THE publication of house price predictions for the year ahead now coincides with the switching on of the Christmas lights in the shops. You could see this either as a warning not to blow your gift-buying budget (if property prices are set to fall) or as a sign to make merry (if prices are set for a prosperous new year).
And indeed, for one commentator, the answer to the market’s direction lies in the shops themselves. Yolande Barnes, director of research at Savills, will today reveal more about her thesis, which you could call “the Primark principle”.
The base rate rose by one quarter of a per cent to 5 per cent last week and could rise again as early as February. But Ms Barnes argues that, despite higher mortgage repayments and utility bills, many homeowners still have a comfort- cushion surplus. That is because of the falling prices of clothing and other goods at Primark and other discount retailers. Ms Barnes says that surplus is likely to be spent on house purchases — with soft furnishings by Primark, I suppose. Only if rates rise to 6.5 per cent, giving a variable mortgage rate of 8.5 per cent, would the market grind to a halt.
Capital Economics, traditionally the Scrooge of the sector, has been revising its gloomy views, in face of the average 8 per cent price rise this year. Last Christmas Capital felt that the market would go nowhere, with the typical homeowner struggling to afford to move to something bigger and better. Now the group considers that higher rates will “finally tame the market” in 2007. Prices will appreciate by just 3.5 per cent and by 2 per cent in 2008. But London, Scotland and Northern Ireland should outperform.
Landlords will be hit by the combination of lower growth and more expensive borrowing. However, continued demand from Polish builders and other migrants will support rents, which Capital believes will rise at 5 per cent for the next two years.
More pundits will deliver their deliberations next week. Meanwhile, the latest Royal Institution of Chartered Surveyors statistics prove that the property party rocks on. Valuations are even edging upwards in parts of the North and the Midlands that have previously stayed away from the celebrations. But some agents report a new trepidation among clients over rates, which suggests some cooling next year. That is less of a prediction than a commonsense assertion.
OUTLAW THE ROGUE AGENTS
The Queen’s Speech contained plans for a scheme of redress against rogue estate agents and reforms to speed the planning system. Both sets of proposals are unsatisfactory and you do not need to consider all agents to be rogues or be an unswerving Nimby to think so.
It may be comforting to know that you could claim compensation for such agent misdemeanours as overcharging, price-fixing and misleading descriptions without going to court. But it would be more reassuring if that individual were properly regulated in the first place — something reputable agents have long demanded.
Estate agents are the only professionals in the homebuying process who are not officially authorised. Anyone can set up in business as an estate agent. Solicitors, mortgage lenders and surveyors must comply with tough regulations covering their relations with the public.
If the Government believes that there are enough instances of agents’ bad behaviour to merit a redress scheme — and, indeed, complaints against agents are on the rise — then it should seek to outlaw the dubious practices that allow those instances to arise.
The planning system reforms involve the establishment of an independent commission for such projects as airports and nuclear power stations to ensure they are not interminably delayed by objections. There is certainly an argument for streamlining the planning process, but this should not mean that communities affected by a project find themselves excluded from decision-making. The Royal Town Planning Institute believes that “there should be no national policy without national involvement”. Every homeowner will agree.
IT’S PRIME UP NORTH
The average property in “prime” London now costs more than £1 million, according to Prime Location, the property portal, and, no, this is not yet another survey telling you that values in Chelsea and Notting Hill are spiralling. Prime — which is estate agent-speak for “smart” — now encompasses neighbourhoods once seen as down-at-heel, such as Camden and Kentish Town. As we report on page 15, the average selling prices for houses and flats in these areas and other longer-established North London hotspots such as Hampstead is now £1,024,100. However, although a million pound-plus property in London may now be commonplace, the density of seven-figure homes is higher elsewhere. In Hale, a salubrious Cheshire town, one home in every twenty sells for £1 million, or more. In the capital, it is just one in fifty.
