A local take on house price predictions
Winkworth's local estate agents look at prospects for property in their areas.
Dominic Agace, Managing Director of Winkworth Franchising Ltd
We have seen a 50pc reduction in sales transactions from 2007; however, there has also been a 30pc increase in rentals activity, as buyers watching the economy unfold are choosing to rent while they await the bottom of the market.
Sales prices have also gone down by 20pc, compared to last year. I believe prices will fall a further 5-10pc (following a historic 30pc drop in price during recessions). People moving up the property ladder, who have significant equity, will take a four year view on buying a property.
In my opinion, we have seen the bottom of the market in terms of volume. Next year, I don’t foresee a sudden uplift in volume; however, reduced interest rates will start to peg the bottom of the market.
We are already seeing those with significant cash re-entering the market as share volatility continues and savings rates have all but disappeared, property at a 20-25pc discount starts to look attractive.
With over 80 offices in London and beyond, Winkworth are in an ideal position to comment on the housing market in specific regions of the UK. The following document comprises property market predictions for 2009 from seven Winkworth franchisees across the UK.
Ian Fraser, Franchisee of Winkworth Islington
The Government’s announcements in the pre-Budget report are likely to do little to alter the state of the housing market.
However, that is not to say that the outlook for the London housing market is not positive as we head into 2009. Firstly, affordability is going to be increased with falling interest rates, especially for those with tracker products. Coupled with this, as interest rates fall and Government borrowing increases, sterling will fall, making already low property prices even more attractive to overseas buyers.
Secondly, confidence is creeping back as buyers realise that they can get a property 25pc cheaper than summer 2007, and at these prices, the future effects of the recession are already “priced in” to the market.
Finally, there is an enormous amount of pent-up demand from buyers who need to move for all the usual reasons: births, marriages, deaths, job changes etc, but who have been putting it off for the last year or so because of the falling market. Now that the bottom of the market appears to have been reached in Islington, buyers are going to have the confidence to get on with their lives, and we have already seen volumes of sales agreed this autumn increase to something much closer to normal levels, compared with their lows during the summer.
Alex Thompson, Director Winkworth Notting Hill
Generally, the Notting Hill property market was affected more quickly and deeply than the broader economic climate. Therefore, I believe that the property market should recover more quickly than the economy. Property has, at times, lost up to 30pc in value, and may have a little more to lose. If another interest rate drop occurs, this will incentivise people to start buying, even if it doesn’t necessarily push banks into providing more tracker products.
There will be a slow start to the New Year in Notting Hill; prices will come down a bit further still but sooner or later transactions should start to pick up.
Ian Dickson, Franchisee of Winkworth Hammersmith
If the property market follows the same pattern as the 1990s downturn, then I would expect to see a spring bounce next year. There is a build-up of frustrated people who have been waiting to move for a year now, however everyone is nervous and I would not anticipate any recovery in prices in this area until 2010, just more sales being achieved.
Confidence should be boosted by the recent interest rate drops and hopefully Government pressure should result in more mortgages becoming readily available, this should stabilise prices to allow a recovery in 2010.
Nigel Field, Franchisee of Winkworth Kennington
I think 2009 will see a stabilisation in the market; more buyers will come into the fold in the first quarter as banks start to offer more reasonable mortgage products. There are many people out there who want to buy and good quality properties in popular locations are receiving a lot of attention. Lettings should also stabilise
In my opinion, in Kennington we have not yet reached the bottom of the market, however, hopefully the New Year will bring with it a new sense of enthusiasm and optimism.
Josh Kravitz, Franchisee Winkworth Tottenham
Next year’s property market in Tottenham will depend on mortgage products and interest rates. If 90pc mortgages become available and interest rates remain well below 5pc, this will have a huge impact on the part of the market where demand is, primarily young professional first-time buyers. Good quality properties, period properties with original features, will then be more likely to rise in demand and price.
Job security is also an important factor for buyers at the moment; security needs to return before people will start buying again. Buyers now have a long-term, not short-term view to property investment.
Tim Winney, Franchisee Winkworth Highcliffe
In Highcliffe, if properties are correctly priced, they should generate interest straight away in 2009. Recently, I have seen non-dependent buyers, common to this area, come back into the market, which is an indication that the bottom of the market has been reached here. More buyers have started making offers, especially second home buyers, which is also an encouraging sign.
Top-end properties have bucked the trend throughout 2008 and have continued to sell, mostly to buyers from outside Highcliffe; predominantly from the Home Counties and London. This should continue into 2009.
People who wanted to move up the property ladder are now able to do so as the market has shifted and the gap between properties has narrowed. They will be able to take advantage of the price reductions and move to their aspirational properties.
Sarah Waldeck, Franchisee Winkworth Lincolnshire
I foresee that the beginning of 2009 will still be tough for the property market in Lincolnshire. However, by spring I hope to see things picking up again and banks becoming more sensible and providing more mortgage products. HSBC has already promised to offer more mortgage products, and hopefully this will encourage other banks to follow suit.
The interest rate cuts will help to encourage buyers in the New Year. I have already seen an increase in investment cash buyers who are choosing to invest in bricks and mortar rather than leave their money in the bank. £90,000 in a savings account will earn around 3pc interest, working out at £2,700 per year. A £90,000 property in Lincolnshire would be let, almost immediately, for around £450 per month, making £5,400 per year.
So investors are being clever and opting to buy property that will bring them greater returns than a bank account and will also gain capital growth over the years.
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