Market Commentary - March 2001

The news from the housing market is ... well, there's no news. House prices are not spiralling out of control nor are they plummeting - they're just chugging along quite nicely. Not very interesting, but at least the chattering classes will be able to talk about other things at dinner on Saturday. There seems to be a consensus that the UK Housing market will grow steadily during 2001 - with estimates of 6% increases in house prices over the year.

It is also likely that some of the anomalies will start to disappear - or at least fade. Those areas of the South East - and especially London - where prices were loony cannot and will not sustain the price growth. If high prices mean that only exceptional wealthy people can afford to buy in London, there will be loads of unsold property and the prices will have to come down.

The Chancellor's budget is unlikely to have a great effect on the housing market. The one relevant measure was the abolition of stamp duty in certain 'designated areas'. At the time of writing, I don't know where these areas will be - but I doubt they will include Fulham, Surrey or other areas that have been most affected by the recent hikes in stamp duty. It is designed to promote growth in the chosen areas, but will a few hundred quid really make any difference?

The one cloud on the horizon is the condition of economies across the world - and in particular the United States. US (and to a certain extent global) wealth has been driven by the surge in technology over the past decade. Capital spending, productivity improvement, rising incomes and stock market wealth have all surged as a result. That growth is slowing and with it goes the virtuous circle of growth -> confidence -> investment -> growth. The UK is in good shape, as Gordon Brown was at pains to point out in his budget. However it is quite possible that within a few months we may find that a slowdown here, a recession in the US and a worsened bear market across the globe makes things look very different!

Spring is now on its way. You can tell because the rain is not as cold. If you're deciding whether to buy or sell, now is the time that most people start testing the market: You can read up on the subject and analyse the factors mentioned here or here plus hundreds of others. You could do a detailed SWOT analysis of the marketplace before writing a paper on each of the options. You could do any number of things to ensure that you took into account all available information. Or...you could think carefully about these 2 questions:

1. Where do I want to live?
2. Where can I afford to live?

Disclaimer: As usual, all the above is purely my opinion, and could be complete rubbish.

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