January is always a good
time to look back on the previous year to see how the local property market and
the general climate performed and to see if it could give us any guidance for
what is to come.
From a political front,
every year seems to become more and more dramatic and we always seem to be
looking round the corner for the next major development in our own, European
and World politics.
This is certainly not the
place for a great Brexit debate, or to review the benefits or otherwise of a
Trump dominated world. However, Trump
may dominate many headlines but it’s clearly Brexit which is having the
greatest effect on the economy, both locally and nationally. This in turn has bought about a profound
change in the local property market, some three years after the decline of the
market in the capital. I suspect one of
the reasons that our market has remained so strong is that Essex has remained
pleased with itself, having voted almost 2-1 in favour of Brexit.
Whether it’s as a result
of Brexit, or just that we’re coming towards the end of a long upward spiral,
which began in January 2009, but it’s clear that for the short term at least,
the rise in house prices is drawing breath and is certainly a great deal lower
than it was a year ago.
There are always a great
number of Banks, Building Societies, Industry Bodies, Property Portals and
Industry Commentators who all come up with their own statistics at this time of
year, but the only figures I’m happy to
rely on are those produced by the Land Registry and the Office for National
statistics. Having looked very carefully
at the statistics for the Southend-on-Sea area it’s clear that house prices were
increasing at about 10% per annum at the end of 2017. That increase has now fallen to between 0.75%
and 1.5% per annum. Quite surprisingly
we actually had three months in 2018 where house prices actually fell and what
is even more surprising is that these falls actually took place in February,
March and April after the strongest monthly increase of nearly 2% in
January. All in all, it’s quite clear
that the House Price Index has slowed and we are, at least for the short term,
going to have to get used to very little inflation.
For those who are
thinking of selling you can at least consider that you may be selling at the
end of a very long rise in prices, going back precisely ten years. Could you possibly be selling at the very top
of the market? I certainly hope not but
there are some pretty firm indications that buyers are likely to be fairly
cautious, until there is a clear resolution, to Brexit. The question is will this resolution actually
come about as quickly as we all hope, or could it be that we remain very
divided, for some years to come.
Looking back over the
last twelve months of the local property market, the slow decline in house
price inflation has clearly meant that it’s becoming that much easier to buy
and a little more difficult to sell.
That’s not necessarily a bad thing and will, I hope help to avoid any
overheating of the market and will I hope give us the best opportunity for a
recession free market change.
I see that a year ago I
was suggesting an average rise in house prices of about 4% during 2018. That now looks a little optimistic, as we
ended the year with house price inflation running at 1%.
Any prediction of future
house price changes is very, very risky and it’s all too easy to end up with
egg on your face. I think I’m going to
have a stab at suggesting that there really are two options for 2019, if we
have a gentle and sensible Brexit then there’s a good chance the market will
actually pick up, if we crash out then there is the real prospect of a severe
downturn, which could take many years to get over.
My tongue in cheek predictions for 2019
are as follows:
1. Interest rates will remain low
2. Brexit is still being debated at Christmas
3. Local house price inflation remains low
4. London house prices continue to decline
5. The Government will make it illegal to charge any fees to tenants
6. England win the World Cup – at Cricket.
7. Purplebricks announce that they can no longer cope with a difficult property market and go into liquidation
8. OnTheMarket becomes the leading property portal in the UK
9. Estate Agents are once again voted as more popular than surveyors and solicitors
10. Southend United beat Spurs at Roots Hall in a pre-season friendly in July