The Housing Market: The Winners and Losers By Susy Copus At Isnare.com Ezine Articles

The housing market crash has it's winners and losers. Which one are you?

By mid 2007 house prices were still rocketing with the early predictions for 2007 to be that house prices would continue to rise possibly by around 10%. That was before sections of the investment world realised that their money had been invested in the US's collapsed housing market. With that realisation, money was pulled out of the system and lending came to a near standstill. We know the rest of the story.

First time buyers had been priced out of the housing market and were fearing that the longer they out of the market, the harder it would be to buy their own place. Family members would contribute to a deposit, friends could co-own a property with a shared mortgage, or people decided saved and rented meanwhile. Now, with house prices set to fall further in 2009 affording a house will become easier. In fact, according to The National Association of Estate Agents (NAEA) the proportion of first-time buyers entering the housing market in November 2008 increased for the third month in a row. First time buyers accounted for 10.4% of all properties sold, up from 8.3% in August.

Cash buyers are the next winners. Cash buyers will be able to buy a property without having to secure a mortgage and will be the crème-de-la-crème of buyers, so sellers will be more likely to lower their price even more to secure them.

Investors buying property at auctions to renovate or to let out are winners too. As reported in the Guardian, the average price of a house sold at an auction has fallen by 31.1% in the three months to November, compared with the same period a year ago. This is more than double the falls reported by Halifax and Nationwide.

Homeowners wanting to move up the property ladder could also be winners. Assuming a mortgage can be secured, the percentage fall in higher priced property will equate to more money in your pocket.

The main losers are those that bought at the height of the property boom and now are facing negative equity for a number of years. For some homeowner, the recession and the expected redundancies may equate to mortgage payments being unaffordable. As such, house repossessions are expected to rise by 67% from 45,000 this year to 75,000 by the end of 2009. This includes homeowners and landlords whose rental income no longer covers the mortgages.

In terms of life satisfaction, sellers waiting to sell are losing out on a daily basis. They want to move house, yet are stuck where they are until they find a buyer. In the meantime the value of their property is falling and they are losing money. Estate agents are trying to drum up business by holding a high-street end of year sale. Yet, moving over Christmas and the holiday season is historically a quiet time for estate agents and the housing market in general.

The housing market is likely to continue falling in 2009 and may bottom out by 2010. A slow recovery is expected and banks, adverse to risk, are unlikely to lend at the levels seen in 2007. Property will be in comparison, cheap and more affordable. Borrowers will be low risk and able to pay either fairly small deposits with a higher interest rate or larger deposits with a lower interest rates. As a result the market and prices will be more secure and making money on property will be through long term investment or property renovation.

If you are thinking of buying or selling now, or in the near future, review your options carefully and work out how you can be a winner.

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