Everybody was getting a little excited at the beginning of 2014.
The stimulus that had been pleaded for by estate agents and financial organisations started to take effect. Help to Buy and Stamp Duty amendments combined with an apparent improvement in the economy caused a strong bounce in the housing market.
Due to the relatively low number of properties on the market this improvement caused some fairly sharp increases in house prices and agents reported a depletion of stock. It would appear that vendors react slower than potential purchasers and it took some time for a greater number of properties to come to market. This in turn led to calls for the incentives to be withdrawn to calm the market.
In the latter part of 2014 the housing market all went a little quiet in the media, there were murmurs of small house price falls in parts of London but generally the market was beginning to settle. Transaction levels also remained relatively steady around 100,000 residential property transactions per month.
Our prediction of an 8% rise in house prices, that many thought was to optimistic, eventually transpired to be a little conservative. The Halifax has reported a 8.2% increase in 2014.
So what is in store for 2015?
As we have suggested in our previous years predictions (2014 House Price Predictions), second guessing the UK property market is fraught with difficulties. The market is super charged by a chronic lack of supply and we still build far too few properties to alleviate the supply and demand issues. We also have a general election, historically low interest rates and a shaky looking European economy.
Despite this, the feed back from estate agents is becoming more consistent across the country. We have started to hear a term that we have not heard for a while ‘if vendors are realistic we can get a sale’. We believe this to be a sure sign that the market is settling into a good place with enough property coming to market to prevent unsustainable house price rises but also a strong demand. Location is still of great importance but the boundaries are definitely softening and London is no longer leading the charge on prices.
Mortgage lending fell in the latter part of last year due, in part, to new restrictive measures introduced by the lenders. December bucked the trend and showed a slight increase and with these restrictions now showing signs of loosening slightly, and with a good degree of competition in the mortgage market, we expect to see an increase in mortgage lending again.
Netanagent.com has just seen a record number of properties listed during January, some 74% up on the same period last year. Whilst some of this will be down to improvements on netanagent.com, we believe this is a very strong indicator that the market is gathering pace. Even more encouraging is the number of properties that have proceeded and been instructed to agents during January, this shows a genuine desire to sell as opposed to just researching the market. We believe that in a couple of months we will start to see some very positive headlines, relating to the property market, being published in the media.
As for our predictions, we believe 2015 is all about transaction levels and the number of house sales completed as opposed to large jumps in house prices. That said, we still expect to see an increase nationally of approximately 5% to 6%, well above the general consensus of about 3%.