As we are heading toward the holiday season and the New Year, many people will be asking what will 2012 bring? If you had hopes of moving to a new home, you might be particularly wondering what will happen to property prices. Will 2012 be the year you buy a bigger and better home? Or your first home? Or should you stay where you are?
With all the financial troubles in Europe adding to fears about our economy, declining take-home pay, higher unemployment and strict lending criteria making mortgage financing difficult, should we be fearing the worst for the property market in 2012?
Channel 4 Homes just featured an article asking experts from across the property industry to offer their insights into what the near future may hold for homes.
With experts including estate agents, mortgage advisors, financial advisors, and services that study and record the ups and downs of the property market all offering their opinions, only one thing is certain. It is hard to know.
One surveyed expert believed that London house prices could drop by -3.7% while another felt that prime London locations with good schools, transport links and leisure and retail facilities could easily gain 5%-10%. And there were predictions for everything in between.
One expert Neil Monnery, author of Safe as Houses, A Historical Analysis of Property Prices admitted, 'One of the lessons from the Safe as Houses research is that it is very hard to do house price predictions, particularly over short time periods.” Monnery went on to offer his best theory, “My guess would be that if interest rates remain low, then house prices will be flat or slightly down in nominal terms, and more significantly down in real terms as they move back to the long term trends. If interest rates rise to "normal" levels (say 2% above inflation), I would expect house prices to fall materially. In part for that reason I expect the government and the Bank of England to continue with their very low interest rate policy.’
So, if the answer to the question, What will happen to property prices in 2012 is “Nobody knows”, what are you supposed to do?
What Should You Do?
Mortgage Availability - The continued difficulty in obtaining mortgages will continue to influence the property market. However, don’t assume that you would be unable to get a mortgage. Part of what can cause a stall in property markets is actually people’s belief and confidence levels which have been heavily influenced by media outlets constantly saying that there are no mortgages available. However, as everyone’s situation is different, it doesn’t mean that mortgages won’t be available to you. Take advantage of an independent mortgage broker’s expertise and ask if you might be able to obtain a mortgage. You might be pleasantly surprised. Even if you aren’t currently eligible, the mortgage advisor will be able to give you advice about what you could change to turn a rejection into an acceptance. Northfields can refer you to an independent mortgage broker who will be able to look across the entire mortgage market and see if there is any financing available for someone in you circumstances. The advice is free and there is no obligation, so why assume you aren’t eligible? Find out for sure by calling Northfields now on 0208 840 6666 to be referred to an independent mortgage broker.
Don’t Get Fixated on the Asking Price – We all do it. We all think that our house or flat is the best of the bunch. And we all want prices that reflect our pride in our place. But Henry Pryor, housing expert makes these points: “Second timers' (the majority of buyers) should remember that it is only the price difference that matters – what you pay and what you accept for you home are relative numbers.” In that regard if you are worried that you won’t achieve a high enough sale price on your home. Pryor says, “Don’t. What you want to buy will be equally effected”, which means that the house you buy will be cheaper too, so when you move you will have purchased more property for your money. And that in turn means, that your new property will accumulate value more quickly when house prices rebound. Pryor also cautions downsizers saying, “don't assume that your home is more special than the one next door or down the road. Prepare for the fact that your property isn't worth what it was four years ago and if you have decided to sell, pay attention to the three Ps – price, presentation and promotion. Quote a sane asking price that demonstrates you are serious about selling. Make sure the house looks its best. Don't assume that buyers can see past the ring around the bath!”
The thing about price is that many estate agents will inflate the asking price that they think a property can achieve in order to win the instruction. When you have an estate agent come to your home for a valuation, ask what properties similar to yours, in your area have recently sold for. An estate agent who has done their homework will be able to give you that information and you will be more aware of what your property could realistically achieve via that estate agent. If you want an honest and realistic assessment of what price your property could attract in this market, call Northfields on 0208 840 6666 to arrange a free, no obligation valuation or request your valuation online here.
Timing – When is the right time to move? As the panel of experts in the Channel 4 article clearly demonstrates, “the best time to move” is purely conjecture. Prices may go down in the future, but then they may go up and your area may be different from the norm, particularly if it is in a desirable area. If you need or want to move and you have the financing to do it, why wait? Just remember that although property remains a good long term investment, purchase a property with a view to finding the right home for you, rather than seeing your home as a potential investment. Buy with the view to remaining for 5-10 years and you will be better insulated against negative equity.
Having said all of that about timing, Northfields’ Managing Director, Richard Palfreeman has always purchased his properties in November and December. During the busy holiday period most house hunters are too diverted by Christmas parties and mince pies to be going to viewings and making offers, so the competition amongst buyers is always reduced during the last two months of the year, meaning that properties can often be had for a more reasonable price, particularly if sellers are motivated to move and get their property transaction sorted before Christmas.
So if you are looking to buy property, don’t wait to see what 2012 brings, phone Northfields now on 0208 840 6666 to tell us what sort of property you are looking to buy or register your interest online now by clicking here.