With all the doom and gloom in the media recently and predictions of massive house price crashes ahead, I thought it might be worthwhile to give our opinion on the current state of the property market and our predictions of what we think will happen moving forward:
It seems that you can’t pick up a newspaper or turn the TV on without seeing some “expert” tell us that we are heading towards a recession which will mean that the housing market will drop and everything is terrible.
So, rather than all panic and accept these predictions without looking at some facts, let’s all think about things a little more logically.
The one huge difference between now and the last recession back in 2008 / 2009 is that back then, banks had little or no money. In the current scenario we are in, banks are sitting on plenty of money – in fact possibly more money than they have had in decades. It wont therefore be the case that they can’t or won’t want to lend money to people, as this is how banks make money. What it will mean however, is that that they will want the security they are lending on to be as safe as possible. Therefore, getting a mortgage for those with a good track record and buying a good property is still very much doable.
Rising interest rates are also a factor that people are currently concerned about. The Bank of England are raising interest rates to try and bring down inflation. If they can cut back mass public spending, then inflation will calm from the current high back to there or there abouts their target of around 2%. Neither Central Government, nor the Bank of England want high interest rates mid to long term and we predict that rates won’t go higher than 4 or 5% over the next year or so and then as soon as inflation is under control, we could even see them start to come back down.
So, with these pieces of information in mind, what will happen to house prices and indeed the local housing market in the short and medium term?
Already we are seeing a lot of buyers hold back from committing to buy a property due to the uncertainty and negativity of the news outlets. However, as with any market, the properties that are priced correctly will sell. We don’t mean those that have dropped their price by a huge percentage either. Whereas six months to a year ago, you could market your home for say 5% more than the value given and because of the demand there was, sell quickly, now it’s not the case. You need to take your estate agents advice regarding current values and select an estate agent that will put the work in – Not just list your home online and wait for the phone to ring, but actively speak to motivated buyers and match them to your home.
And how about those that are asking us whether buying now could mean they will lose out on their new properties value when prices fall? Well, unlike much of the media, we don’t see anything like the level of “crash” that some are predicting. BUT, let’s say for arguments sake that house prices shift down by 5 – 10% (and we don’t necessarily think they will) If you are buying your new home for your family, the chances are you wont be looking to sell again in the next year or two. Therefore, even if we are wrong and prices do fall – guess what? They will go up again. In fact, if you look at data following every recession over the last one hundred years it will show that house prices increase over and above any short term losses every decade.
So… Our advice? If you need to move home and have the financial ability to do so then do it! Don’t put your lives on hold for something that may not actually be as bad as some are predicting.
Until next time,
Do you have any property related questions you would like answering? If so, why not drop me an email at; email@example.com