January 7, 2004
Estate agents describe the upturn of the premium property market since Spring 2003 as ‘extraordinary’. Where once there might have been a glut of country houses on the market, and stories of overvaluations abounded, the top end of the UK property market is now dominated by lack of supply which promises an increase in values during 2004.
The common denominator in all forecasts for the top end of the UK property market this year is that prices in London and the South East, areas which recorded the lowest price increases in 2003, hinge on affordability although FPDSavills expect that last year’s downward trend in values of premium properties in London as well as the home counties will reverse in terms of price growth. ‘Increased employment in the City, remuneration and bonus payments begin to have an impact,’ states Managing Director Rupert Sebag-Montefiore.
Look north for areas of growth, say most experts, although price rises are likely to be less aggressive than they have been in 2003. Northern England outperformed every region in the UK, according to a report published by the Halifax on Tuesday, January 6. Annual house prices rose by an astonishing 33.7% across the North, against a market average of 15.4%. ‘In the North and the Midlands, away from the conurbations, there is still room for more house price growth although not at the same rate as in 2003,’ says Mr Sebag-Montefiore. The forecast from the Royal Institute of Chartered Surveyors echoes this, predicting a rise in values of properties in northern regions of 10%, although it remains significantly less than the 2003 increase.
The Halifax also forecast that property prices will continue to grow in 2004, albeit at the slower rate of 8%, which is close to the long-term average. Shane O’Riordain, General Manager for the Economics Group at the Halifax confirmed that the housing market remains strong but it will ‘continue to slow down naturally, as the impact of higher interest rates and a reduction in the number of first time buyers entering the market continues to kick-in.’
While RICS are also confident that the property market will avoid a crash in 2004, the organisation maintains that the health of the market is dependent on the continuing strength of the overall economy and low interest rates.
The top end of the property market is thought to have the best prospects for 2004 where supply is most constrained and buyers are not mortgage reliant.
The Halifax’s housing research
Royal Institute of Chartered Surveyors
January 7, 2004