients of the facts, not the fiction” Adam continued.
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A pick-up would be a further boost for George Osborne on top of predictions from the International Monetary Fund this month that the UK will be the best performing international economy this year. Conceding it had been overly pessimistic last spring when it warned the chancellor to ease austerity measures or jeopardise growth, the IMF said GDP growth would soar to 2.9% this year before returning to its long-term trend of 2.5% in 2015.
Economic growth and GDP are playing a major part in the recovery of the property market as confidence soars, and demand from buyers outstrips supply. This is having a knock on effect locally with agents like Cadman Homes seeing a shortage in supply of properties for sale.
“Currently at Cadman Homes we are seeing 2.5 offers for every property, this means that we need nearly 3 houses for every one on our books currently” Adam explained.
“It’s hard for potential vendors to choose an estate agent they are weighing up what service they will get as you only know how good your agent is once you’ve instructed them, however we have a 100% recommendation rating with our clients, and there aren’t many agents that can say that”! He continued.