PROPERTY: SHOULD WE GET USED TO VOLATILITY?
PUBLISHED: 15:28 20 June 2014 | UPDATED: 13:19 30 August 2017
Will property prices continue to be volatile in Cornwall and beyond
Years ago I rememberchanges in behaviour of the property market were gradual and took many years. Prices went up for long periods, and retreated in a similar way. The troughs were long and there were many years between changes in sentiment.
During my first weeks in the business in the early 90s I was taught that a property market (like many others) is driven by this sentiment. Greed drives the market (and prices) up, and fear pulls it back. This sentiment used to be set in for many years before changing direction, building momentum gradually.
Now it seems that this sentiment changes almost weekly, driven surely by 24 hour news channels, the internet and social media platforms such as Twitter. What’s more, we live in a global economy, where economic shocks on one side of the planet affect economies on the other side within minutes. This in turn can affect government policy, and the UK housing market is now undoubtedly political.
Is this market behaviour temporary, or should we get used to it on a permanent basis? Are volatile stock markets and housing markets just a bi-product of the internet age?
Looking back over the last ten years, Cornwall experienced a rampant bull market from 2004 until 2007, with a dramatic correction in 2008. But by 2010, most parts of the county were back very close to peak, but 2011 and 2012 saw some steep falls until the middle of 2013, which would seem to mark the recent low. From the autumn of 2013 until April this year, prices recovered some ground rising strongly, but now the market feels cool once again, with some deals falling apart and some buyers making silly offers.
Looking at the last twelve months, the strengthening market since last summer could be put down to Help-to-Buy, and the recent slowdown probably has a lot to do with the constant speculation about rising interest rates and house price bubble’ in the media. The former gives buyers confidence, and the latter unsettles them. The recent cooling of the market could also have something to do with the strengthening of the Pound, which might make London look slightly less attractive to all those foreign buyers, or it could be the increase in properties coming on to the market in spring time.
Whatever the reason or reasons, whether one looks at the last month, the last twelve months, or the last decade, we have a volatile, choppy property market, one in which it is difficult to look too far into the future.
My best guess is that we should all get used to it. Volatility could be here to stay.