UK Property Market Overview for 2008

Buyers and sellers of property across the area will be wondering what the outlook holds for 2008. Well-respected estate agent, John Wilkinson, said “I have been selling houses across the local area for over 50 years and seen it all. Many estate agents will have only ever seen the good times over the last 15 years, and thus we are well-placed to advise on local market conditions”. We believe that this year will hold mixed blessings for property owners depending on what type of property they own.

It is significant that my fellow Partners and senior staff all have in excess of 20 years’ experience in varying markets – which cannot be said about many other business, small or large.

Local conditions are good

The fact is that the local property market has “special conditions”, which make it different to most other parts of the country. For example, we have seen the construction of an awful lot of property in Milton Keynes, Aylesbury and Leighton Buzzard over the last few years and an unfortunate majority of this has been two-bedroom apartments rather than traditional family homes. There has already been a significant drop in new two-bedroom apartment prices over the last four months, and this is being compounded by several other factors.

Home Information Packs (HIPs)

There is no doubt that this has been a complete failure in that of the several hundred houses we currently have for sale (of which many have a HIP available) we have only had one person out of many thousands that have contacted us over the period actually even ask to see the pack. The traditional market of No Sale No Fee, where a homeowner can place a property on the market without cost, has been changed by the Government now forcing homeowners to spend somewhere in the region of £350 to £650 just to place the property on to the market. Accordingly this has deterred a lot of prospective sellers from placing their homes on the market.

Credit Crunch

The “credit crunch” that has affected institutions like Northern Rock and the subsequent national publicity has also dampened buyer activity and created uncertainty in the market place. Under these conditions, buyers and sellers tend to sit still and watch what happens before deciding whether to buy or sell. Accordingly, it is logical that certain types of property may well see a downward correction in price, whereas other types of property where there are fewer available on the market and in short supply, will see much better market conditions. The buy-to-let explosion in property over the last 10 years has seen the private rented sector increase very significantly as a proportion of the overall UK market. Many property owners now have a second or more property which they let. These properties have seen considerable price growth over the years and rental demand has been strong. These conditions have changed significantly very recently and it remains to be seen whether these investors will remain in the market and ‘tough it out’ or decide to dispose of their assets now.

Inward Investment supports local prices

It is not all doom and gloom, however. There are major job relocations taking place around the country, often funded by the employer themselves. There are several significant corporate relocations into the Milton Keynes region taking place in the New Year and this will create much-wanted demand and activity in the market.

Similarly, the Milton Keynes, Leighton Buzzard and Aylesbury region does not suffer from significant unemployment. Indeed in many sectors there are vacancies and an upward pressure on wage settlements. This situation is unlikely to change whilst the region remains so strong economically. This situation will only be further enhanced by the opening of new infrastructure enabling people to move around the area much more quickly and efficiently; for example, the Stoke Hammond Bypass, the East-West Rail Link and other imminent major infrastructure projects will all assist the economy.

Interest Rates

Many people will remember in the early 90’s interest rates of 14%, compared to today’s rate of 5.5%. The fact of the matter is that interest rates look likely to remain low for 2008, and if anything there is now a downward pressure. It is quite likely that a further cut will appear early in the New Year.

Over recent months the Prime Minister has reinforced the need for three million more properties to be built in the UK over the next 20 years. The fact is we are living longer, there are more people living alone, and there is an increasing population largely coming from migrant workers creating this demand. Thus, whilst there may be a short-term correction, the medium to longer term demand for property is strong.

What for 2008?

Some property will do well and will probably increase in price well above inflation (expected to be circa 2%) albeit at more modest levels than recent years at probably 5% House Price growth generally for 2008. It is likely that well presented family semi-detached and detached homes will remain in relatively short supply and we anticipate good demand and strong prices for these types of home. Most property where there is relatively short supply, will probably find more than one prospective buyer and thus sell well. Certain already ‘over-inflated’ property, specifically new apartments will see a significant correction in price. In Milton Keynes on certain developments there has already been a correction of a massive 25% from Spring to Winter 2007.

Good news for first time buyers

Where the correction has taken place then there is every reason to believe that first time buyers who have been absent from the market for the last 5 years will be able to return to the market. This will enable ‘chains’ to be built and will stimulate the entire market – naturally.

The political scene is also of critical significance. It must not be forgotten that there will be Local Government elections in many areas in May and a Presidential election in the autumn of 2008 in the USA. Both of these facts mean that the political cynic will believe measures will be put in place to “assist” the election process.

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