Twelve months ago, the outlook for the British economy, and indeed the trajectory of Western finance, more generally, appeared to be largely on track, having recovered from the worst effects of the 2008 financial crash. Now, the future appears less certain. Events of national and international significance (I’m sure I don’t need to spell it out), have thrown into question the reliability of long-term fiscal projections. Closer to home, away from the machinations of Government and the civil service, the repercussions of international monetary negotiations, is where we often feel the bite.
At the peak of the financial crisis in 2008, estimates suggested that house values fell by 16.2%, the biggest drop for a calendar year on record. Of course, there is no suggestion that a similar economic shock is imminent, and that we’re on course for the doldrums. But there are a number of property forecasters out there, whose outlook is pessimistic. Jones Lang LaSalle is one such forecaster, which recently estimated that house prices here in the North East will fall by 1% next year.
To test the prediction, we undertook a survey of local estate agents, to find out their views on the property market now, and into what the New Year holds. When we last polled at the beginning of the summer, there was an overwhelming view that the property market in the region was significantly more buoyant, year-on-year. In the most recent round, 80% of those surveyed reported improvement, or no change, in property listings in the last quarter. Whilst this suggests the market has not deteriorated, it also indicates that there hasn’t been a late year surge, which one might expect, ordinarily.
The lion’s share of those asked, also reported no change in the average time between listing and sale, with only one believing sale times had increased, and one believing they had reduced.
On the question of the prospect of falling property prices, as predicted by Jones Lang LaSalle, opinion was not quite so clear cut. Although around 60% said they disagreed with the prediction, 30% were unsure, and 10% agreed. However, some were concerned by the, as yet unclear, impact of Brexit, which, they consider an unknown quantity, capable of giving the British housing market as a whole, not just in the North East, a bit of a shake.
The agents we asked seemed to agree too, that in general, the housing market in the North East is less predictable than it is elsewhere. In large cities, house prices tend to increase fairly uniformly. Whereas in this area, according to our survey respondents, prices could rise in one of the more sought after parts of the region, while falling elsewhere.
Surveys are by no means scientific, but this one gives us an insight into what those on the ground consider the direction of the North East housing market. One thing’s certain, in unpredictable times like these, nothing is certain.
Martin Williamson is a Director and Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information call 0325 341500.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise.