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Housing Market Opinion / Forecast |
| 2008 |
| Trend..DOWN |
Heading for recession ? but a good time to buy?
After our correct prediction for 2007, we now predict that the town market will continue to slide for 2008. The more resilient country market has stared to show signs of weakening and this is a good indicator to the state of the economy.
With rising inflation and falling house prices, has the bank “snookered” itself? you may well ask because if it cuts rates this will be inflationary and if it does not the housing marked could collapse back to the point where rental returns yield double figures.
If rental returns yield double figures again and banks free up lending, this will underpin the housing market and fuel a bounce back. If they do not, expect a recession.
With regards to rental, we are now seeing the phenomenon of “let to rent”, again a good indication of the market as people are unable to sell, but need to move.
Most property millionares were made with stocks they bought during a downturn as properties are often "given away" for knock down prices. Now can be a good time to buy if you can buy off market for reduced prices. We have seen examples of houses being sold for as much at 30% under retail.
The super prime market, eg £2,500,000 + is as strong as ever as mortgages are almost non-existent and buyers intend to live in the properties for decades.
Julian Blackmore
Author: Julian Blackmore, May 2008 Comment To Author
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| 2007 |
| Trend..DOWN |
Stormy Waters
With increasing caution amongst buyers, some un-realistic valuations and hyper inflated "marketing" values, as predicted sales volumes in the area have reduced substantially. As said in an earlier opinion, when some agents are giving valuations that are as much as 30% higher because of a change of calendar year, natural market forces will cause stagnation. This combined with increasing interest rates, the HIPS debacle upsetting free market dynamics and reduced numbers of first time buyers we are expecting this trend to continue for the foreseeable future. We have seen examples of houses being as much as £100,000 over-valued in the £300,000 to £500,000 price range as agents struggle to gain instructions. As yet we have not seen tangible reductions in property exchange prices, only in marketed values and for this reason a true downward trend is not occurring at this stage.
The number of Buy-To-Let investors enquiring about off-loading portfolios has increased substantially and this may have one of two effects, either a reduction in property prices or the attraction of more buyers to the market and stock is freed up.
Country / Village Property
As usual, property in desirable village locations remains pretty much immune to any fluctuations because of the longer term view of the average village buyer combined with their generally more affluent status.
Prediction for 2008
With the above in mind, we are expecting to see difficult market conditions in the town areas for the rest of the year and with further reduction in house prices from their current advertised levels. Please note the emphasis on advertised values as apposed to previous actual exchange values. We cannot stress enough the need to use an agent that understands the market dynamics. We also expect to see more “bargains” as some vendors compete for buyers.
Author: Julian Blackmore, 19th July 2007 Comment To Author
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© 2006-2007 Bournes Estate Agents Ltd ~ Head Office: 8 Swan Court, Andover, Hants, SP10 1EZ 01264 300300 enquiries@bournes.biz
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