UK Property Market is Back in Business
The most recent statistics confirm house prices are rising again at last. It seems the property market has finally turned a corner and is heading once again in the right direction. But if you are thinking of selling your home and want to achieve the best selling price, I would suggest doing it now – because there is likely to be at least one hiccup as we head into next year.
Most market analysts, property price surveys and official statistics show that UK home values are now improving, albeit gradually. Importantly, the more reliable sources of this type of information are also in general agreement – the consensus is that prices are up, buyers are coming out of the shadows and the market is moving out of stagnation.
This is good news for most homeowners and property investors – but it may be an all-too-short event, as disappointment is probably waiting for us in a few months time.
The surveyors professional body, the RICS (Royal Institute of Chartered Surveyors), confirmed that values across England and Wales rose last month to the highest they have been since 2007, which is when most agree the credit crunch began. The RICS are not alone in reaching this conclusion. The Halifax has also released figures that show values have risen nearly 6 per cent over the last six months. Although any rise is welcome news, analysts have been quick to point out that prices are still nearly 5 per cent lower than a year ago.
The property consultants, Cluttons, have added fuel to the fire by saying that gazumping has returned to the Central London property scene. Cluttons suggest this market is now overheating, partly due to a glut of foreign buyers and partly due to a shortage of homes on the market. They point out that the situation may be temporary, because underlying unemployment levels are still rising and the current shortage of homes for sale is likely to turn into an excess when sellers release properties they cannot affordably or easily remortgage.
One of the biggest online estate agent’s, findaproperty.com, have now also climbed aboard the price rise bandwagon. Their figures show house prices have risen by £6,000 on average over the last six months, an increase of almost 3 per cent.
Even the government’s own official figures are supporting the price gain claim. The Department of Communities and Local Government’s data shows a 2.6 per cent average increase over the last quarter, contrasting sharply with the 1.7 per cent fall over the previous quarter. Other good news came when figures released showed that inflation had fallen to its lowest level in five years, which further helps confirm Britain is edging its way back to stability and (hopefully) prosperity in the not too far off future.
The problem is, most of the house price gains seen in recent surveys and statistics are almost entirely supported by more buyers entering a market where there is a severe scarcity of suitable homes up for sale. Scarcity means there is high competition amongst buyers, which is forcing prices up artificially. Once more sellers enter the arena, prices will slow down – and they may actually fall back again. But keeping up with the general positive mood of this article, I am happy to report that RICS surveyors predict price increases will continue for at least the next three months.
Influential property agents and consultants, Knight Frank, say they expect the market to be very unpredictable next year, with prices rising and falling like a game of snakes and ladders. But they also predict that by 2011 we will see prices rising in a more consistent way, with full stability and recovery being realised in 2012.
What the various statistics and reports seem to collectively suggest is that there is a short window of opportunity right now for sellers to achieve the best prices they are likely to see for a while. In the longer term, the housing market seems set to return to its prior high values in a couple of years from now, so if you are under no pressure to sell – hang on to get even better returns in 2012 and beyond.
I suspect much is going to depend on mortgage availability, because even though prices may recover and interest from prospective buyers might return, these will be meaningless if buyers cannot access suitable and competitive loans. To put it in a nutshell, buyers cannot buy without money in their pockets, no matter how eager they might be to invest.A case perhaps of being ready and willing … but not necessarily able.