What will happen in 2010?
2009 was a difficult year for home buyers and sellers. The first half of the year saw prices continue to fall while the second half saw increasing prices in some areas. So what does 2010 have in store for us?Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and house sectors to gain an insight into where the market is and where it is heading.
House Price Index Halifax +1% (monthly change) -15.38% (fall since peak)
House Price Index Nationwide +5.9% (monthly change) -12.87% (fall since peak)
Interest Rates 0.5%
Quick Move FTI 37%
Inflation 2.9%
Economic Growth +0.1%
Unemployment 2.46 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 20/01/2010
Prospects for the housing market remain very uncertain and 2010 is likely to prove a difficult year for many home buyers and sellers.
Mortgages
In recent days we have seen the UK’s 4th largest building society increase their standard variable rate by 1.45% despite no change to base rate. This makes mortgages more expensive for both current and prospective clients. Many more lenders are expected to follow this move which could add £1000’s to homeowners annual mortgage costs.
At the same time inflation has increased rapidly and now stands at 2.9% well over target of 2%. If this trend continues it could well lead to increasing base rates which would make mortgage repayments even more expensive.
This could lead to mortgages become more expensive as it will stifle demand as people cannot afford to take on larger mortgages. Also after the economic woes of the last 2 years many people are very close to the red line, even a small increase in interest costs could see them slip into arrears. Should there be a big increase in cut-price repossessed properties hitting the market we could see a corresponding market dip.
Election
With a general election widely tipped for May this year we could easily see a new government in power. The housing market is important to millions of voters and is the driving force behind economic growth and stability so housing will have to be a central part of policy for whoever is in government. Some of the policies could have a major impact on the market for instance the Conservatives have already said they will abolish Home Information Packs within weeks of coming into power. Without the prohibitive cost of a HIP many more homeowners will go on the market. Unless attractive mortgage deals become available there may not be enough demand for these houses. If the market becomes flooded with property it may lead to another fall in prices.Over coming weeks and months the parties will launch their manifestoes and we will keep a keen eye on the various plans for the housing market.
Unemployment
Although unemployment figures seem to have a hit a plateau this situation could change rapidly. Global market conditions could easily take a turn for the worse which may finish off many companies who are just hanging on. Huge cutbacks are also expected in the public sector soon after the general election. In many areas the main employer is the public sector and any large redundancies would have a huge impact on the local economy and housing market.
Potential for a double dip in house prices. Well the jury is still out! But I don’t think any sensible industry commentator would rule out a double dip in prices. The more likely scenario is fluctuating prices with little or no annual growth in prices. However as usual the London market is likely to be the powerhouse and many regions will experience very difficult market conditions.
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