What do you think about the housing market right now?
Do you think things are looking better? Are prices climbing? Is the recovery sustainable, not sure, not interested, all of the above?
If it’s all of the above, then I suspect you’re in the majority, and is it any wonder? Have a look at this selection of headlines, all from articles published within a week of each other.
“House prices rise for third consecutive month, says Halifax.” “Housing market still fragile with sales down 8.7%.” “Why house prices seem to be climbing higher.” “House prices to fall another 17% from here?” “House prices rose by 1.6% in September.” “Interest rates to stay at record lows until at least 2011.” “Mortgage lending falls in Q3.” “Interest rates held at record low.” “House prices rose 2.6% in three months, govt says.”
What is certain is that on average, the value of property is rising. The Nationwide index shows that house prices rose again in October by 0.4%. This was the sixth consecutive monthly rise and means that the average house price is now 2% higher than a year ago. What isn’t certain is can/will it continue.
Those that think it won’t, point to a short term lack of supply fuelling the uptick in prices, as homeowners postpone selling in the hope of a better price in the future.
Capital Economics’ Seema Shah, said current increases in price were being driven by a shortage of property, and predicted that if rises continued sellers would become more confident about putting homes on the market, increasing supply and therefore driving down prices.
Unemployment is cited as another reason it can’t last. With the number of unemployed already 2.47million and widely tipped to reach 3m next year, some commentators worry that this would damage any recovery, especially if interest rates start to rise. This would potentially lead to more repossessions and the subsequent increase in available property could drive prices down.
On the other hand, those with a more positive outlook point towards an easing in the downturn and greater consumer confidence as indicators that the recovery is sustainable. The mortgage market continues to offer extremely attractive interest rates, and more recently we have seen a noticeable increase in competition and lenders appetite to lend. There have even been some improvements for those with smaller deposits.
Ultimately the reason there are such polarised views is that we’re still in uncharted waters. With so many influences such as interest rate changes, inflation, and recovery from recession hard to call, then almost any forecast seems feasible.