This year the usual doom and gloom merchants Capital Economics and Jonathan Davis are still saying property prices will fall by 5% (CE) or up to -12% (JD). These two companies typically give ‘downbeat’ forecasts about the property market.
Other predictions suggest property prices will rise by up to 3% (Savills). The CEBR correctly predicted small falls in 2011 and then prices rising around 14% up to 2015. Although this sounds a lot, over a five year period, this means an average growth of just under 3% per annum, which means house prices potentially won’t keep up with current inflation levels of 4% or more. Hometrack predict house price falls of around 3% in 2012.
So, depending on whether we hit an economic recession in 2012 and how deep it is will determine whether prices show a little bit of growth or a small decline. If things get really rough with high unemployment levels, a sharp rise in repossessions and say a rise in interest rates, then it may be that the real doom and gloom forecasts of 5% or more falls could exist by the year end.
The following data and analysis helps us to understand what might happen over the next few months in the property market. However in view of the regional differences, it is essential to consult local property experts and not rely on national data which could give you a completely skewed view of the market.
For more information and analysis using For Sale Sign Analysis, Hometrack, National Association of Estate Agents and Royal Institution of Chartered Surveyors, please download the full release in PDF format.
What does the current market mean for Homeowners, Buyers, Sellers and Investors?
The current market suggests that for homeowners, nothing much will change this year unless you are in a tough area where property prices are falling 5% or more – such as Hartlepool, Blackpool, Carmarthenshire, Hull and North Lincolnshire. Owners of properties in these areas are more likely to find equity is being squeezed which could impact on their ability to re-mortgage their properties.
In other areas such as successful parts of London, the market is buoyant and homeowners can look forward to natural property price growth.
For buyers, in the main, the market will play into your hands as there appears to be more properties coming onto the market than there do buyers. However, the number of properties available for sale is still low, so although you could get a bargain, it may be tough to find the right property and when you do, with so many micro markets developing at the moment, you might end up having to compete to secure it.
For sellers, it’s all about understanding not just the local market but also the market for your individual property. Board counting is a useful way of doing this, just as For Sale Sign Analysis carries this out on a regional basis, so you can check how many similar properties to yours are for sale and how many are sold. If you are in a market where more than four properties out of ten are sold, it’s potentially a good time to sell, if it’s down around the one in ten, then you are likely to have to price keenly and have to wait a few months to secure a sale.
For investors, most areas across England and Wales should be quite attractive. Properties are sticking on the market and some sellers are likely to become desperate to move on this year, whether they are trading up or down. For those sellers that have the equity to be able to sell at a discount, investors can pick up a bargain. But, as stock levels are low, if you want to find a bargain, be prepared to do a lot of leg work looking at properties. You won’t be able to view a few properties and then make a cheeky offer. Finding a property where the deal stacks up could take you six months to a year and you are likely to have to look at over 100 properties to find a good investment.
Finally, all investors should be wary of companies offering ‘below market value’ properties, many of these are sold to novice investors who don’t know how to research prices properly and some have ended up buying a property which doesn’t necessarily have the discount they thought it did. Never buy a property without viewing it first!
For the full analysis please download the full release in PDF format.
For more information and property market commentary for consumers and one to one consumer property advice:-
Designs on Property Ltd (www.designsonproperty.co.uk) is run by Kate Faulkner, who spends half her time working as a consultant to the residential property industry, and the other half helping people carry out property projects. Kate is uniquely placed to help first time buyers, tenants, people trading up and trading down, renovators, self builders and would be property investors.
Kate’s new ‘Help me find a house’ service offers property hunters a 100+ page property pack which contains how tos, top ten tips, checklists and advice at every step of the way, including a one to one helpline via email or phone.
About Kate Faulkner
Kate carries out over 50 speaking engagements every year, highlighting property market issues to the industry and consumers. She has written six property books including four for Which? is a featured property expert on the 4Homes website, regularly presents market issues for BBC Radio Nottingham and has a column in the Nottingham Evening Post. She has appeared on BBC Radio 4′s You and Yours, BBC Radio 5 Live, ITV news and The Big Questions.