In his first Property Weekly column for Altrincham Today, estate agent Ian Macklin reflects on the reasons behind the revival of the local property market.
It’s been a whirlwind year so far. The market had been steadily improving over the previous couple of years but at the beginning of 2014 it was as if a switch had been flicked – almost overnight, the local market became highly active.
Considering the property market over the last six or seven years, there is a logical explanation. Between 2007 – when the market crashed and house prices bottomed – and 2012, only half the number of people compared with the norm purchased a property.
Now that the market has seen considerable signs of improvement, the remaining buyers are suddenly interested and the demand that usually would have been spread over five or six years has instead been condensed into a very short period.
As a result, probably somewhere in the region of 2.5 million buyers nationally have condensed their purchase into a much shorter timeframe of one or two years.
[pullquote align=”right” cite=”Ian Macklin”]It was as if a switch had been flicked – almost overnight, the local market became highly active[/pullquote]
There have been many other contributing factors, such as mortgages becoming more available and the “Help to Buy” scheme – but much of the market recovery can be attributed to the fact that there has been a huge increase in first-time buyers.
Many property chains will start with a first-time buyer and this kick-starts the rest of the chain above. Without first-time buyers, the chains may never be formed and the market will gradually slow to a standstill. Throughout the country, first-time buyers accounted for a record 48% of all house purchase activity in March 2014, well above the usual average of 38%.
Activity has therefore improved, with an increase in the number of potential buyers in the local area, and the trend has been continuing for some months.
But there are now reports that buyers are beginning to lose confidence in the property market, with a looming interest rate rise in the initial months of 2015.
In the Halifax’s most recent quarterly “Housing Market Confidence Tracker”, the number of people surveyed who think that next year will be a good time to buy has plunged from 34% to just 5%. This does seem to be extreme and one wonders if there would be a similar result in the next quarter.
Much of this uncertainty is due to the unknown impact of the potential interest rate rise, but the Bank of England has repeatedly confirmed its commitment to making very gradual and cautious increases to the base rate. It has also stated that there is a case for an earlier increase in interest rates but emphasised that any tightening of the cycle would be limited and gradual.
Overall, therefore, the market remains active with an increase in the number of purchasers registering with estate agents. From the purchaser’s point of view, it is also essential to shop around as there is considerable variation in products, charges and rates.
In Altrincham and elsewhere in the country, the rise in activity this year has been welcome – and there’s no sign of that switch turning off just yet.