By Ceri Adams

The media bombards us with confusing messages about the housing market and statistics argue every view point. So what is reality?

SHORT TERM

If you cut through all the media exaggeration, the consensus view points towards price stability in the housing market over the next 12 months, which is a continuation of the previous 12 months.  Alas price stability doesn’t sell newspapers, unless described as stagnation.

There is strong frustrated demand from buyers, who consider the collapse of the housing market unlikely. However the banks have turned off the financial taps, demanding large deposits (typically 25% for buy to let mortgages) and increasing affordability requirements, so pricing many buyers out of the market.

Access to and affordability of credit is likely to have the largest impact on house prices in the short to medium term.  Expect to see house prices subdued if interest rates rise significantly, but strong growth once credit restrictions are eased and widespread access to 85% & 90% mortgages returns.

LONG TERM

Looking to the medium to long term future, increasing demand for housing is unlikely to be matched by supply.  The government’s public sector cuts have reduced their ability to provide new housing and the private sector house builders have taken a beating during the recession. Combined with the projected growth in households of 232,000 per year (CLG figures), it is difficult to see how supply can possibly keep up with demand. We are likely to see strong growth in property prices and potentially another property boom, sometime in the future.

WHAT DOES THIS MEAN FOR YOU?

The housing market is in recession and potential buyers want to drive a bargain, so now is not the time to sell unless you really have to. As property owners, timing your sale correctly could lead to massive capital gain for you, over today’s prices.  Realistically you will need to wait at least 2 years to start seeing significant sustained uplift in the market.  On the flip side if you have the available capital now is a good time to be investing in property, provided you can find properties with strong rental yields.