IT is that time of year again, when various property experts are tempted to look into their crystal balls and predict what will be happening in the market in the year ahead.
A quick look at some of last year’s predictions shows how dubious the art of making predictions is. No amount of expert insight will actually change anything and all forecasts are pretty soon forgotten – if any of them had ever been remembered in the first place, that is.
What really affects the market is confidence and that’s something that is impossible to predict. Confidence doesn’t come from an upbeat industry or government prediction. It creeps unseen and unnoticed into our collective awareness.
In his autumn statement earlier this month, the Chancellor of the Exchequer painted a very sobering picture of austerity measures continuing until at least 2018, which on the face of it suggests a real lack of confidence in the economy from within the corridors of power. But George Osborne would be a very clever man indeed if he could really tell us where the economy will be in six years’ time.
Forecasts of any kind are always based heavily on the latest available facts or data. Things have to actually change at ground floor level before the change becomes widely known and reported, at which point all forecasts are then amended and updated again. Despite the continuing gloomy undercurrents in the national news, Allan Morris and Jones have actually seen the highest level of sales agreed this year than at any time since 2007 when the property market peaked and the banking crisis erupted.
If this trend is happening elsewhere and continues next year, I would see lots of reasons to be considerably more optimistic about the future than George Osborne has suggested.
But whilst demand is noticeably rising, house prices are fairly stable. With wages generally remaining frozen or growing at less than the rate of inflation, most buyers will have no greater spending or borrowing power. Factoring in the ever increasing costs of living such as fuel, food, heating and so on, together with reductions in widespread benefits such as Child Benefit or Tax Credits, the unavoidable fact is that most buyers will probably have less spending power next year rather than more.
None of this suggests that house prices will rise in 2013, but is that really such a terrible thing? Large numbers of young people being unable to afford to buy a home of their own is a far worse scenario, in my view.