As we look back on previous property market trends it can be easy with hindsight to spot movements which could have been exploited for maximum gain. Seasonal movements, by far the easiest to spot, have seen lulls in winter and summer time. Elections have seen volatility ahead of the results and interest rate movements seem to be directly correlated with property market trends. However, does history always repeat itself?
Only this week we have seen a significant increase reported in activity in terms of listing and sales numbers in the UK property market throughout November. While it is dangerous to take one month’s figures in isolation, could it be that the seasonal trends of years gone by are starting to fade?
It is foolish to suggest that seasonal trends will disappear but as the housing shortage across the UK continues to grow we may see these seasonal fluctuations “flatten out”. There may well be seasonal times to buy property, sell property and sit on the sidelines but in the future it is likely that even greater benefit will come from research into specific long-term property investment opportunities.
If we were to ask the majority of the voting public which political parties would benefit the UK property market most the vast majority would suggest the Conservative Party. Historically the Conservatives have been a pro-business movement in favour of homeownership while the Labour Party has often focused on social housing and greater wealth distribution. The Liberal Democrats and other fringe parties tend to be somewhere in between these two extremes.
The reality is that the impact which individual political parties have on the property market when in government has diminished over the years. Aside from tinkering around the edges the policy of the vast majority of mainstream political parties tends to be pro homeownership and pro newbuild investment. Quite when they will deliver on these policies remains to be seen because promises have been made and promises have been broken on numerous occasions!
Of all the variables used to predict the future of any property market around the world, the underlying local economic performance and worldwide economic performance still have the greatest impact. There is a direct correlation between economic performance and base rates as there is a correlation between base rates and property market investment. Those variables surrounding economic performance tend to have the greatest impact upon property market trends and property market activity. Also, trends associated with economic activity tend to be repeated on numerous occasions.
If we look back at the performance of property prices during times of economic prosperity and economic despair it is fairly easy to see the trends emerging. Therefore, of all the historic trends to take most notice of when looking at property investment it has to be economic performance. However, while trends do repeat themselves they may occur when least expected and their severity, both on the upside and the downside, can vary enormously.
It is very easy to look back on property market trends with hindsight and “spot” opportunities in times gone by. The fact is that trends do repeat themselves on numerous occasions to greater and lesser degrees of severity. Economic performance and base rates still have the greatest impact upon property market trends but even these are not as easy as you might guess to spot and forecast “when you are in the moment”.
Those investing in property would do well to look at historic trends to get an idea of how markets perform during different environments. However, do not assume that all trends will be repeated in a similar fashion even under similar economic scenarios.