Boothroyd

Year-End High Note May Not Be Sustained

23rd December 2009

While 2009 was a far better year than expected for the property market in Kenilworth, 2010 may be tougher if unemployment continues to rise and potential buyers lack the confidence to take the plunge, according to John Boothroyd FRICS.

“Once again we were the top selling estate agency in Kenilworth with a steady stream of sales throughout the year – some properties selling for more than we dared anticipate in the prevailing climate – but there is definitely a shortage of properties for sale,” he said.

“This shortage shored up prices to the extent that we sold one home in December for several thousand more than the guide price, after just a week on the market, with seven bids received.

“House prices rose by almost three times more than expected in November, taking the price of an average home up to £167,664 – almost £14,000 up from the low of £154,490 in April.

“From April to the end of November house prices rose 8.5%, taking the annual rise from a year earlier to 1.8% - their first annual increase since February 2008. If they continue to rise in December we could finish the year with prices 6% higher than they started it. This time last year no-one predicted price rises – all the pundits were proved wrong!

“But the new year marks the beginning of a more costly time for anyone either buying or selling property. The Stamp Duty threshold, which has been £175,000 since September 2008, drops back to £125,000 and the VAT rate, reduced to 15% last December, returns to 17.5%.

“Alistair Darling’s pre-budget report offered nothing positive for the housing market, not even an extension of the stamp duty holiday on homes valued at under £175,000, so the only incentive for more people to put their homes on the market is that prices have probably peaked.

“If unemployment continues to rise and the number of repossessions increases, these forced sales could well push prices down again.

“However, demand for homes has not waned and when people can’t or won’t buy, many rent instead, so it’s been a healthy year for landlords, which looks set to continue.

“With demand still high I predict the rental market will continue to grow during 2010. Landlords currently receive an average 5% return – far better than more traditional forms of investment with the Bank of England base rate still at 0.5%.

“However, it’s important when considering buying to let to take professional advice. The right property, in the right area and presented well is vital to financial returns.

“What is certain is that the year is ending with the housing market in a far better condition than expected and those looking to sell now could well be in the best position of the year.”