The property recovery is like a mirage that recedes as you approach it. The Nationwide's confident prediction for 1991 was not fulfilled. Recovery failed to happen again last year, despite high hopes of a post-election boom as buyers stampeded out of their shells. What chance, then, that 1993 will be any better?
The signs look promising. Price falls will flatten out this spring and recover in the second half of the year, says the Halifax, carrying all the authority of Britain's biggest mortgage provider. But it, too, has been wrong before - as have most forecasters. And they remain irritatingly inconsistent. For instance, John Wriglesworth, of the City analysts UBS Phillips & Drew, predicts that average prices will fall 5 per cent this year before recovering by the same amount in 1994. James Morrell, of Charterhouse Bank, plumps for a 1 per cent fall followed by a 6 per cent rise.
'The recovery looks likely to be led from the north of the country,' says the Halifax. But Savills Research says: 'The prime central London market will be among the first to recover later in 1993 and could lead the rest of the UK out of depression.'
No wonder there is a lack of confidence in the housing market, when the experts either get it wrong or cannot agree. The forecasters can claim an excuse for misreading 1992, however. Buyers should have been out in droves. Incomes rose and prices fell, making homes cheaper than any time since 1970. But few noticed that economic laws weakened by the boom were finally shattered by the crash.
Fear had driven people to buy frantically in 1988, thinking prices could only go higher. Last year a similar sense of fear convinced them that values could only keep falling. Why buy today when homes would be cheaper tomorrow? That lack of demand dragged prices down further in a self-perpetuating spiral as strong as the one that sucked them upwards in the boom.
Meanwhile, potential sellers vanished. More than a million were in homes worth less than their mortgages; others chose to stick it out rather than accept cut prices. Supply dried up but, contrary to economic laws, prices still fell.
Total sales slid to just over 1 million, only half the turnover in 1988, and in a moribund market the dead outperformed the living: more than 160,000 inherited homes came on to the market in 1992, exceeding the efforts of the whole building industry, says Mr Morrell. That was another dampener, as beneficiaries (assuming they have their own houses) are more likely to cut prices than are home owners: they are not losing money they have invested, and they want the money rather than the house.
Will 1993 be any different? Probably - but no one can make hard promises. On the positive side, interest rates have halved in the past 12 months, making buying cheaper than renting. An average semi in a town such as Luton would cost around pounds 300 a month on an 80 per cent mortgage, says the Halifax. That compares with pounds 620 during the boom and pounds 370 in pre-boom 1987. Mortgages in the South-east take up only 25 per cent of earnings compared with more than 60 per cent three years ago.
Meanwhile, the simple need to have a roof over your head persists. Sixties 'baby-boomers' should have been queuing for their first homes, but the number of buyers has fallen by more than 40 per cent since 1988, says Mr Wriglesworth. That leaves an army of people who have delayed setting up home waiting in the wings.
Uncertainty and fear could still hold them back until 1994, however. Cheap loans are no incentive when you cannot be sure of meeting even these low costs. One in seven people believe their jobs are at risk if the recession continues, and two-thirds see little hope of a swift recovery, according to a recent survey by the British Market Research Bureau.
The experts are at least agreed on one thing: more deals will take place in 1993. Turnover is expected to rise between 13 and 15 per cent, which means that around 200,000 more homes will be sold than last year. But this is only a small step up the slippery slope, taking us back to the 1.2 million properties that changed hands in 1990. It still falls well short of pre-boom figures.
New buyers will also continue to beat down prices while they are spoilt for choice. Another 450,000 homes will come on to the market in 1993, according to Mr Wriglesworth, to join the 250,000 already unsold.
Some people have made up their minds to move, however. The run-up to Christmas, normally the quietest time of the year, saw a rush of activity, says Peter Miller of the Royal Institution of Chartered Surveyors. 'This could be the first sign of spring flowers for the beleaguered market,' he says.
Those unable to move immediately will probably not lose out on prices, says Adrian Coles of the Council of Mortgage Lenders. But the longer they wait, the narrower will be their choice of property, as the excess is eaten away. Yolande Barnes of Savills Research is less confident about recommending a wait-and-see attitude. London prices have fallen by more than 25 per cent since 1989 and flats by almost 30 per cent. 'This means that prime central London prices are looking very cheap, and thanks to falls in sterling are even cheaper to foreigners,' she says.
Investors and second-home buyers will swarm in, boosting prices by 10 to 15 per cent in the 12 months from the middle of this year, so buyers have a limited 'window' to get bargains. On a wider stage, this could help to lead the UK out of recession. 'The central London market has a high profile and any improvement should boost confidence by showing that prices can go up as well as down,' says Ms Barnes.
The Halifax, however, muddies the waters by forecasting that the North will perform much better this year and then lead the country out of the slump in 1994. This will further narrow the national price gap. Homes in the South already stand only 15 per cent above the national average, compared with almost 60 per cent in 1988; in the North they are 15 per cent below the average compared with 35 per cent at the peak of the boom.
Mr Wriglesworth will have none of this: 'We expect the sharpest turn-around in 1994 to be in the southern regions.' Prices will fall by 6 or 7 per cent in London and the South-east this year, leaving a quarter of mortgage payers in homes worth less than they borrowed. As they cannot sell, the number of homes available to first buyers will be much more limited than elsewhere, so prices will rise more.
Whether the wind blows north or south, the great recovery has been postponed yet again. All that the forecasters agree on is that things should start moving this year, but prices will not recover strongly until 1994. It is up to buyers and sellers to show whether they concur.
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