Follow this topicProperty prices to stagnate in 2010
Find out where lovemoney.com readers think property prices are headed.
Last week, we surveyed lovemoney.com readers and collected a fairly representative sample across Great Britain and Northern Ireland. It wasn't a massive survey as it had just 844 respondents but, since we kept our questions quite broad, that's large enough to give us a rough picture of people's confidence in the housing market.
Around 70% of you currently don't consider this market a really strong market for buying or selling property. The remaining 30% are evenly split between whether you would definitely buy in this market or definitely sell (or definitely recommend to friends that they should sell).
This largely correlates with your views on property prices. Around 80% think that house prices over the next 12 months won't move or will barely move in either direction. Of the remainder (who think house prices will move more dramatically), those who think prices will fall outnumbered those who think they will rise by three to one.
Around 60% thought that tracker mortgages are still a better bet, which reflects the huge discount you currently get with trackers over fixed rates, and probably also a belief that rates won't rise for some time. We could perhaps read into this that people are still understandably pessimistic about the economy.
Who can we rely on to call the market?
I've argued before that, in normal times like this, forecasting the property market's next move is extremely difficult and I'm still to find a professional forecaster who has consistently done a good job over a significant number of predictions.
The consensus prediction from our survey is that house prices won't move much over the next 12 months, yet consumers can get predictions wrong as easily as the professionals.
House prices were pushed up by buyers in 2006 and 2007, many of whom will now be in negative equity and, more importantly, will be thinking that it would have been better to keep renting and buy later. Millions more were desperate to get on the ladder as soon as they possibly could afford it and now it seems they were saved by their lack of funds and income.
Others were predicting as early as 2003 and 2004 that prices would fall and refused to buy although they could afford it. Most of them will still be waiting for prices to fall far enough to reward that decision.
These are reasons why I think you should take survey results, as interesting as they may be, with a fistful of salt.
We can gain some comfort from the past
Most of these views will be based on, or greatly influenced by, price movements over the past few months and on other recent indicators that the economy and lending might be turning around.
However, monthly figures by themselves are unreliable and are as good as meaningless, and, even if we consider trends over six to 12 months, all that tells us is what happened over that period. It doesn't tell us what's going to happen over the next six to 12 months.
Quality historical data on property prices is surprisingly limited, with the best records being kept in the past few decades. Based on that relatively small period of time we can see that no one owning a property for at least ten years has come out worse for wear, even if they bought at the peak of a boom. This doesn't mean that a significant loss can't happen over longer periods, but it does give us some reassurances that buying a property is a good purchase in the long run.
The exact point in time that you buy, over the long run, becomes less important than ensuring you can afford the repayments, even if interest rates were to rise significantly.
More: Property market is back to normal | Why I hate high house prices
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