Market Report January 2009 |
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1st February 2009
The start of the year was filled with uncertainty. The market had found itself in a state of inertia as buyers and tenants had simply decided to wait until after Christmas before doing anything. Since our New Year return, enquiries have increased dramatically as the green shoots of confidence have made a tentative appearance.
Really, there is no need for the market to remain as it was in the last quarter of 2008. There are mortgages available to the credit worthy, there are lots of keenly priced properties to choose from and there are a lot of motivated sellers. In fact, mortgages have never been cheaper as those Banks with funds to lend see this as an opportunity to steal market share from the traditional mortgage lenders and cherry pick the lowest risk customers.
The reality is that prices are reaching their nadir. It is likely they will fall a little further, but if you are intending to live in the property for more than two years, you should grab a bargain now before prices start to recover.
As soon as prices finally bottom out, bargain hunters will be out in force creating demand. As conveyances generally take several weeks, this gives sellers a lot of time to be offered a higher price as supply starts to reduce. Make no mistake, it will happen as it did in the early 1990’s. After that housing slump, how many times have we all wished we had bought then? Ah, the benefit of hindsight, but this is no different.
Prices are in fact lower than the market would dictate if left to its own devices. Many properties have gone under offer only to be down-valued by surveyors irrespective of the fact that the agreed value is supported by comparable evidence. These are the same valuers who happily agreed with outrageously high sale prices in a rising market safe in the knowledge that the value would soon catch up.
The reality is that blanket figures of house price results from Banks and Building Societies are an average of the UK market and are not indicative of the extremes they represent or specific geographic areas. (UK 15.4%, Northern Ireland 34.2%, Scotland 8.1%- Source: Nationwide). In fact the change in value in Dulwich is not the same as in Acton, so the value of these national statistics to buyers and sellers is questionable. Furthermore, these prices are based upon completed transactions when the values are established at the point of sale when the offer is accepted and as such are often 2-3 months out of date.
More important is the trend indicating a decline in the rate at which prices have fallen. London was the first region to suffer and I expect it to be the first to recover. This recovery will start to be noticed towards the latter part of 2009 and I expect full recovery to begin early in 2010.
What we need now is a period of stability where prices level so that buyers and sellers know where they stand. This will only happen if the press stop their constant scaremongering and sensationalist reporting. Bad news finds front page status yet recent positives about the London market languished on page five of Metro eclipsed by pictures of Paris Hilton.
It seems that good news is boring. So at the risk of being boring, let me say that the first few weeks of 2009 have been the best for some considerable time….. just don’t tell the omnipresent Robert Peston.
