It has been over three years since the collapse of Leyman Brothers, and the markets still remain sluggish, indicating that recovery still remains on hold until the lending squeeze eases. Given these market conditions and the 94 day average time a property is on the market, sellers seeking to tie up a deal in the 94 days left before Christmas need to take action now to undercut and out-promote their competition.
New sellers are asking £7,255 less than they were three months ago, trying to strike a balance between maximising their returns and grabbing a buyer in the brief autumn selling season. Many buyers hope to move in before the Christmas break and enjoy their turkey in their new abode. With less than 100 days left before Christmas there's an opportunity for some deadline-focused movers to do their bit to get some action into a market that is still pretty moribund three years after the financial fiascos that precipitated the downturn.
Agents report that one of the reasons why the market lacks momentum is that prospective buyers do not feel any urgency to make an offer and conclude a purchase. However, prospective buyers looking to move before the festive season should note the short timescales involved. A further and more financially significant deadline is the ending of first-time buyer stamp duty relief on the 25th of March next year. The nil-rate threshold will fall from £250,000 to £125,000, so first-time buyers should be aware that they must have completed their purchase by that date to avoid paying stamp duty of 1% of their purchase price.
It's a tight but feasible deadline to find and be in a new home for Christmas. The stamp duty relief has more teeth to bite you in the pocket if you miss it, but that is a tasty incentive as long as you beat the deadline. There are a couple of opportunities here to get a sense of urgency into buyers, something that's been sadly lacking since the collapse of Lehman's put a seemingly indelible blot in the financial landscape.
The market needs and seeks solutions to boost housing activity. Government proposals to liberalise local planning laws are partly justified by a view that they will promote economic activity as well as providing a greater supply of affordable homes to meet demographic needs. However, the lead-time before developments come to market means that any benefits will take several years to come to fruition. While catering for future needs, they will do nothing to boost housing market activity now, at a time when, arguably, the impact and need is greater. The recently launched new-build FirstBuy deposit assistance initiative is an example of an incentive that, while limited in number, has created considerable interest.
Planning relaxation may help to boost housing market and economic activity in three or four years' time, but it does nothing to help the market now. The continuing lack of attractive mortgage products with higher loan-to-value ratios is stalling a housing market recovery, as first-time
buyers or existing homeowners with little or no equity are faced with years of saving to raise the necessary deposits. The risk is that the current turmoil in the financial markets, which would be exacerbated by a Greek default, could make lending criteria even tighter at a time when they appeared to be easing slightly.