WHAT’S IN STORE FOR
What does next year’s property market hold for me and for you? Recession or soft landing? The property boom of the past 10 years has confounded the doomsters so far. But this year things may just be different. The credit crunch has brought to its knees No
Frustrated first time-buyer, 25, renting in London
Relax: it’s your turn to enjoy yourself. You have seen prices running away from you for several years, and suffered the gloating of contemporaries who stretched themselves to get on the housing ladder. For you, every market slowdown has proved to be a false dawn, but this time it is different: the chances of a significant correction in house prices are growing by the day. You should keep actively searching for property: the more you keep your nose to the ground, the better the decision you are likely to make. But you needn’t hurry, and you certainly don’t need to do what some of your friends did two years ago — buy with a stranger just to get on to the property ladder.
Try looking in Hackney, east London – which is one of the places where, according to the Halifax, prices could do best next year. And keep an eye on the auction rooms: repossessions are expected to double to 45,000 next year, which means a lot of property will be disposed of at knock-down prices.
Keep looking, but don’t rush in
Couple, both 28, expecting first child, living in £160,000 three-bedroom house on new estate in Bootle, Liverpool, with £150,000 mortgage
You struggled to get on the housing ladder, and now you are wondering about the wisdom of it. Next June, your two-year, 4.75 per cent fixed rate mortgage comes to an end and you face either having to pay your bank’s standard variable rate of 7 per cent or else stump up at least £1,000 – which you can’t afford — for a new fixedrate mortgage of about 5.5 per cent. And, worse, your job is looking shaky. As an investment, your home has proved unexciting: its value seemed to go up for a while; now it seems to be coming down.
The bad news is that your type of property is likely to underperform against the rest of the market. According to the information company Experian, Bootle, has the dubious distinction of boasting some of Britain’s most highly-mortgaged streets – one where the average mortgage is worth 99 per cent of the average property. Newly-built estates are a monoculture of highly-mortgaged families who have bought at the top of the market; many of them are now struggling and one or two have already suffered the trauma of repossession.
However, this isn’t just an investment: it is home to your growing family. It will be painful, but you should hang on as best you can. The good news is that interest rates have already come down one notch: further falls are likely, although, with inflation still a danger, far from certain. If you are having trouble, you should contact your lender as soon as possible. Breathe in, forget the foreign holiday and try to hang on
Buy-to-let investor, 36, with 10 flats in Birmingham worth £1.25m — and a £1m mortgage
“It was Mrs Thatcher who got me my house,” said one former Labour voter, explaining why he was backing the Tories in 1987. By the same token, you are
Hackney... where first-time buyers might get lucky
In the swim: for some, uncertainty in the market means clinging to home base. Others may look starry-eyed towards the Scilly Isles (above), where there is less chance of a crash than anywhere else in the UK
Bootle...Britain’s most highly mortgaged streets