1. A Potential Disaster if Labour Wins the General Election
Despite many predictions of a slow-down, we expect 2015 to kick off strongly, with house prices to rise by up to 6% in the first quarter alone. However, moving towards the General Election and beyond, growth is likely to slow. Prices could even start to drop by around 2% in the last half of the year. So overall, in the absence of any major legislative changes, we predict growth to continue at somewhere around 4%-5% in 2015, whilst warning homeowners to be prepared for a rocky spell around April, May & June, with the uncertainty that a general election inevitably brings.
A Labour victory in May could potentially have a hugely disruptive effect on the property market as the party is known for surprising voters with unexpected measures and excessive red tape.
Our founder Adam Day affirms "The last Labour win led to the introduction of HIPs. I was all for HIPs, however, the way they were introduced wasn’t thought through. The government announced the specific date that HIPs were to become a legal requirement, which led to hundreds of thousands of homeowners rushing to put their house on the market in an attempt to avoid the cost and bureaucracy associated with their production. It was this slapdash strategy, which consequently led to an oversupply of properties that brought on the beginnings of the crash in 2008."
2. Bank of England to Increase Interest Rates
If the status quo is maintained politically it will be the responsibility of the Bank of England to steady the ship post-election, with interest rises that aren’t too aggressive yet equally, not too weak.
We expect interest rates to rise, which will, along with the general election, be a contributor to the slow-down for the housing market in the final half of the year. For many homeowners, this correction will be barely noticeable over such an extended period of time and certainly not when compared to 2008, when house prices were falling at 2% per month in some places in the UK.
3. Consolidation in the Online Estate Agents Market
The number of online estate agents is growing rapidly, with, at last count, 10 new nationwide players entering the market in the last year alone, resulting in there now being 62 online estate agents covering the UK, along with dozens of others who just cover small towns.
“My own view is that there are now way too many online estate agents” says Adam. “Many of them are only selling 10-20 properties each month, which is simply unsustainable for estate agencies using the online business model and with so many competitors to battle it out against. The obvious next step is for one of the bigger players, perhaps one of the online agents with a bit of spare cash, to begin scooping up some of the smaller or newer agents to try and consolidate the market a little.”
4. A High-Street Agency Offering an Online Alternative?
Day also believe that 2015 will be the year that one of the corporate agents finally launches a serious online proposition.
“I have no idea who or when that might be, but if online estate agents currently hold two to five percent of the market share, this could potentially rise to somewhere between four and eight percent in 2015. That is simply too big a market for the corporate agents to ignore, and they will feel compelled to take their slice. How they or do it, remains to be seen, but it will be interesting to see how they roll any online offering out.”
5. A Significant Reduction in High-Street Agents
Despite a prospering estate agency industry, Adam believes that the new property portal, OnTheMarket, is set to hit traditional agents hard with those that join having to drop either Rightmove or Zoopla as per the conditions set out from the newcomer.
“Many agents will have over staffed themselves this year because it has been so busy, so when the property market does begin to slow mid-year, they will have over extended themselves. There is no doubt that the agents that join OnTheMarket will be the ones that will struggle the most; with less coverage of their properties, and little (if any) traction of buyers visiting this new site, these agents will sell less properties, with no way of getting back on Rightmove, or Zoopla without paying through the nose.”
Adam expects many agents will blame their reduced sales on a perceived ‘tough and changing’ market at the start of the year, rather than admitting that they are making ‘three-less-sales-a-month’ as a result of halving the exposure of their properties by dropping one of the two major property portals.
This, in turn, will unavoidably lose them instructions. However, by the time these agents realise they’re losing instructions to the more sensible agents who decided to stick with the two giants of the property portal world, it will simply be too late, because from Q2 onwards, the market will have become that ‘tough and changing’ market that many are predicting from the start of the year…
We firmly believe that 2015 will see online estate agency continue to prosper. Likewise, traditional agents who decide to join the online revolution and thus respond to customer demand by driving efficiencies with the aim of lowering their fees, should also enjoy success and stand out in a market which is likely to get tougher as the year progresses.