We could not have picked a more challenging year to open our business – but what better time to fuse our experience and enthusiasm together to create a professional estate agency to offer advice through some difficult times in the housing industry.
After an unpredictable rollercoaster of a year, 2010 overall saw a small rise in house prices from the start of the year, somewhere in the realms of 4.5% overall – albeit not without its peaks and troughs in the months between.
Regardless of the slow start, in the first quarter of 2010 a definite imbalance between buyers and sellers developed following on from an active last 6 months of the previous year. It appeared buyers were fast becoming overcrowded against the scarcity of quality country houses and town houses available. For those that made the intuitive decision to sell between February and April, they were likely to find themselves bombarded with potential purchasers and in some instances achieving a sale price far in excess of the advertised guide price.
This imbalance continued up to the early summer months where Election and World Cup fever interrupted an active selling market. At this time, a trend emerged whereupon sellers new to the market reacted to the ‘spike’ of activity reported in the months prior and enthusiastically priced their properties to the market. Regrettably, this buoyant pricing was not met with the same interest, as slowly the buyers who were looking had found whilst not being replaced with new applicants registering. As the more sellers entered the market and few buyers sought property, the weight of imbalance changed and prices became static.
The third quarter GDP grew by 0.8%, wrong-footing many of the UK’s economists. The growth, fuelled principally by the service sector and construction output, provided a welcome boost for the government following the publication of its comprehensive spending review. Despite the unexpected GDP results, key activity indices are pointing to a sharp slowdown in the economy in the final quarter.
The restricted mortgage market refuses to write bland cheques for the UK’s residential market. Lenders are favouring credit worthy buyers and those looking for low loan-to-value mortgages. This means that high loan-to-value, interest-only and self-certified mortgages are all but a memory in the UK at the moment. Overall, lending volumes are now at their lowest level since 2000, according to the Council of Mortgage Lenders.
Although considerable attention is paid top house prices, it is the volume of activity taking place that provides the real insight into underlying health of the residential market. Whilst supply is reasonable, mortgage lending is still declining. Tighter funding conditions contributed to a sharper-than-expected seasonal fall in demand.
It has been no surprise that the UK’s economic recovery continued to slow into the fourth quarter of 2010. This, combined with the beginning of the government’s austerity programme and the ongoing mortgage drought, will act to pull prices down overall to around a predicted 6% in 2011. There is always going to be regional variations on these ‘guesstimates’ and I would expect Suffolk to fare better than many next year.
Bury St Edmunds and the general Suffolk area is seen to be more resilient that many other counties, particularly to the north. Demand for town living appears to be ever-strong, and with the likelihood of more quality houses coming to the market in the New Year, one would expect a healthy start to against the predictions of a tough Q1 in 2011. If prices are to edge off it would be typical to see it in the first two months, however, I would not be surprised to see a continuation of stagnancy albeit with an increase in transactions.
Whatever the outcome, it will be an interesting 12 months where constant monitoring between agent and vendor is key to stay in-touch with an ever-moving housing market and to maintain keen and sensible pricing.
