So here we are in September traditionally the month when the property market revives after the lull of the summer months and yet falling values continue to create shocking headlines. The volume of transactions remains pitiful, which is now being reflected in poor corporate results from house builders and estate agents alike. In the past couple of weeks, Foxtons has called in the investment bank NM Rothschild to review its business (a year after being bought by a private equity company) and HBOS reported the closing of 53 of its Halifax estate-agent branches (more than a quarter of the total).
The Government has responded shamefully late and woefully inadequately with its announcement of a one-year stamp-duty holiday for properties under £175,000, together with some other half-hearted measures to help homeowners in danger of repossession. The harsh reality is that a far more substantial rescue package would be required to revive the ailing market. Those of us who remember the difficult times of the early 1990s might recall how the stamp-duty holiday heralded by the then Government completely failed to have either the desired, or even a positive, impact.
The most glaring problem is, of course, the lack of available credit. Personally, I don’t believe the mortgage market will ever be quite the same again and neither should we wish it to be but until broader-based lending has resumed and there is greater confidence in the economy, it’s hard to see what will turn the market around. Having said that, the higher up the market you look, the more activity you find, and there have been several substantial country houses going under offer just in the past couple of weeks.
Buyers are very much in control we at Garrington have just secured a property on behalf of a client £600,000 below the asking price within six weeks of starting the search. All buyers are being highly selective, and properties that are blighted in any way are not selling, almost regardless of price. Apart from the fact that completed chains of buyers and sellers are proving extremely difficult to hold together, mortgage applications are also taking far longer to be processed. Consequently, deals involving related transactions or mortgages take longer to go through, causing further headaches. There is also almost an epidemic of gazundering, and estate agents live in fear of Friday afternoons (usually the day people choose to exchange) when the telephone starts ringing and offer prices are dropped.
But the reality is that, in this changing market, some buyers understandably think that in the period between offer and exchange (nowadays a delay of 14 weeks is not unusual), the price first offered is no longer relevant. And don’t forget, when the market was travelling in the opposite direction, the vendors played the same game. Amid all the gloom, there have been miniscule signs of hope this month with the most recent RICS opinion survey highlighting tentative signs that ‘housing-market activity may be nearing a floor’.
New buyer enquiries and agreed sales, as well as expectation of future sales, all improved possibly reflecting a more realistic pricing environment. It should be noted, however, that these improvements are only marginal, and all the indicators remain in negative territory. The weakness in the market is still very much demandled with new buyer enquiries down a great deal. Supply has increased in London and the South-East, which possibly reflects the bias towards the financial services industry in these areas, but, says the RICS, overall supply levels have not increased.
Market behaviour this month will be a key indicator of the shape of things to come in the last quarter might activity volume increase as people either get fed up with waiting or decide that this is the bottom of the market? Will there finally be any improvement to liquidity in the mortgage market? What direction will interest rates move in? It’s a fascinating time to be involved and, as things continue to change on an almost daily basis, I will, as ever, be monitoring the situation extremely closely. For more information about Garrington property search, visit www.garrington.co.uk