Good recession bad recession, bad for property but better to come

Lord Young said in November last year that a “vast majority of Britons had never had it so good” during the recession because of low interest rates. Even though he got a lot of stick for that he was sort of right, so long as you were a borrower rather than a saver, and it appears most of us are. Although now Saga enabled I’m still a net borrower and suspect most like me still are despite exhortations to the contrary. Given current direct and indirect Taxation I’m guessing most would now feel less inclined to agree with his Lordship’s sentiment even though the yawning chasm of higher interest rates seems to be, for the moment at least, a mirage again. From a purely property perspective you’re continuing to see those who make their living from servicing it struggling. Volumes are still catastrophic, in both sales and lettings at the moment, and all this despite the re-emergence of a couple of 90% loans, one at 95% and some very clever and determined independent mortgage brokers who really do know which stones to look under and who really has the money to lend. If these people can channel enough lending to alternative sources that really do have the cash perhaps the high street might sit up and take notice, maybe it’s the only thing that will. You can’t rely on there being more cash buyers to take up the slack created by recalcitrant banks either. James Charles wrote a fascinating piece last weekend in the Sunday Times reminding us that in January this year there were a mere 53000 house sales according to HMRC compared to, for example, 120000 in June 2005 (not the highest month by some distance). But the interesting bit was that both months saw c.22000 cash buyers, with every month in between showing more or less the same number of those paying with readies. So what you’ve actually seen over that period is a drop in real transactions involving the life affirming process of getting a mortgage from c. 98000 to 21000 per month over the period, that’s a 78% fall.

Given the spectre of a rate rise appears to be receding perhaps that’ll be enough o tempt those wringing their hands to step up and buy that property they know they need but were putting off as they thought there’d be a terrible economic denouement. Is a soft landing and gentle growth enough to start the grinding wheels of the property industry moving again. We should have an inkling in about a months time and there’s more reason to feel hopeful now than when interest rates seemed destined to start an inexorable rise three months ago