Recovery on horizon for housing market - but not just yet, say experts

(l-r) Neil Dickens (Manning Stainton New Homes Director), Guest Speaker Neil Parker (Strategist, Global Banking and Markets, The Royal Bank of Scotland) and Russell Manning.

15 February 2008

Delegates at a Manning Stainton Builder and Developer Breakfast Briefing at Oulton Hall between leeds and Wakefield, earlier this month were given some confidence that the housing market should begin a recovery in the latter part of this year. 

Hosted by Manning Stainton New Homes, the event’s guest speaker was Neil Parker, a strategist with The Royal Bank of Scotland Global Banking & Markets division in London.

Agreeing with the general view that house prices had fallen some 5% over recent months, Neil said he expected a further fall before recovery begins:

“The UK economy faces a number of challenges in the coming quarters following the credit crunch, the sub-prime mortgage crisis and a predicted global economic slowdown. Over the past six months the UK property market has already seen a significant slowdown in activity and residential prices have fallen by about half the amount we expect them to fall overall” he said.

“Importantly, though, the Bank of England’s interest rate setting body – the Monetary Policy Committee – have already begun the process of reducing interest rates to support growth, and the UK Chancellor has recently made some encouraging comments regarding a loosening of the fiscal purse strings.”

“We believe that the combination of a monetary and fiscal loosening will help the UK economy begin to recover, perhaps as early as the fourth quarter of 2008.”

Responding to a question, Neil agreed there was also a political dimension to the issue, as the government must call a general election within the next eighteen months and would want to see an economy in recovery and not recession.

Russell Manning said that, though the market was obviously harder, most of the prospective purchasers in the market were serious buyers and were prepared to buy given the right incentives. He also commented that home viewing levels at Manning Stainton during January were back to those seen in early autumn last year.