January Property Market Update
At this time of year, out come the property market predictions appearing from all types of different sources. The general prediction for the market seems to be a steady market from all sources with growth between 4% and 8% - in fact the Halifax states 4%, Nationwide 5 - 8% and the Royal Institute of Chartered Surveyors 7%.
We do not intend to make any predictions as the market will be largely controlled by the prevailing interest rates. Looking back at the most recent slump in property prices in the late 80's and early 90's, interest rates rose between June 1988 from 7.38% to 14.88% in October 1989 with a total of 13 rises. This was over 100% in actual terms and meant in many cases that householders were paying twice as much on their mortgage payments. As we all know, the property market slumped and there was a great deal of negative equity which in many cases, was not cleared until the mid to late 90's.
Looking into the market more recently, buyers have become very used to cheap money. For nearly two and a half years after the millennium, house buyers were used to rates at 4% and below with a rate of 3.5% for 6 months in 2003. Following a warning from the Governor of the Bank of England and interest rates rising from 3.5% to 4.75% (a 35% rise) the property market slowed until 2005 when interest rates were dropped to 4.5% and the market quickly moved forward again.
Since then the market has risen with double digit house inflation in 2006 (Nationwide 10.5%). This is shown by a very strong market on all sectors, particularly in the south Midlands where the market is influenced by the bonus culture of London and the City.
Interest rates have moved from 4.5% to 5% in the latter part of 2006 and the majority of economic commentators believe they will go higher to 5.25% or 5.5% later in the year. This will not have an enormous effect on the market and we believe will keep it moving forward. However, if interest rates rise to 6% a rise of a third from the rates we became used to 2005/6, then the market will slow. This seems very unlikely and therefore we can look forward to a continuation of a steady market moving forward which suits buyers and sellers.
- Ashby de la Zouch
- 01530 412821
- Banbury
- 01295 271 555
- Knutsford
- 01565 757970
- Market Harborough
- 01858 410 200
- Newark
- 01949 851815
- Southampton
- 02380 883150
- Stafford
- 01785 220 044
- Worcester
- 01905 453275
