Reading the Market

How do we know what to believe when there are so many conflicting reports?

Look for evidence, not speculation. Recently a City investment banking group opined that British houseprices could fall by another 55 per cent. Ignore that; after the lack of insight shown by banks into their own business, we need not listen to their forecasts on others. Instead, note trends revealed in reports by property professionals such as the Royal Institution of Chartered Surveyors (RICS) and mortgage lenders Halifax or Nationwide on the actual increase or decrease in prices, number of sales concluded, properties on the market and potential buyers registering.

Are some areas really doing much better than others?

There are always regional variations, particularly in difficult times. In locations where people stretched to buy with 90 to 125 per cent mortgages, the recession is now forcing many sales so supply exceeds demand and prices continue to fall.

However, in more soughtafter areas, where owners generally have more equity in their homes, there tend to be few distress sales. People are staying put and waiting for values to rise again. At the same time, those who can buy tend to look in those very places so demand exceeds supply and sale prices are now holding their own or increasing.

Asking prices are difficult to get right as sellers must be wary of asking too much while accepting that many buyers still expect hefty discounts.
How can we tell when the tide has turned in our area?

Traditionally a proliferation of skips is a pointer to a renewed investment in property. The proportion of “Sold” as opposed to “For Sale” or “To Let” boards is another key indicator of how a local market is performing.

What is the outlook for the British property market?

It will recover and in someareas is already showing signs of picking up. This is a popular overcrowded island where demand exceeds supply and will continue to do so. There is underlying confidence despite the level of Government debt being incurred. Most people are still in jobs and paying their mortgages. Some 80 per cent of the debt that necessitated bank bail-outs was due to poor overseas loans and investments by high street retail banks engaging in merchant banking business, not by domestic borrower failures. The real danger is of Government trying to compensate for poor banking regulation by imposing more irrelevant and burdensome restrictions on the market.

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