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UK Real Estate Recovery 2 Years Away, says Colordarcy

Just recently the real estate news from the UK has been looking pretty positive, as the latest Rightmove house price survey released at the beginning of this week shows the highest ever new seller asking prices for March with an increase of 1.7% on February's prices. However real estate investment firm, Colordarcy thinks Britain isn't out of the woods just yet.

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Its analysts have pointed out that taking a look at the reason why prices have surged reveals quite a different picture. The managing director of Colordarcy, Loxley McKenzie said "There are many theories about what makes a property boom and what makes a property market bust. The reality is actually quite simple-property investors and buyers need finance and they need it to be easy to obtain. The last boom was fueled by easy finance gained from Self Cert and 100% mortgages. This one is different- it is an artificial boom created by government schemes that cater for one section of the market with the hope that it will kick-start a recovery."

It is a fair point, as the government's New Buy scheme and Funding for Lending scheme are aimed primarily at helping first-time buyers and those with deposits to purchase or invest in new homes. Colordarcy analysts have pointed out that those already on the property ladder and buy to let investors are not receiving the same level of help as first-time buyers. As yet, schemes allowing second-home buyers with negative equity to invest don't exist, and finance for existing homeowners is still hard to come by for everyone except those with the very best credit ratings. This is making it impossible for many so-called second steppers to move up the property ladder.

McKenzie went on to say "What seems to be happening in the UK is a boom for new properties and a relative slump for secondary properties outside London and the southeast."

This view seems to be backed up by other statistics, as according to the RICS the number of property sales in Britain is still only a half of levels seen in 2007. Although the UK government's intentions are good, it's schemes may only have made things easier for first-time buyers and developers.

Historically recovery from the last major UK recession took nearly 7 years before a new expansion phase began. As it is only been five years since the biggest recession in a generation, analysts at Colordarcy feel it's only reasonable to expect recovery to take a similar time as it did in the early 90s and that things won’t really begin to pick up for another two years.

Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

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