What matters more, future predictions or past performance?
Slowdown? What slowdown? Against the trend of most recent market forecasts, one agent is suggesting that growth in the mainstream UK market will see up to 32 per cent price surges by the end of 2018.
Recent comment from within the profession says the average UK house price growth has exceeded all expectations over the past year and expects average annual UK house price growth to settle at 9.5 per cent this year, well ahead of the 6.5 per cent which it originally forecast.
This will be followed by 4.0 per cent growth in 2015 and 25.7 per cent overall in the five years to the end of 2018, fractionally higher than 25.2 per cent originally forecast.
In the case of London this view appears to go against the grain of what other agents are saying.
For example, an Agent in south west London has claimed that price rises are “grinding to a halt” and “flat-lining” in its area. Another has also been significantly more downbeat; it says property registrations in the capital rose by 25 per cent year-on-year , while new buyer registrations increased by only seven per cent.
So what should we believe? House price growth in the mainstream market has been underpinned by record low interest rates, rising loan-to-income lending and pent up demand from buyers re-entering the market as the economy and consumer sentiment have improved. However, these extraordinary rates of house price growth may not continue in the current, more regulated mortgage environment, particularly in the face of likely interest rate rises.
Predicting price rises in the property market can be a dangerous pastime. Pundits, agents and the Government can frequently get it wrong. Equally difficult is the task of predicting a fall because it is so negative and consumers don’t like negativity even if they know deep down the market may collapse. In a bullish market such as exists now, some negative predictions are made simply on the back of a quiet period within the year. For instance, August isn’t going to be the same as June, so the year must be judged as a whole.
Also, Government should not be too hasty in bringing in financial restrictions due to rising London prices, as these percentage increases are rarely replicated throughout the country. For a true picture, the only way is to look back at Land Registry figures over a twelve month period, but in our opinion the public want to know about the future not the past and we don’t have that magic crystal ball.