In February, I wrote how the property market was at something of a crossroads, and the stakes were high.
The big question that I and many working across the sector were asking was whether a spring and early Easter market bounce could rescue a market that has effectively been in the doldrums for the past year or more.
Well, it was a mixed picture in March. Prices dropped by an almost invisible 0.2 per cent. That’s £500 off an average home so nothing huge to worry about there.
It may surprise people to know that I am not worried about prices dropping. But I am concerned about stagnation.
The property market could become stagnant
PA
The market can become snail-like. Moving plans and lives have to be put on hold, sometimes for years, sometimes forever. Right now the thing that concerns me most is the fact the market is running out of steam and that stagnation is taking hold.
It’s set in because the optimism felt when the Bank of England stopped putting up interest rates has worn off.
The reality of pretty high base rates combined with high inflation in the things we must pay for – like the TV license, our council tax, and utility bills - really came home to roost in March. Most people feel poorer and this does not entice them to buy a home.
Market stagnation will lead to tumbling prices and once that cycle begins, it is very hard to stop. I’ve seen it over and over again. Fewer buyers with less money means sellers must compete for their attention, reducing prices in what quickly becomes a race to the bottom.
Buyers see this and hold back, worried about committing in a falling market. And the downward spiral can last for years.
The good news is we’re not there yet. But the danger over the coming weeks is that we could edge ever closer to this position.
LATEST DEVELOPMENTS
Jonathan Rolande shares his expert analysis
JONATHAN ROLANDE
If the Bank of England does not begin to move rates down soon we will be in danger territory within months. This is a point regularly made very well by the former Bank of England advisor and GB News commentator, Dr Roger Gewolb.
Arguably, the bank left it too late to increase rates and this has had damaging long-term consequences. But if they fail to reduce them soon, difficult days could be lurking around the corner.
Jonathan Rolande is a property expert from the National Association of Property Buyers and Home Sale Hub
