Are property prices going up or down?
Since the beginning of 2009, we have received conflicting information from property price reports, some showing that the market is starting to increase, others indicating that property prices are still sliding downwards. Added to this we have the housing industry saying that they are selling more homes while economists are typically still full of doom and gloom, declaring that this is just a ‘blip’ and the market will still continue to slide in 2009.
So who is right? Kate Faulkner, one of the UK’s top property experts and author of Which? property books and Managing Director of consumer property website Designs on Property explains why we are receiving such conflicting information and more importantly, what is really happening right across UK property markets. “The problem with property price reports in isolation is that they don’t consider what’s actually happening from a volume perspective” say Kate Faulkner who studies property data on a daily basis. Kate also believes it’s wrong to talk about the ‘property market’ as if there is ‘just one’. “There are lots of property markets” says Kate. “It’s essential to monitor what’s happening with regular buyers and sellers, new homes, auction houses, rentals and investors”.
There are also other market indicators that are much better than property price reports which indicate what’s happening now and likely to happen in the future. For example, a company called For Sale Sign Analysis monitor how many boards are ‘sold’ versus ‘for sale’ at a regional level. At the height of the market, on average across England and Wales, most areas showed 40% of properties were sold versus for sale. Since 2008, sold versus sales boards fell to around 14%, but since the New Year the number of sold versus for sale boards have increased each month to their current levels of 29.5%. In some areas, such as Ivybridge, sold versus for sale boards are above pre-crash levels, at around 65%.
Finally, another indicator on whether the market has ‘bottomed’ out or not is the price and sale of new homes. Unlike second home owners, developers will sell their properties at a price people are willing to pay. Last year new homes prices fell, but this year as they are being sold at similar prices to the cost of building, developers would struggle to drop them further.
Where are the Property Markets Heading in 2009?
All property markets are in dire straits, mostly due to the lack of volume, which is very much influenced by ‘doom and gloom’ reports lowering confidence and the lack of mortgage availability, coupled with the fear of, or actual unemployment. The only market doing well from a volume perspective is the rental market, which although prices are depressed slightly, is booming with people opting to rent rather than buy.
So, bearing in mind the complex nature of these different markets, we’ve created a table explaining what’s likely to happen to in 2009 and what this means for different property sectors.
Notes to Editors
|Property Market||2009 Predictions||Implications|
|Regular Buying and Selling Market ||We will see a ‘stop, start’ in property sales over the year, with some areas and property types likely to continue to fall, while those in short supply will bottom out and see small rises.||Sellers who don’t need to sell this year would be better off staying put and spending money on value adding home improvements. Those that need to move could consider renting their home, or need to price realistically to secure a sale.|
|New Homes Market||Developers are unlikely to drop prices too much further, so prices are likely to stabilise this year. Stocks of new build however will continue to be low. ||Developers would attract more buyers by pricing keenly rather than by offering too many incentives such as cars etc. Buyers should continue to negotiate hard and check the value of incentives versus a reduction off the price. |
|Auction Market||Sales volume in auction houses will be up and down during the year, depending on the demand and supply of property in the normal buying/selling market. As more investors enter the market, prices may stabilise as ‘the best deals’ are sold.||Any desperate sellers should consider selling with a reserve through an auction house and all buyers should consider buying via auction to secure a bargain. However both buyer and seller need to ensure they understand the process fully before going ahead.|
|Rental Market||The supply in the number of properties available to rent is likely to subside by the end of the year as the buying and selling market starts to stabilise and stock dries up from developers/frustrated sellers.||Landlords need to price their properties competitively to avoid voids; work with a lettings specialist and talk to the local authority housing department to ensure they let the property. Tenants should negotiate on the rent/agent’s fees. |
|Self Build Market||Self Build plots are typically down by 20% in price, while supply is up by 50%. Due to high supply, demand will need to increase dramatically to stop prices falling in 2009.||Anyone with a 10-25% deposit should consider self building this year as prices, labour and materials are extremley low and you can still secure a mortgage on the land and build costs with a 10% deposit. |
Designs on Property Ltd
is a company run by Kate Faulkner who has worked in the property industry throughout the UK from relocation to self build and renovation, property investment, buying and selling and the lettings industry. Kate works as a consultant to property companies and individuals and has also undertaken many property projects, so understands the problems that people (and the industry) incur on a daily basis.
Designs on Property already works with property journalists and runs a property statistics
finding service for the media industry and provides a monthly ‘property market update’
on all aspects of property from commercial to land, buying and selling, letting and home improvement.