September 2010

Thursday, 06 September 2012

Reasons to be cheerful

If one were to take too much notice of the national press and broadcast media one might become rather depressed about the economic outlook and the housing market in particular. However, any decent psychologist will tell you that the national press and the broadcast media are past masters in the art of negative conditioning. In other words the worse the news, the more we read and watch. The EDP does, of course, take a rather more positive approach to local news I’m pleased to say.

There are plenty of good news stories about the economy that are buried in the small print. For example the economy is growing, the deficit is being addressed, unemployment is falling, there is stability in financial markets and the culture within government to buy now and pay later is being curbed. The last great period of austerity was in the 1950’s which is a period many regard as a golden era for this country. In fact the measures taken in the 1950’s to balance the books following the Second World War paved the way for prosperity during the following four decades. Rather than fear austerity measures we should embrace them and see them as a necessary medicine for a sick patient.

So when it comes to moves in the property market I would advise sellers to choose an agent who is not just hard working, local and well connected but realistic and objective and to be patient in selling because the desired outcome may take several weeks or months.

Although I think it would be foolish for any estate agent to use the word “buoyant” when describing the market at the moment, there are encouraging signs. At Hadley Taylor we have agreed three sales in the Golden Triangle each in excess of £600,000 in as many weeks. This is a sure sign that the market is not as depressed as the editors of national newspapers and producers of news programs would have us believe.

Times may be hard and confidence in property has been dented but the fundamentals that underpin the UK housing market haven’t changed. Our island doesn’t get any bigger but the population does, new housing development is running at way below the rate required to make up the difference and most importantly of all, Britons have a love affair with property and a burning desire to own their own home. For all these reasons the long term outlook for property is good.

August 2010

Friday, 13 August 2010

Could property become a realistic alternative for investors?

Many people who rely on income from savings will be wondering what to do next with rates on deposit accounts struggling to get above 2%. Low savings rates are symptomatic of the state of the economy and are here to stay for the foreseeable future so could property prove to be a viable alternative?

Residential property investments haven’t looked very attractive in recent years due to falling property values but perhaps it’s time to look again now that we have more stable prices and very low rates of return for savers. Let’s ignore capital growth and look solely at yield. Residential investment property in Norwich is currently yielding up to 6.5% before costs and taxes. If investors have the stomach to take on a house in multiple occupancy the return could be as much as 7.5% gross and if investors are prepared to look at mixed residential and commercial properties the returns are even higher.

Of course there are many more things to consider with this type of investment and many more pitfalls than if one were to put one’s feet up and wait for the building society statement to come through the letter box but as we enter unchartered water for investments we will all have to make our money work harder than ever before.

July 2010

Tuesday, 13 July 2010

Will property out perform inflation?

Price Waterhouse Coopers have recently confirmed a view that I have held for some time, which is that property price inflation over the next few years will be modest at best. Their view is that property prices will struggle to keep pace with inflation. This will change the way many people view their property purchases from now on. For those of us simply wishing to buy a house to live in, nothing changes, but for those who see their home as an investment vehicle that will always increase in value and which can be borrowed against whenever the need arises, I’m afraid the game is up.

However, before we write off property as an investment vehicle completely let’s consider how other investments will do over the next ten years or so. Are we to assume that savings rates will out perform inflation? On current form I think not. Are we to hope that stocks and shares will out perform inflation? Maybe, but maybe not and only the bravest investors will be around to find out.

So compared with the alternatives perhaps good quality housing stock in good residential areas doesn’t seem like such a bad bet as some might think.

June 2010

Tuesday, 15 June 2010

How will increase in CGT affect the property market?

There is much speculation that the Government will increase capital gains tax at the budget as part of its attempts to reduce the budget deficit. Much of this speculation is I believe media driven and although I think we are going to see an increase, I don’t think it will be nearly as scary as some are predicting. I believe this for two reasons. Firstly, I don’t think our new chancellor is in the habit of political suicide and second, the wealth creators have to go on doing just that, creating wealth, and too much of an uplift on CGT would be counter productive in the long run.

So what effect will an increase have on the property market? Will landlords rush to sell? The answer to this will depend on the level of increase. If we have a modest increase I don’t predict a rush to dispose of investment properties. Professional landlords with large portfolios who are in it for the long haul tend to buy and not sell so I don’t think an increase in CGT will impact much on this group. Many amateur landlords who jumped on the band wagon during the past decade in search of an easy buck have already come unstuck and are no longer in the game. Accidental landlords, of whom many have been created during the past three years, will feel under most pressure to exit the market.

So I am expecting a welcome increase in instructions of small flats and houses in the city during the next few months but not the sort of surge in disposals that would lead to instability in the market and a drop in property values.

May 2010

Thursday, 20 May 2010

HIP's finally bite the dust

The demise of home information packs has been welcomed by the National Association of Estate Agents, The Law Society and the Royal Institute of Chartered Surveyors. So one might ask why these professional bodies weren’t asked their opinion before the HIP’s debacle and the answer is that they were asked, but their contributions to the consultation were largely ignored.

The new coalition government has, however, decided to continue with energy performance certificates for residential properties sold in the England and Wales. These certificates were the most logical component of the now defunct HIP’s so I for one support this move.

Although most estate agents will have a great deal of sympathy with the thousands of people who qualified themselves to prepare these packs it doesn’t change the fact that these people were providing a service that increased the cost of sale at a point in the cycle when the market was at it’s most stressed. Many of these people will, I hope, continue to find gainful employment producing energy performance certificates instead.

Since the suspending of HIP’s we have seen a welcome return to the market of the speculative seller which has increased the number of properties on our books.

April 2010

Thursday, 01 April 2010

Why pay an estate agent to sell your house? 

Why pay an estate agent to sell your house? Why not do it yourself? Why indeed, but let’s look at this in more detail.

Of course sellers want to keep the costs of sale to minimum but they also want to achieve the best price for their most valuable asset. These are often incompatible objectives. Anyone can sell a house but it takes experience, skill, tenacity, local knowledge and patience as well as the right routes to market to achieve the optimum price for a property. If the seller is equipped with all of these, then my advice is to go ahead and sell it yourself and save the fee.

In reality sellers tend not to be trained in the art of negotiation, they may not be on hand to take viewings at the drop of a hat whenever potential purchasers want to view. They may not wish to sit by a phone all day in case there is an enquiry and they may not want to pay several hundred pounds for an advertisement in the EDP property supplement. They will not have access to tried and tested property portals such as rightmove.co.uk and they certainly won’t have a list of people actively looking for a house in their area and in the required price bracket as will a good local independent estate agent.

Private sellers will have to take their own photographs, prepare their own sales particulars and measure up their own house, not to mention guess what price they should be asking and take a punt on which solicitor they should use. Private sellers will also have to vet purchasers for affordability and proceedability and keep the sale on track once the purchaser gets cold feet after reading the survey report. These are all rather onerous tasks that people pay their estate agent to do for them.

Tesco have made noises recently about providing sellers with a web based solution to sell their house for as little as £199 as if buying a house was like buying a packet of peas. Google have similar plans although at least they don’t sell peas as well. Private seller’s websites have been about for many years and the Tesco and Google models are no different to those that have come and gone before. None of these private seller’s sites or internet only estate agents has gained any degree of market share in any part of the UK because they don’t deliver what most people want.

You can pay as little as £2500 to an independent estate agent for selling the average house in the UK. Small beer when compared to the thousands of pounds that may be lost if the optimum price isn’t achieved in a private sale and of course private sellers never know whether they have achieve the optimum price or not because they never go on the open market. The one consolation consumers have in this country is the knowledge that because we operate in a highly competitive market estate agents charge a lot less here than they do virtually anywhere else.