21
Jan
Hopes for a Brighter Future
The effects on the UK property market of the global economic
downturn are very well documented. For many months now the national
media, internet sites and televised news reports have continued to
show in graphic detail their portrayal of what appears to be a very
uncertain year ahead. However, what we consider to be the vital
ingredient has been conspicuous by its absence and that is
'perspective'.
We all know only too well that the words, British press and
sensationalism, run hand in glove. Whilst the media are not
responsible for the banking crisis, the global recession, and the
sub prime mortgage fiasco they should be held to account as to
their portrayal of these difficult situations.
Leveling Out
The UK housing market has been exposed to the effects of all of
these economic conditions since August 2007. It is fair to say that
there has been substantial downturns in the number of sales, values
and the availability of mortgage funds. But the figures that are
shown are always averages and do not discriminate from one market
sector or one geographical location to another and there certainly
are some considerable extremes. The very bottom end of the market,
sub £200,000 is and will continue to be in continual decline.
The very top end of the market has witnessed considerable weakening
in demand and as a consequence over the last six months there has
been a rapid and noticeable reduction in property values. The
middle range, in particular our niche market sector, which in real
terms these days relates to properties between £500,000 and
£1.25million, have over the last 2 or 3 months seen a very
slight levelling out, a reduction in supply and a gradual increase
in demand. This is coincidental or as a consequence of the
significant reductions in interest rates, inflationary pressures,
oil and food prices.
Bottoming Out
The cash injection into the money markets has yet to flow through
and the benefits are unlikely to be felt until the second quarter.
So back to the word ‘perspective’. What can we possibly
read from these indictors that the press prefer to conceal.
Properties are now at their most affordable level for generations,
by which we mean the fall in incomes in relation to the fall in
values. Mortgages, if you are to be influenced by peoples such as
the Woolwich and Cheltenham and Gloucester are slightly more
difficult to acquire but just as readily available as they have
been in previous years. Although the defining factor is the now
commonly used phrase, 'safe lending'. The balance between supply
and demand has been out of kilter for virtually all of 2008 yet we
have started 2009 with a suggestion that parity could be reached
sooner rather than later. The first signs of a collapse in the
rental market became more apparent in the forth quarter of last
year fuelled by over supply, less demand and rents falling fast.
Cumulatively all of these will feed in to be a stimulus for
improved performance and what we see, which is a position where
property values will be bottoming out as we get into the second
quarter of 2009. The rate of decline has started to slow noticeably
in Hampshire since October 2008. In fact Penyards right across the
board and in all offices sold more houses in the last 10 weeks of
2008 than the like for like period in both 2006 and 2007. Of course
‘one swallow does not make a summer’ but encouragement
is inspired by early indications that they are showing continuity
already.
We are by no means complacent or dismissive of the fact that
much hardship will be felt throughout the UK particularly in retail
and manufacturing probably for most of 2009. However, we strongly
believe that as for the property market which effectively had
already been in recession for 9 months may well be drawing to a
close.
And if you are now contemplating a sale and purchase you may be
pleasantly surprised that the reduction of the value of your house
may not be as bad as the national average as certain properties in
certain locations are ‘bucking the trend’. For those
experienced and educated buyers they are also off setting much of
the differential from their loss of the sale price of their
purchase.
Bucking the Trend
You will no doubt read in the local press an editorial statement as
to the performance of Penyards and in particular their Romsey
office. A statement from our company accountant at an Audit at the
end of November confirming that in year to date the sales
performance increased nearly 20% over the same period in 2007 which
in itself was a previous best. We have been able to attain such
high standards of performance through more strategic marketing
leading to a significant increase in market share, applying the
concept of quality over quantity by a transparent and direct
approach to both sellers and purchasers expectation and by
subscribing too a positive as opposed to a defeatist outlook and it
is a continuation of this philosophy that will guarantee to hold us
in good stead for the rest of 2009.
Comment from Graham Evans, Managing Director, Penyards Country
Properties