An odd time for the property market!

What is the problem with the property market?

It is a funny thing the housing market, around the country the overwhelming feeling is that the property market is heading for another crash. The Land Registry have reported drops in prices throughout the country apart from London which boasts a modist increase of around 2% for the year.

I remember when the general rule was, if London was rising the rest of the country would too! Yet for most parts of the country this just does not seem to be happening. Infact everywhere is going down whilst London is going up!

Our offices cover Stockport, mainly postcode sectors SK2, SK7 and SK8 with SK6, SK3 and SK12 being border villages where we have property. The picture across these areas is mixed at best, all 3 offices are selling property and but each having to deal with their own micro markets, one showing prices at the same levels of 2007, one around 2006 levels and one seemingly floating around 2005 levels, yet all within 4 miles or so of each other.

So what is holding the market back....why are fewer properties selling generally (we interestingly have sold 31% more property in June/July 2011 compared to the same two months last year) but why generally is the mood so grim?

*Surveys show, the majority of people "WOULD" still like to buy rather than rent!
*Surveys show, may buyers think prices "WILL" increase over the next 5 years!
*Results show, "FEWER" Houses are being built!
*Facts show, "MORE" houses than ever before remain available on the open market!

SO why, when there is a demand for property, a stock of property, potentially a shortage of new homes and a clear indicator it could well be a buyers market out there and the perfect time to steal a bargain is property NOT selling across the country as well as they should be........

Mortgages! Mortgages! the vehicle to buy is just not there in the numbers the market needs to maintain it and see growth in the immediate future!

Deposit levels needed to get the best deals are still too high for most people and without the return of 100% mortgage (which most will agree) are far too risky, it seems to be a battle between the lenders lending more freely and prices having to drop to meet what perhaps the lenders are waiting for which is lower risk property prices.

I still get a little confused, because if this is the policy set out by lenders to wait for lower prices....take a £200k property, needing 20% (£40k) deposit to get the best deal.

That property at £160k if the market dropped 20% would still require a £32k deposit on the same basis to get the best deal. Now personally I think saving up £32k could be equally as hard as saving up £40k.......so what is the answer to the problem?

Does that £200k house need to be £70k so just £14k is needed to get the best deal, or by then will the lenders have introduced 100% mortgage again? or will more 95% mortgage be available as a result of lower prices....?

What is the answer? I certainly think a forced drop in prices is not the answer, as all this will do is send more people into negative equity and most of these will then stay put....it will be interesting to see where we are in terms of prices in 12 months time from now.