Not having the benefit of a fail-safe crystal ball, we can only go on what the economists predict as well as looking at historical trends to predict the future for moving home companies.
In recent times, lenders calculated that on average people moved home every 6 to 7 years but concede that this figure is a product of the property boom in that people have moved more frequently during the boom to make a profit rather than for traditional reasons of need. As there are no profits to be made in moving home presently, the market is likely to revert to one where people move for traditional reasons. Traditional moves take place on average once every 8 to 10 years, which will clearly reduce the overall volumes of removal work.
The shrinkage will in part be compensated for by a contraction in the removals industry itself as significant numbers of man and van operations and enthusiastic amateurs no longer view moving as an easy way to make a living and will go off to do other things.
If property prices drop back to 30%, as predicted, anybody that bought a property in 2004 or earlier shout not be in negative equity. If you take the average move cycle as of today being realistically between eight and 10 years, the vast majority of people that would want to be moving right now and over the next few years should have plenty of equity in their property and therefore have no problem at all in obtaining mortgages.
In theory then, this means there are people with traditional reasons for moving, wanting to move and able to meet lenders criteria. Meanwhile homeowners are trying to get their heads around the fact that their properties are worth considerably less than they were a year ago.
The next factor to consider is that interest rates are predicted to drop to 2% or 3% during next year which should also stimulate the property market and economists advise us that inflation and the cost of normal every day living increases have peaked and are on the way down. What's more with the lack of serious activity in the moving market over the last 10 months there must be a backlog of people wanting to move. So once things stabilise and interest rates drop its entirely feasible there will be a mini boom in activity in the housing market.
If however lower interest rates and other measures the government have taken don't' kickstart the property market economists say that the government would have to once again intervene because our own economy couldn't sustain a prolonged stall in home sales.
All the above suggests that most of the domestic removal activity in the industry in the short to medium term will be in the middle and upper end of the housing market where far more of the moving public are likely to have borrowed a sensible percentage to buy their homes and many may be mortgage free. We should also bear in mind that there is a shortage of properties so supply and demand will inevitably play its part in pricing the property in the first place. Not to be forgotten or ignored is the buoyant lettings market.
In summary, whilst these are hard times for removal companies there is a glimmer of light at the end of the long dark tunnel with the prospect of a marked improvement in the summer of 2009. The strong, professional removal companies have ridden out the last 12 months and kept their pricing realistic will be best placed to pick up the pieces from the credit crunch.
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