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After a 2 year phase of stagnation with residential property sale transactions down by as much as 50% at times, there is presently a built up demand amongst residential property purchasers. What’s more lots of potential first time purchasers have had their ambitions suppressed and now recognise that residential property has become excellent value due to approximately 25% value falls. And finally, government estimates of the need for an additional 120,000 houses a year to be constructed have not gone away. All these factors indicate an imminent revival in the residential property market and suggest that an early return to 2007 transaction numbers of approximately 1 million a year should be possible even in the short term.

What presently seems to be restricting this amelioration is the shortage of mortgage finance, particularly for first time purchasers. Mortgage approvals are on the increase month on month but remain at levels appreciably below the mid 2007 levels. This seems to be more to do with supply rather than demand as the banks continue to open up their lending to residential property buyers with a degree of caution. The banks have to lend to be profitable and it is profit which will best repair their balance sheets, but it is vital that they lend carefully, it is widely held that their imprudence in residential property lending was a main cause of the downturn in the first place. A Quick House Sale is still possible if the house owner prices the residential property sensibly and the purchaser has the money in place to complete the transaction.

Income multiples and lender assessment and credit scoring criteria look like being set to return to an earlier time of conservatism and the availability of non status mortgages or impaired credit mortgages will be greatly restricted. Financial Institutions will carefully increase their lending in the residential property market but it will be only those with genuine affordability who will be favoured with such mortgages. This situation has recently created a demand for “Sell House Fast” Companies who buy houses extremely quickly indeed, but at below market value, using their own funds.

The result of all this will be a measured increase in residential property transaction numbers over the coming months. But purchasers will be restricted on affordability by more careful income multiples and will need to continue to bargain hard for the residential property they desire. Sellers will have to accept, especially if they want to Sell Home Fast, the reality that their residential property is now worth 25% less than 2 years ago, but they will gain by getting their next residential property at a similar discount.

So the merry go round of residential property transactions will carry on and the mortgage market will unquestionably prove to be the main inhibitor on residential property prices in the coming months and years. In time to come the past 2 years of plunging residential property prices will become to be seen as a necessary market correction brought about by a return to more conservative lending standards. In the meantime a gradual rise in residential property prices can now confidently be predicted.