David Boyd, Managing Director, PAD4U Estate and Letting Agents Manchester writes:
There has been a wealth of news regarding UK property prices this week, so lets take a look and see what we can learn. First up Nationwide reported prices up 0.3% in February, making property prices over the year 0.1% lower. Secondly, the director of the NAEA recently reported their agents are seeing an upturn in the market. Thirdly, there is evidence of a pick up in mortgage approvals from the Bank of England. Lastly, mortgage conditions have eased recently with some lenders including Northern Rock providing 90% mortgages – although at eye watering rates. The overall conclusion of most analysts is of a property market moving sideways, but perhaps not.
At the beginning of the year I predicted a flat market over 2011, and for now I see no reason to alter this prediction. However, for all the talk of a double dip risk in house prices, there are factors which could result in property prices rising over the period, which I do not think are being given a voice. Firstly, interest rates remain at historic lows, although it is certainly anticipated that we will have one but more likely two rate rises bringing rates to 1% perhaps over 2011 (this is still historically low), Secondly, inflation is running high and may rise even higher in 2011 before heading down again to the BoE targets (inflation is usually good for the property market and rents), Thirdly, there is a gradual easing of the mortgage market both for Buy-to-Let and for FTB (First Time Buyers) although there is certainly some way to go.
Perhaps most importantly, however, is that I do not believe that the British people have completely lost their appetite for property nor altered there perception or rather aspiration of home ownership. An Englishman’s home is still his Castle, our psyche has not yet adapted to a European view in my opinion. So although there are certainly more people renting than ever, the pent up demand to buy is still there I believe, awaiting the “right conditions”, whatever these are, for people to buy their *own* home.
At PAD4U we have seen a recent upturn in activity and offers on property. Still, it’s hard work to get Vendors and Buyers to see eye-to-eye, the market is still very price sensitive. The return of investors who are looking for buy-to-let properties has also increased. But keep in mind that this is starting from a very low point in the housing market. My prediction is still for a flat market, but whilst I wouldn’t rule out that there are factors which could result in a double dip in house prices, economists would do well to keep in mind there are factors which could result in rising house prices in 2011 (they may save themselves some red faces).
For the would be investor or buyer, the most important point is to be careful with statistics. There are wide variations not only in different regions or even cities in the UK, but between suburbs separated by only a few miles! Take the time to research the “local” market very well indeed, speak to local agents, look at what is selling and what isn’t, this is where to invest your time and energy – and you’ll be more likely to judge things right than economists pouring over national statistics.