Well, another year has passed and it has been quite a rollercoaster as far as the property market is concerned, so with the help of the Bradford & Bingley annual review of the housing market, we take a look back and a look forwards as well. If you want to download a PDF version of the report, please click the link below.

Download now

The predictions doing the rounds at the beginning of the year were for a prolonged period of steady growth at around 6 or 7 percent for the year, but as we all know now, the reality proved rather different. Widespread early gains meant that the market threatened to go into orbit as it had done the previous year, with some areas enjoying double-digit growth in the first half of the year. Then suddenly the brakes went on, as the problems in the US economy filtered through to confidence in the UK market and talk turned to the threat of recession. Job losses ensued, city bonuses were postponed and the MPC embarked on a series of rate cuts to buoy the flagging economy. Then, to make matters much, much worse, terrorists sent the world into a spin after destroying the World Trade Centre. The markets stuttered and house price growth threatened to nosedive as events led to question marks hanging over the whole world economy. But a decisive military campaign and a series of bold decisions by the MPC meant that a mini-recovery happened much sooner than many people expected and some economic indicators ended the year reporting more positive trends than looked likely just a couple of months ago. In terms of property markets, annual house price inflation has once again hit double digits for the year, with some estimates going as high as 12 percent. And that, in a nutshell, was 2001.

As for next year, we have already started getting forecasts for house price growth from the big lenders. Nationwide decisively said it will be somewhere in the region of 5 or 6 percent, but then said it could be higher, or lower. Bradford & Bingley was more conservative, putting the likely gains at somewhere in the region of 3 to 5 percent. It would be no surprise here if the recessionary fears ease off after the first quarter and we see strong growth in the second half of next year. Sticking our neck out, we predict annual house price inflation to be 7 or 8 percent in 2002.

Bradford & Bingley: 2001 has seen a steady lettings market, with rental values showing modest increases in line with inflation. Activity levels in the private rented market tend to be fairly consistent, rather than suffering the peaks and troughs of the sales market. Low interest rates have ensured continued growth in the buy to let market, property being viewed as a safer bet than shares in a volatile stock market.

This has also been encouraged by increasingly competitive mortgage products that now offer similar terms to occupancy mortgages. The buy to let explosion since 1996 has resulted in greatly improved standards of property across the whole rental sector. This, in turn, has created a more discerning breed of tenant.

Unlike the sales market, lettings hotspots tend to follow centres of employment, rather than picturesque rural areas traditionally perceived as desirable places to live. Consequently, this year there has been great demand for rental properties in Basildon, Brighton, Hove and the M4 corridor up to Oxford.

Our comment: A full report on the state of the Buy to Let market will follow in January.

Bradford & Bingley: With mortgage rates at their lowest level for 40 years, the property market has remained strong throughout 2001. Gross' mortgage lending for 2001 is expected to reach approximately £145 billion, the UK's highest recorded level. With continued low interest rates and competition in the market, housing market activity is likely to remain at similar levels.

The combination of a volatile stock market and attractive rates for buy to let mortgages has made 2001 the most active year ever for the buy to let sector.

The high number of mortgage redemptions we have seen this year - a churn rate of 17% - will continue into 2002, with consumers switching freely between lenders as they become more financially aware. Consequently, lenders are focusing on trying to retain existing customers once lock-in periods expire to protect profit margins.

Our comment: The combination of low interest rates and rising asset values make it no surprise that lending has continually scaled to new heights throughout this year. While there have been conflicting reports over the year about affordability and borrowers' ability to afford this increasing level of mortgage borrowing, rather more concerning is the continued increases in personal debt that people are taking on in terms of credit cards, store cards, personal loans and other facilities. Although home repossessions and incidences of bad debt don't appear to have grown too much just yet, if there were to be a real recession that lasted any length of time, then a lot of people might just find themselves in a bit of a financial mire.

One of the most striking changes in the mortgage market over the past year has been the collapse in market share of the Nationwide. From a peak of 15 percent in 2000, it ended the year with just 0.2 percent of new mortgage business, it's place in the top 5 lenders being taken by online lender IF. The demise followed the 'fair pricing' strategy, which saw the abandonment of cheap introductory deals for new borrowers in favour of offering the same good value long term rates to all borrowers. The move has obviously proved a disaster, highlighting the short-term month-to-month view that many borrowers seem to take of their mortgage payments.

Bradford & Bingley: 2001 has been a busy year with activity levels following seasonal norms (the month of September excepted). Consumer awareness of the difference between surveys and valuations, and the need to have some condition advice over and above a mortgage valuation, continues to grow. Many surveying firms are now offering value added extras such as hidden defect guarantees, energy ratings and security advice in their survey packages.

Another trend is for mortgage lenders to employ database technology to assist in lending decision-making, primarily in low loan to value cases, which eliminates the need for a chartered surveyor's visit. The surveying profession is taking advantage of the legislative delay in introducing compulsory Sellers' Packs by forming strategic alliances and development plans ready for their introduction, expected to be around 2004/2005.

Our comment: Two things stick out for us as far as surveying and the year 2001 is concerned. Firstly, following a wet, wet winter last year, there can be few people that are not aware of the phenomenon of flood risk and this may well prove to have had a lasting effect on the diligence that buyers apply when making their purchase. While the Internet can be a very useful tool in researching different areas, people seem to be more aware of the importance of gaining a professional opinion when it comes to assessing the short and likely long-term health and value of a property.

The second thing is the fact that the Internet has not really changed the surveyors market very much. There aren't really any major surveyor chains that have a strong Internet presence and this would appear to be a market which could still develop. Although most people will continue to arrange their survey through their lender or estate agent, there is an increasingly large segment of the homebuying population who are self-confident, independent and willing to hunt around for the best deal, who would surely make use of a good value professional surveying service that they found online.

Bradford & Bingley: There was nothing in the B & B report about conveyancing.

Our comment: As with surveying, there are two things that came out of this year for the conveyancing market. The failure of the Homes Bill to get through parliament before the General Election was a major blow to its supporters, but a big victory for those who saw the sellers pack as a flawed policy. While the aims are almost universally approved of - speeding the conveyancing process, improving the clarity of information available to buyers and protecting against gazumping - there was huge opposition to the criminality that the Bill would have placed on those who failed to produce a pack. There is also still concern that large groups will offer sellers packs as a loss leader, thereby taking estate agency business away from small independent companies who will not be able to compete.

The year has also been one of great advancements in the development of the National Land Information Service, part of the overall e-government strategy that will eventually see average conveyancing times slashed to hours or days rather than weeks. Initially, the NLIS will provide a central access point to the various local authority searches, land registry data and other pieces of land and property-related information that are currently stored on different locations and by many organisations - a state towards which great strides have now been made.

These views are all contained in the B&B report:

Scotland:

Fuelled by low interest rates and high consumer confidence, the Scottish housing market for both existing and new build homes has remained buoyant throughout the year. Nonetheless, we are now seeing some caution for new homes at the upper end of the market, which are priced at £250,000 upwards.

The most popular house types vary according to location. In suburban areas, such as Clarkston or Bearsden, traditional family homes with good transport, schooling and shopping remain highly sought-after. In the city centre, demand for apartment living has continued, driven by high quality developments with imaginative specifications.

Property price rises varied dramatically according to area across the region, but averaged around 6%. On the new homes front, we have seen a trend for wealthy early retirees to sell their family home and invest the proceeds in a luxury city centre apartment and a holiday home abroad.

Next big thing? We have seen a resurgence of interest in property in coastal locations such as the Isle of Bute, the West Coast and East Neuk of Fife on the other side of the country. Just two hours away from major cities, they represent a bolthole to those who might previously have considered buying a second home abroad.

The North:

The North has enjoyed a buoyant property market throughout the whole year, although activity inevitably levelled out following an exceptional 2000. While prices increased across the region by around 15%, much of this growth took place during the first half of the year.

New homes are selling as fast as developers can build them. Stylish city centre apartments are particularly sought-after and we saw the sale of the first £1 million apartments in Newcastle and Leeds. Continued volatility in the stock market has led to a significant increase in the number of people buying to let.

With prices stabilising in 2002 and homes taking a little longer to sell, an increasingly important factor for buyers and sellers when choosing an estate agent will be customer service.

Next Big Thing? The Quayside in Newcastle, a huge redevelopment of the dock area, is set likely to become the place to live and play. We also predict an explosion of interest in Darlington, a very accessible town with a rich history, where a large greenfield site for housing has been released.

The West:

Whereas we described 2000 as 'a year of two halves', 2001 has been much more consistent, with steady activity throughout the year and modest price rises averaging around 7%. The traditional hotspots of Cheshire, South Manchester and Stratford upon Avon have seen increases of up to 11% but properties in these areas are in particularly short supply and tend to sell very quickly.

Throughout the West, there is a distinct shortage of new homes being put up for sale, with greater emphasis on extending existing properties instead. The climate of uncertainty has led to homebuyers becoming more cautious and reverting to 'safe bets' in terms of property type and location. Attracted by comparatively high capital growth at a time of low interest rates on savings accounts, investment buyers have been very active this year. We expect to see property prices rise in line with inflation in 2002.

Next big thing? The more rural parts of North Wales and Chester, which have the potential to ignite once consumer confidence returns.

The East:

Activity levels have remained consistently high and there is evidence that first time buyers have returned in force, tempted by cheap mortgages that make taking the first step on the property ladder more affordable.

Prices rose between 10 and 15% on average across the region, with dramatic variations between areas, but hardened significantly in the last quarter of the year.

There is increasing reluctance among potential sellers to put their house on the market before they have found the home they want to buy. This has led to an acute shortage of property coming on to the market and created a vicious circle. The lack of traditional three-bedroom semi detached homes is particularly acute as it remains the most popular property type.

The trend towards 'convenience living' has been well maintained, centrally located flats grow in popularity, experiencing price rises that are virtually on a par with their house equivalent. We predict property prices will rise by an average of 5% during 2002.

Next big thing? A reputation for excellent schooling, highly affordable housing and its proximity to Cambridge Science Park, make the cathedral city of Ely an appealing place to live.

The South West:

The property market in the South West has been buoyant during 2001 and has seen an improvement from 2000, with sales up 10% year on year. Activity levels - the number of people registering as buyers and the number of people viewing property - have remained consistently high throughout the year up until early November.

House prices have continued to rise by an average of 12% across the region, although parts of the region particularly in Bristol and parts of Cornwall have seen larger increases. Also the now traditional hotspots of Ivybridge, Devon and parts of Cornwall, have maintained their desirability which was due, in part, to people buying second homes. In 2002 we expect to see similar levels of activity but prices rising at a lower rate, around 5%.

Next big thing? St Austell in Cornwall because The Eden Project will increasingly become a draw for tourists and create job opportunities. Weymouth in Dorset where considerable public and private investment in the town centre and marina area will prove a magnet for shoppers and tourists. Significant numbers of new homes are also currently in development.

The South East:

The market has been very active for the first three quarters of the year but levelled out in the final quarter, creating two distinct types of homeowner: the "have to move's" and the "want to move's". Whereas the first group continue to move, economic uncertainty is causing the second group to delay.

While we don't expect to see a significant reduction in the overall volume of transactions, City job cuts are bound to have an impact on the market and this is more likely to be at the top end. Nonetheless, homes will continue to sell if priced realistically. Prices have increased by more than 10% across the region year on year and we expect to see property values maintained in 2002 as a shortage of supply continues to put pressure on prices.

Next big thing? Our hot tip is Southsea, near the port of Portsmouth with its naval base and significant new property developments. The scenic attraction of Port Solent is one of the reasons it is a growing retirement area.

 Print

Copyright (c) 2008 TheMoveChannel. All rights reserved. Terms of Use Privacy Policy

• Developers
• Agents
• Advertisers
• Partners
• Press

Our International Property Portals: Bulgaria • Cyprus • Florida • France • Italy • Portugal • Spain • Turkey