The outlook for 2002 remains positive according to industry experts, with predictions for an increase in house prices wavering between a modest 2% from Charcol to a more optimistic 6% from Nationwide.
Research from providers has highlighted standard variable rate (SVR) mortgages, remortgaging and buy-to-let as the growth areas for 2002.
Paul Fegan, general manager of personal financial services at Yorkshire Bank, said: ‘The prospects for the UK housing market over the coming year look rosier than some in the industry have been predicting. It is encouraging to see that since our first housebuyer survey three months ago, the wider global slump appears to be having little negative effect on the actual buoyancy of the housing market in the UK. However, with only 7% of people believing that mortgage interest rates will rise noticeably in the next 12 months, the swing towards SVR mortgages does show the current low headline interest rates are influencing the way homebuyers are choosing to fund the purchase of their property.’
Remortgaging is set to remain a popular option throughout 2002, according to Ray Boulger, senior technical manager at Charcol. He also believes the buy-to-let market will continue to improve. ‘Buy-to-let will continue to thrive as an alternative element of retirement planning with confidence in the stock market still low, although in this market we may see more selectivity coming into play,’ said Boulger.
Hugh Dunsmore-Hardy, chief executive at the National Association of Estate Agents (NAES), agreed that the residential sector is an attractive option for investors due to low interest rates and the poor performance of equities over recent months. However, he said: ‘With such a market increase in the number of people looking to become landlords, there is likely to be a glut of rental property in some areas, which will affect potential rental income. Buyers in this market should definitely be looking for medium to long-term capital growth and ensure that they research the local market demand and rent achievable before committing to buy.’
Industry predictions for 2002
• Housing market to remain buoyant in 2002.
• Investment properties increase.
• Half of those surveyed believe the value of their home will increase in next 12 months.
• A steady housing market over the coming year.
• Surplus of residential property.
• A 4% increase in house prices.
• Economic uncertainty will limit number of first time buyers entering the market.
• Fewer sales.
• Remortgaging to decline.
Source: Yorkshire Bank, NAEA, Nationwide