News

Is property at long last on the move?
It has taken a long time for the real economic figures to filter through to the housing market, but our first week back to work in January hit us with a 400% leap in viewing request! Hopefully a sign of what is ahead of us and more importantly conversion to sales.
So what has changed? Why the sudden demand? I think at long last despite the nonsense we read in the press, people are now starting to realise that interest rates are not going up for a very long time and when they do the rise will be slight and protracted. Also mortgage lenders are now desperate for business and offering rates not seen since the recession of 2009.
Also inflation continuing to drop (now 0.5%) even although salaries are not going up, for the first time in a long time families are starting to feel better off.
Everyone lays the fall in inflation at the door of oil prices, but the reverse is true. Look back over the last six months of 2014 and inflation was falling every month, only in December did oil start to fall. So it is the slowdown in demand that has caused the fall in oil not the fall in oil causing the drop in inflation, however it will cause the decline to speed up if we are not careful. (Deflation is worse than Inflation)
Do we care in the housing market? We should, inflation is everything to the property market and as inflation falls, house prices will at best stagnate or fall.
Where is inflation going in the short to medium term?
Let’s look at our closets trading partner, because we can’t escape what happens in Europe
The Eurozone slipped officially into deflation in December, with the inflation figure at minus 0.2% (and dropping) compared with its target of plus 2.0%. Markets are expecting a further fall for January. Meanwhile, concern continues to rise over the potential exit by Greece from the Eurozone in the event of a victory in the 25 January general election for the left-wing Syriza coalition. Pressure is mounting on the European Central Bank’s president Mario Draghi to deploy full-blown quantitative easing (QE) and, after another week of hints and speculation, the market is still expecting the ECB to use the purchases to tackle deflation as soon as the end of the month. Fears that the Eurozone could follow Japan’s economy into prolonged deflationver 20 years!)Could finally outweigh long-standing opposition from Germany’s Bundesbank.
The adoption of QE by Frankfurt would, as it has in the US, UK and Japan, be supportive for asset prices in Europe and spell a further period of low interest rates – all of which will be good for home buyers but not so alluring for the bloc’s savers and pensioners. In the meantime, uncertainty over the detail of an ECB bond-purchase programme pushed Eurozone bank stocks lower, with the FTSEurofirst 300 index down 1% to 1,362 points over the week. Mixed economic data from the bloc also weighed on investors, while the 10-year German Bund yield fell to a record 0.43% in response to last week’s deflation news. Weak industrial data from the three large Eurozone economies on Friday suggest the single-currency area is far from a sustained recovery; just as political uncertainty and deflation loom.
Why is this important to our housing market? Our economy in isolation could not support an interest rate rise anytime soon, certainly not until well into 2016. If you build in the euro factor who are going to weigh us down, it all looks years away, too far to predict sensibly. That can only be good news for house purchasers. The good news for the UK economy is if you take Energy, Food and Alcoholic drinks out of the inflation figures (0.5%) ours actually went up from 1.2% to 1.3% showing a healthy economy.
 Let’s hope the initial January flurry continues.