The omens were not good; a plunging stockmarket, world economic uncertainty and an impending war in the Gulf.
The property market is driven by confidence and confidence was mixed. The market around the Home Counties continued to be battered by a reduction of City bonuses and the loss of some 50,000 financial sector jobs.
The volume of transactions continued to fall (particularly in the south east) but with interest rates at their lowest level for 48 years and competitive mortgages available, the home hunters returned and helped house prices to rise.
A great summer and the end of the Iraq war coincided with the recovery of the stock market in April to help the market perk up. However, the market, especially in the south east never really got going, although the buy-to-let market remained healthy as people ploughed more money into bricks and mortar rather than uncertain pension schemes.
Too many vendors floated their houses on the market at ambitious prices and a significant portion were not serious in their intentions to move.
Hot Spots: At the beginning of the year we predicted that the Scottish Borders and Cornwall would soar ahead. They did with house prices rising by 6.5% and 11.9% respectively. Other buoyant areas for the County Homesearch Company were in Yorkshire, Lake District, Northumberland Borders and Scotland itself. Record levels of business were conducted in each of our northern offices.
- As the stock market rises, jobs that were lost in the fall will be replaced. As a consequence, City bonuses not prevalent in 2003 will start to return in 2004 and be ploughed back into property.
- The New Year will start with a greater sense of optimism than 2003. Interest rates are unlikely to climb significantly and will not damage the market we operate in.
- The slow down of growth will prevail and we believe UK house prices may not rise beyond 5%-6%.
- The stock market has seen a 31% growth since March and will continue its recovery – which will be a boost to the housing market in London and the South East.
- Volume of transactions will increase but not dramatically.
- Buy-to-let purchases are likely to decline and this will ease the competition for first time buyers and fuel the market further.
- Overborrowing concerns will not have a material effect on the market, as homeowners are not stupid and will not overstretch themselves in a more sedate market.
- We predict hot spots to be Lincolnshire and rural South Wales where bargains are still to be had in these delightful comparatively undiscovered regions.