When there's talk one minute of the British economy picking up, followed by the threat of a triple dip recession the next, it's difficult to really get to grips with where the UK is heading in 2013. The same goes for the housing market, where confidence appears to be building, yet house prices are still in decline and the market looks to end the year in a fairly dismal state. The economic outlook remains challenging and unclear to say the least.
I am by no means an economist (and I have the utmost respect for those foolhardy enough to be so at this time), but as an independent online estate agent, I like to look at the market myself and see what I can decipher from the tangle of predictions for the year ahead.
1. Firstly, it's important to recognise that the last two years have been rocked by one-off events that have affected the property market in individual months. With no stamp duty holidays, Royal Weddings, Jubilee celebrations or Olympics to celebrate, the market should settle and steadily improve in 2013.
Transactions will rise during the first six months of the year compared to 2012, with house prices potentially climbing by as much as 2% across the year. However, a word of warning, if there is an unexpected rise in interest rates, house prices will fall quite aggressively and, in turn, damage the chances of a full housing recovery.
The outlook on interest rates is that they will remain low at least well into 2013 - but they will have to start to go up to a 'normal' level at some point in the future!
2. The government has yet to do much to help buoy the property market and if this year's policy decisions are anything to go by, it will only be a hindrance to the market's recovery over the next twelve months. The FirstBuy Scheme, the Estate Agents Act, stamp duty tax and planning legislation reforms have yet to do anything to solve the housing market crisis.
As a priority, the government needs to better understand the business of estate agents and the needs of buyers if property legislation is to actually help the market.
3. High street estate agents will face ever stronger competition from their online counterparts in 2013. In fact, I predict that online estate agents will account for over 10% of the market within the next two years (they currently make up around 1.8% of the market today). This will put 1,400 high street agents out of business.
Put simply, it's a sign of the times. Online businesses in every retail sector are growing having successfully adapted the traditional business models to cater for today's online world. By cutting overheads and streamlining processes, online estate agents have the capacity to deal with more properties, require fewer members of staff and can charge much lower fees. Over 90% of house sale enquiries now come via the internet and the majority of buyers will go to the internet first to look at a house before arranging the viewing, so there is a growing demand for the services offered online.
For every online estate agent that opens, nine high street agents will close, saving the public approximately £350million in unnecessary fees.
4. Another trend to watch out for in 2013 is the rise of lawsuits against agents. The repeal of the Property Misdescriptions Act (PMA) will put estate agents under the scrutiny of Consumer Protection laws for the first time. Yes, we may breathe a sigh of relief as this should weed out unscrupulous agents, but it will also place complex, time-consuming and costly burdens on legitimate companies already facing significant economic challenges. Since Consumer Protection is a 'catch-all' law that is not related to the property market, estate agents will be bound by new legislation and this will lead to more agents, respectable or not, being sued for misrepresentation in 2013.
5. The Estate Agents Act is being amended next year in a proposed move to make it easier for homeowners to privately advertise and sell their houses. However, the market is largely controlled by online property portals where all buyers search for properties. These portals, quite rightly, do not want to allow intermediaries and private sellers to list on their sites.
We're going to see a battle against property portals not listing private sellers. The coverage that this new legislation should generate will educate the public on the estate agency industry, as well as the clear benefits of using online estate agents.
Adam Day is a Director at Hatched.co.uk, a leading online low cost estate agent and one of the original pioneers of the online estate agency model.
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