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Too early to celebrate upturn, says Crown

Thursday 17th December 2009

Too many commentators have got carried away by their own positive rhetoric, said Steve Haggerty, group chief executive of Crown mortgage management.

“Sadly, I think we’re going to face some quite torrid times, particularly in the first half of 2010, both in the housing market and the economy,” said Haggerty.
He called the property market resurgence this year a “false recovery” and warned mortgage levels remain well below “normal” levels.

“The market’s recovery has been led by existing homeowners using the equity in their properties to move up the housing ladder, plus limited numbers of first time buyers entering the market, often helped by the bank of mum and dad. Now we have entered what looks ostensibly like a Christmas slowdown, with most recent housing market indicators showing price falls. While seasonality is no doubt part of it, this may be the beginning of a second phase of weakness stretching well into 2010,” said Haggerty.

Arrears and possessions continue to rise and CML figures show possessions undershooting their forecasts, but the situation is deteriorating gradually, he said.

“2010 will be worse than the 53,000 possessions forecast for 2009, and 2011 is likely to be as bad. Moreover, government measures such as the pre-action protocol and mortgage rescue scheme, plus the moral suasion placed on lenders to exercise forbearance and private sector initiatives reduce the number of possessions based on the statistical data. But in fact people are still leaving their homes,” he said.

The lack of a sub-prime market, first-time buyers and historically low LTVs are all also problematic, he said, adding new lenders will emerge during 2010 but that will take time.

He predicted an end of year slowdown, which could drag well into 2010. “We could see the UK come out of recession and almost immediately slide back into it - the ‘double dip’ effect.”

“People are ‘bored’ with recession - they want to spend money, they want to feel more confident, they want to buy a home or move house. But with the spectre of post-election doubts, plus a build-up of negative economic and financial news, they are likely to wait and see. Only once the world cup in South Africa is over on 11th July (and I harbour hopes that Capello’s boys may do well) are we likely to see any real consolidation in either the housing market or the wider economy. Even then, it being summer, the pick-up will be slow.”

He added: “Maybe by autumn 2010 we’ll start seeing the foundations of a real recovery and by this time next year the housing market and economy will be looking more positive again. A long haul, I’m afraid.”

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Posted By LC on Thursday 17th December 2009 14:18:11

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And a Happy Christmas to you too Crown Mortgage Management! Personnally I think the depression junkies like this are the ones who will fail in 2010....more positive people will flourish!

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