Monday, 28 January 2008

Outlook for 2008

With the uncertainty over stamp duty is now gone, we are operating in a new dynamic, free from speculation. Crucially, it seems that interest rates are no longer rising. In fact, many expect that rates will fall in 2008. Coupled with the increase in mortgage interest relief housing affordability will improve substantially in 2008. These factors will combine to breath confidence into the market in 2008.

Thanks to changes in stamp duty those looking to trade up are now in a stronger position. This is a sector of the market that has been holding off on making the move for the last 12 – 18 months and their reemergence into the market will be a welcome boost. Investors too can take heart with rents on the up and interest rates on the way down.On the upside the cooling off of the market in 2007 has meant that speculation and unrealistic vendor expectations have been removed from the marketplace. Vendors are now more motivated than they have been in recent years to sell. Purchasers who may have put their lives on hold for 18 months are now looking at a much-changed market and are seeing real value emerging.What has been lost sight of in the last number of years and what we may have all gained from this reality check is that a house is not a 12 – 18 month exercise in making money. Over 75% of all buyers opt for mortgages of greater than 20 years, it therefore makes sense to look at property in this timeframe or at least in a 5 – 10 year window when they may be thinking of moving.
So what’s the prognosis for the future you may ask? Well, we are most likely looking at a year of flat prices, followed by a gradual resumption of the upward cycle.