Looking back to 2010, at what turned out to be quite a boring year in the housing market in comparison to the years preceding it, there have been a number of changes which could set the scene for a more exciting or more difficult year ahead. There has been a change in government, more talk of a major reform in mortgage lending and a continuation of historically low interest rates.
Looking ahead as to what may happen in the housing market in 2011, the only thing I know is that whatever you read and whatever views people may have, nobody can predict the future with any great deal of certainty. There are too many different things that can happen that will shape which way property prices will go this year. Will tax rises reduce our ability to service mortgages? Will lenders decide to make it easier or harder to obtain a mortgage this year? Will the government step in to attempt to make housing more affordable for first time buyers. Will interest rates rise? Unless you can answer all of these questions and more, it is very hard to make any meaningful predictions about what will happen.
In an attempt to show us which way things are going to go, every month the change in the property price index is on the news. I question the relevance of looking at property prices this often, because what does it really show us? One month it may have gone up half a percent and then the next month it may have gone back down half a percent. Both times this would be on the news and told with optimism or pessimism about future trends, whereas in reality over the 2 months, nothing has happened. You wouldn’t sit and watch the FTSE100 all the time to see how it progresses throughout the day, because it’s the long term picture that matters, not the short term. Despite this, the media will still talk about how property prices are on the way up one month, then on the way down the following month.
Another reason to question the usefulness of such an index is that it shows average changes across the country. What really matters is how prices are changing in the region you live in, which could be very different to the general picture across the country.
The housing market is always full of surprises and we can never be sure of what the future holds. In my opinion, when it comes to your home, it is best to ignore all speculation about which way prices are going to move and do what’s right for you at all times. A house is firstly your home, not an investment . If you are unsure of the options you have, it is worth contacting an Independent Financial Adviser who specialises in mortgages to provide you with impartial advice on what is right for you. Kieron Bassett Financial Services has two Independent Financial Advisers. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or log onto www.kieronbassett.com.
Jason Hinde CertPFS
24th January 2010
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