Steady As She Goes

As I write my first column of 2015 in the first EDP property supplement of the year, it is appropriate to take stock of where the property market stands, and what its prospects are for the new year. 

In 2014 it was arguably too buoyant; you might be surprised to hear a house builder say that, but in actual fact we tend to wish for exactly the same as most homeowners – stability in the market. 

So I’m pleased that most professional commentators are forecasting an average 4% increase in house prices for this year.  This figure is below, and in some cases well below, some of the predictions made this time last year, and we should be glad of that.  No-one wants to see a return to the rampant, speculative price increases we saw in the early 2000s, because we all know what the inevitable result of that would be. 

In actual fact, prices had started to cool towards the end of 2014, but that was simply the kind of seasonal blip which happens every year as the nights lengthen and our minds turn to Christmas.   

As the days lengthen and the daffodils start to appear, people’s thoughts once again turn to moving house, or buying a new home.  Evidence would seem to suggest that this spring ‘bounce’ will happen earlier, suggesting a confidence we haven’t see in January for some years; we have started 2015 with two house reservations on the first weekend of the year. 

This confidence comes from stability, and my new year’s hope is that this stability continues throughout the year.  Although there will always be upsets along the way, the Government has created a steady, growing economy, with low inflation helping to protect spending power.  Unemployment continues to fall, giving buyers are the confidence to commit; buying a home is one of the biggest decisions that we make in our lives, and therefore job security is key.  

At the same time, The Bank of England doesn’t seem to be in any hurry to raise the base rate, and most commentators agree that any rise, when it comes, will be very gradual.  Alongside this, the Stamp Duty revisions announced at the last mini budget is an important factor that will help boost the confidence of buyers.  

Of course, May will see a General Election, which could upset this stability.  We may see people hurrying to get their moves complete before this happens, whilst others will wait and see what happens.  So the year could see a couple of mini ‘bubbles’, early on and again from June. 

I have written many times in this column that one of the most destabilising influences on the property markets is when the media talk prices up (or indeed down), with wild forecasts of booms and busts.  So it is refreshing to see many experts reported predicting steady growth in prices of around 3% this year, and similar growth in subsequent years.  That is enough to keep the market buoyant without it overheating, and is yet more evidence of a new-found stability. 

Affordability remains an issue, not just in the price of the home itself, but how much it costs to run it.  With buyers looking for energy-efficiency and low maintenance costs, we new house builders can look forward with optimism to 2015.  Let’s just hope the politicians don’t rock the boat.