Property: So who will make the next move?: If this week's forecasts are to be believed, we are about to see an upturn in the sales of homes. It's looking good for 1994. But, says Anne Spackman, agents are still suffering palpitations

In a game of word association, 'estate agent' would probably provoke responses such as 'greed' and 'rip-off'. One unlikely reply is the word almost every agent is talking about for 1994: restraint.

Most agents would like to see a return to house-price stability, or a continuation of the 2 per cent rise seen in 1993. What actually happens will depend less on them, however, than on the performance of the economy in general; in particular, on whether or not potential buyers and sellers decide it is time to take the plunge.

For many months now the analysts have been pointing out that everything is in place for a return to an active housing market. Interest rates are low and look set to stay that way. Houses are more affordable than at any time in the past 10 years - in some parts of the South they are more affordable than at any time since the Sixties. Lenders, led by the Halifax, have come up with schemes to help those trapped by negative equity to escape. The Budget caused no real damage. So what is everyone waiting for?

There is no doubt that hundreds of thousands of potential movers are waiting in the wings. The number of transactions has fallen from a peak of 2.2 million in 1988 to 1.1 million in 1992, now widely viewed as the year the property market hit bottom. In 1993, transactions crept up by about 5 per cent - but that still left them well below the norm of 1.6 million a year.

Most analysts believe at least half a million people have held back over the past three years. Now the Halifax has predicted 1.3 million house moves in 1994, an increase of a further 5 per cent.

The factor that economic models cannot take into account is the one that has ruined so many forecasts - confidence. First-time buyers have been nervous about further price falls. Mortgage payers have been nervous about stretching themselves, remembering that interest rates can go up as well as down. People have been worried about losing their jobs. But now, with prices stable or rising slightly in every region, unemployment - officially at least -falling, and increasing numbers of borrowers locked into fixed-rate mortgage deals, those clouds seem to be dispersing. Nobody is expecting a gloomy 1994.

The most buoyant predictions are for central London, which is undoubtedly leading the way out of the recession. Agents agree that prices have risen 10 per cent in 1993, and with Hong Kong buyers still active and City wallets fat once again, there is definitely money out there to spend. Predictions range from outrageously bullish to cautiously optimistic. Savills Research, for example, predicts rises of 19 per cent across the country and 25 per cent in prime central London.

Last year, Yolande Barnes and her team at Savills Research stuck their necks out - and their optimism proved well-founded. But such predictions give agents palpitations, since their biggest problem is persuading sellers to set realistic prices. If sellers respond by asking 19 per cent more, there won't be a property market this year.

David Forbes, of Chesterfield, expects central London prices to rise a further 10 per cent over the next six months. But he, like many others, warns sellers not to be greedy.

In the country-house market, the picture is similar. Strutt and Parker expects a modest increase of 5 per

cent, following a 10 per cent rise in 1993. But James Laing, joint head of its national agency, warns: 'Vendors who live in the hope that the market is going to return to the boom times of the late Eighties will be sadly disappointed. Today's buyers are too sophisticated to repeat the mistakes that were made during the recession. Throughout 1993, price was the crucial factor, and so it will be over the next 12 months.'

This is the reason why restraint is the word on everyone's lips. Every report showing even a fractional increase in prices leads to inflated notions of value, on the basis that 'all those price falls applied to my neighbours' houses; the rises apply to mine'. If 1994 is to see a gradual growth in both prices and volume of business, it will depend on sellers being realistic.

It will also depend on sellers coming forward. Since August, the number of houses being placed on the market has fallen by almost two-thirds in London and the South. This effect has rippled out to the M25 and beyond, to cities such as Cambridge, and westwards. Buyers find themselves competing over the few good properties on sale, and asking prices are being reached and sometimes exceeded. So if the dearth continues, prices are bound to rise as demand outstrips supply.

Elsewhere, however, in East Anglia, the Midlands and the North, the property cycle is about a year behind. Business is as brisk as it was in the South a year ago and prices are only just stabilising.

Stephen McOwan, of Sanderson Townend and Gilbert, which has offices across the North-east, says he is looking forward to 1994 - 'as long as sellers and agents don't get too ambitious'. He adds:'I would hope that prices won't rise at all. I would like to see 12 to 18 months' sustained activity. People should remember they are buying and selling in the same market.'

In Manchester, Steve Minchin, managing director of Reads Rains, expects a strong growth in sales and a modest increase in prices. Sales across the firm's 100 branches are up by 50 per cent on this time last year, and he thinks many more buyers will take the plunge this spring. 'There is a buzz about the place. In 1993 the levels of sales were amazing. I've just polled our branch managers and virtually all of them say things are improving.'

All this optimism must be galling for anyone at the bottom of the housing ladder, stuck in a home they cannot afford to sell. Happily there are a lot fewer of them than there were 12 months ago.

Contrary to one recent report, the number of households saddled with negative equity has fallen dramatically this year. The Bank of England says the figure is down from a peak of 1.8 million in the first quarter of 1993, to 1.2 million. For those 1.2 million, at least there are now lenders offering negative-equity schemes to help them to move and carry their debt with them.

Housing market predictions are notoriously inaccurate. But having asked the professionals to stick their necks out, I feel obliged to do the same. My feeling is that 1994 will see the market continue its return to normality, with prices rising modestly. The Halifax figure of a 5 per cent looks realistic.

I think sales could pick up strongly from as early as this month, providing the winter is kind. This is often the only time of year when husbands and wives stay at home together for more than three consecutive days. It is a time for taking stock and making plans.

I fear the trend towards a two-tier market is set to continue, with former council housing and tiny studio and one-bedroom flats becoming the Cinderella options. Coupled with this, lenders and insurance companies are likely to be increasingly risk-aware when deciding whether or not to take your business and at what price. Life at the bottom is not likely to look so rosy.

Still, as Yolande Barnes points out, most of us don't look down. One of the reasons Ms Barnes offers for her buoyant forecast strikes a very human chord. 'People only look up the ladder, however callous that may sound,' she says. 'If they see the property they want going up in price, they will feel they must buy before it gets out of reach.'

This is not a rational way to trade, but buying a house has not been a rational business for decades. Which is why forecasts are so rarely right.

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