20 things

20 things you should know about…predictions for 2007

16 December 2006

2. The primary cause of this maintained confidence is the issue of lack of supply to keep up with demand, while an overall stable economic outlook is also a contributing factor.

3. David Stubbs, economist at the Royal Institution of Chartered Surveyors (RICS), believes: "Increasing gloom for those trying to get on the property ladder won't have significant impact on the housing market as demand remains strong, disposable income is growing and buy-to-let investors substitute for first-time buyers at the bottom end of the market."

4. Interest rates will have a major impact on the market in 2007, with opinion divided over whether a further rise in the early part of the year will occur.

5. Ray Boulger, senior technical director at John Charcol, believes not: “Governor Mervyn King’s comments in his recent appearance before the Treasury Select Committee gave no encouragement to the view that Base Rate would rise again any time soon. Factors suggest the MPC will be prepared to wait some months to see the impact of the two recent rises before seriously considering another increase.”

6. However, David Bexon, managing director of SmartNewHomes.com, says: “I would anticipate that interest rates will stabilise following a further rise in the spring, dropping back by 0.25 per cent in 2008.”

7. The introduction of Home Information Packs (HIPs) in June 2007 are also expected to play a big role in the housing market.

8. Many are predicting a glut of properties to enter the market in the Spring in an attempt to avoid being caught up in the legislation.

9. Paul Smith, chief executive of haart estate agents, is one: “The introduction of HIPs will contribute to the year of two halves in terms of the predicted performance of the housing market, as many sellers rush to put their house on the market prior to the mandatory date in June 2007.”

10. Eddie Goldsmith, senior partner at Goldsmith Williams, believes HIPs will isolate brokers who haven’t invested in technology: “I would say brokers who have shied away from the innovations in the industry until now need to look at what they could gain from embracing technology, making a concerted effort to enhance their offering in this area.”

11. Longer term fixed rates are expected to play a much bigger role in the market next year, especially in the non-conforming market, as consumers look to protect themselves from interest rate pressures.

12. Lynsey Mitchell, head of sales and development at SPML, comments: “2006 has seen many innovations in underwriting, from affordability calculations, to longer mortgage terms, but we see this being continued even more strongly in the coming year.”

13. Buy-to-let is also predicted to remain strong in 2007, with both lenders and brokers confident of the year ahead.

14. A survey by Mortgage Express of 3,617 landlords found 95 per cent expected to increase their portfolios next year or keep them at their current levels.

15. Lee Grandin, managing director of Landlord Mortgages, was also optimistic: “Over the last ten years, the buy-to-let market has grown and matured as increasing numbers of ordinary consumers choose to invest in residential property. In 2007, we will see this trend continue supported by the increasing number of good value fixed rate mortgage deals available.”

16. The UK market is also expected to outshine overseas markets, with Assetz believing many property investors will stay at home rather than put their money in foreign property.

17. Stuart Law, managing director of Assetz, says: “With the UK performing so well, many investors will be opting for the low-risk approach and keeping their money in UK property, now it offers strong returns that can compete on the international stage.”

18. However, there will be more people pushed into arrears in many people’s eyes, continuing the steady upward growth in repossessions seen in 2006.

19. In its Housing Market Forecast, RICS comments: “Repossessions will rise as affordability conditions worsen, but the overall strength of housing demand will limit the negative impact on prices.”

20. Overall, confidence in the UK housing market remains high, with growth predictions slightly lower than 2006. However, many expected lower growth this year and had to revise their predictions upwards.