Predictions for the new year are usually not made until December but with many people asking “what is going to happen to the market” it’s worth taking a peek now at the tea leaves of the housing market and perhaps looking ahead to 2010. Who knows, we may find that in six weeks time things have changed – for the better, I hope!
I said in January that I though that we would look back at the last quarter of 2006 and Q1 of 2007 as being the peak of the market and I expect the market to fall through 2008 – by up to 20% in some places. Estate agents are already reporting buyers offering 5-10% less than asking prices – even so called ‘realistic guide prices’ and my own experiences of the last two property recessions is that for at least the next six months, any deal that is agreed today immediately results in either someone thinking they have over paid or someone else, that they have under sold. The result can be ‘gazundering’ (where a buyer drops their offer just before exchange of contracts).
But what of the market in three years time? People say that “property is a long term game”. It is impossible to say with any degree of certainty of course but one of those who are prepared to put their money where their mouth is are be the Spread Betting companies who are suggesting a fall – from a UK average of £198,500 last month to £179,100 in December 2010.
Having seen prices in parts of London rise by over 20% so far this year, for some a 20-25% fall wouldn’t be as painful as it sounds but for anyone who has bought recently or for those who will see values fall by more than the average, the next three years could be very painful. However, remember that if you are buying and selling in the same market it is all relative. As many people have seen in the past ten years, if you make a lot on your own house, the house you want to buy becomes that much more expensive too. Conversely, if your have to take a hit on your own house, the chances are that the house you want to move to will be that much cheaper too. But at least you can move if you want to. In a stagnant market, it’s hard to even move since no one wants to offer for fear of paying too much.