The company believes that the current stable market would be short lived if unforeseen events such as a terrorist attack in London or a new international conflict occur during the year which could have serious consequences for confidence, similar to the immediate aftermath following September 11th.
Dampening down followed by bounce
Commenting Gary Verity, managing director of Bradford & Bingley Estate Agents said: "2003 was certainly a year of two halves. We witnessed a dampening down of the market in the first half due to the Iraqi conflict. This was followed by a bounce back in transactions from May onwards with sales picking up each month onwards, culminating in our busiest autumn for 10 years.
"I think the strong activity we are currently experiencing will continue well into 2004 commencing with a New Year rush as sellers take advantage of renewed buyer confidence. Employment levels tend to be a key influence on the housing market and we don't expect to see unemployment increase
substantially. City bonuses are expected to improve which will help bolster the Greater London and Home Counties' markets. However, I believe we will see a slight slowing in transaction volumes in the second half, ending the year between 5-6% lower compared to the previous 12 months."
Dents in disposable income
Although further Base Rate increases are expected, Bradford & Bingley Estate Agents feels it is likely to rise by only between 0.75%-1.25% in 2004. Such increases are unlikely to trigger a slump, as even if it rises to 5%, mortgage rates will remain at historically low levels. Affordability will remain the key to buyer confidence. However, it believes possible dents in people's disposable income due to higher taxes remains a major concern.
Verity commented: "Hitting people in their pockets could have serious consequences for the market. Possible tax rises, which many commentators are predicting will be announced in the Chancellor's Spring Budget, and increases in Stamp Duty could hit the market hard, leading buyers to think twice before purchasing a new home. It may also make purchasing even more expensive for those all-important first-time buyers who are already finding themselves priced out of much of the market. Increased taxes will do nothing to encourage them onto the property ladder.
"Although I would certainly welcome a reorganisation of the stamp duty bands into a more sensible system the last thing the market needs is any major increases in what many homebuyers consider to be an already expensive and unfair tax."
Regional differences
Bradford & Bingley Estate Agents predicts a rosier picture for the southern market in 2004 with activity levels catching up with the north which enjoyed a particularly buoyant 2003. Northern hotspots in the last year have included Liverpool, Harrogate, Whitley Bay and Preston with price increases ranging from a staggering 30-50%. Many parts of the South West, namely Newquay, Padstow and St Austell saw rises of 25-30%. The region will continue to attract buyers in 2004, mostly outsiders looking to retire to the region or buy second homes rather than locals. Encouraging signs of a modest recovery within the South East and particularly the top end market in the last quarter of 2003 will continue into the first quarter of 2004 but will not race ahead.
Concluding Verity said: "Barring unexpected world events, it is difficult to foresee a housing market downturn over the next 12 months. The market will remain buoyant with demand continuing to outstrip supply. I think we have certainly moved away from the boom and bust scenario of the early 90's to more stable activity".
