1. Housing Market Conditions South East London Housing Partnership Carole Oliver, National Sales Manager 24th November 2009

2. Key messages Re-pricing of housing market still has at least 12-24 months to run Slower headline price falls – prices ‘bumping along bottom’ Differential outlook for different segments Low turnover ‘illiquid’ market here for next 3-5 years ‘Negative pent up demand’ for housing … More price volatility New supply to remain subdued - adding to lack of liquidity Major viability problems have led to serious capacity constraints Rapid re-pricing of new build largely over now Very slow recovery in volumes over next 3-5 years Full recovery with normal liquidity and modest price rises requires Improved economic outlook and confidence First time buyers able to access finance and bottom rung of ladder

3. Source: Hometrack Low ‘liquidity’ a support for pricing

4. … compounded back lack of new housing Rolling 12 month total starts Source: NHBC Monthly starts annualised

5. Source: Hometrack Green shoots limited to the low LTV ‘haves’

6. Defining the size of the affordability gap Source: Hometrack

7. Intermediate market - 1.6m 20-39 yr olds Source: Can’t Supply: Can’t Buy Narrow IHM - Young working households aged 20-39 who are on incomes too high to get benefit but couldn’t access the lower decile end of the market

8. … price falls have had an impact Source: Hometrack

9. … academic if you can’t get a mortgage

10. Prospects for mortgage lending Negative net lending in 2009 Banks re-structuring balance sheets - some still heavily constrained Fewer active players in mortgage market - no clear market leader Drag on lending through Restructuring mortgage books Focus away from market share to maximising margin Focus on low risk / low LTV lending FSA prescription on lending policy and risk appetite Gross mortgage lending in 2009 a third of 2007 levels Resumption dependent upon Bottoming out in economic decline and greater stability in house prices More competitive pricing of loans recently but for less risky customers Future will be different to the recent past

11. … must consider local market dynamics Source: Hometrack

12. Terrace Housing Catford South Ward Source: Hometrack

13. £40,000 the income required for a LQ Flat in Lewisham Source: Hometrack

14. Overall market outlook 2009 ‘bounce back’ down to scarcity of housing for sale Affordability improving on lower interest rates …... but housing scarcity to remain a factor and keep entry prices relatively high Mortgage availability to remain a drag on demand well into 2010/11 … … especially with uncertain outlook for unemployment (incomes growth) Drawn out period with prices tracking sideways until ‘true’ recovery Opportunities exist as imbalances unwind …. but how to minimise risk All about local market dynamics and pitching product accordingly

15. For further information: Hometrack provides information solutions to the UK housing and mortgage industries. These services deliver accurate and reliable information which is vital for enhanced decision making and improved efficiency in highly complex and competitive markets. The Hometrack Housing Strategy Solution is a dynamic online system designed to empower today's housing strategists & researchers working in the local authority sector, providing instant access to unparalleled insight, intelligence and customised analysis to elevate understanding of local housing markets. Carole Oliver National Sales Manager T: 07889 995764 E: coliver@hometrack.co.uk W: www.hometrack.co.uk