Nick Taylor's Blog

April 2011

Friday, 01 April 2011

Spring is in the air

At last we have seen some activity in the Norwich property market. This year has been slow to get started but in recent weeks we have seen more instructions to sell, more viewings, more offers and more sales agreed.

Many buyers and sellers are still a little reluctant to test the water. People are waiting but they’re not quite sure what they’re waiting for and I’m not sure either.

If buyers are waiting for prices to fall, I don’t think they will. With twice as many new households being formed as there are new homes built it stands to reason that supply and demand will remain the biggest driver in the UK housing market for some years to come and this will underpin house prices. This is because developers aren’t suddenly going to acquire additional funds, not to mention additional courage, to build many more new houses and development land in locations close to amenities yet far enough away from water courses is will increasingly be in very short supply. 

If sellers are waiting for prices to rise I don’t think they will in a hurry either. This is because the economy will grow very slowly for the next couple of years and wage inflation will be modest at best with workers in both the private and public sectors seeing wage increases only as productivity rises.

So what we have is a very stable market. In fact the sort of market that buyers and sellers should feel confident about dipping their toe into.

March 2011

Tuesday, 01 March 2011

Signs of house price inflation

I have commented recently about the lack of good quality housing stock coming onto the market of late and the impact this has on buyers wishing to move into the area. But what about the impact this lack of supply has on prices?

Well what we are seeing is rising prices during February according to the Nationwide. It stands to reason that if you limit the supply to any market the price will go up and that is exactly what will happen to UK house prices if this situation continues. I for one would like to see more stock coming onto the market and stable prices.

This is not the case for all sellers however. What we are also seeing is a two speed market starting to emerge. Let’s forget for a moment about London’s “super prime” market and split the remainder of the UK into “prime” and “sub prime”. The prime market comprises of good quality housing stock in desirable areas many of which can be found in Norwich. These properties are in short supply, they are in demand from the professional classes moving into the city and we are achieving excellent prices for them.

The sub prime market comprises smaller properties in less desirable areas or cities, the owner is more likely to be a distressed seller, these properties are in plentiful supply and therefore prices are under pressure. These properties are generally sold by volume agents and increasingly you will find them at auctions which have become the preferred last chance saloon for many sellers.

In London, which as a property market can only be compared with other landmark capital cities, there is an additional factor pushing up prices. The pound is weaker today than it was a year ago and this makes London property investments even more enticing to wealthy foreign buyers. The result of this is of course house price inflation in the better parts of the capital.

So what we need are sellers. So don’t be shy. We can introduce you to lots of buyers.

January 2011

Tuesday, 04 January 2011

New Year – Same Market

The New Year has started very much as the old year ended in our office with more buyers than sellers. Stock levels are low but there are always serious buyers around for those few owners who decide to take the plunge and I’m sure as the weather improves we will see a few more for sale boards in our area.

The latest economic indicators have not been very encouraging with inflation rising and economic growth slipping back. The upshot of these rather depressing figures will mean a further delay in any increase in interest rates and little chance of wage inflation and consequently of house price inflation for the foreseeable future.

So is it a good time to make a move in the property market? Well if you’re buying the answer is definitely yes because house prices and mortgage rates haven’t been as low as this for years and if you’re selling the answer is also yes because delaying a sale for two or three years won’t necessarily mean you’ll get a better price. In other words prices in the better residential areas of Norwich have been stable for some time and will remain stable for some time to come and this represents a secure environment in which to make what is for most people their biggest financial commitment.

December 2010

Wednesday, 01 December 2010

What a year!

As we enter the quiet end of an eventful year it is time to reflect on the last 11 months and despite many agents describing market conditions as very difficult, with two firms closing their doors for good last week, I am delighted to report that we have seen a 35% increase in transactions on 2009. In fact we end the year with more buyers than sellers. This year has also been our best year ever selling properties around the half million pound mark which is a market sector where we are very clearly the leader.

The New Year will bring a welcome batch of new instructions and I believe more activity in the market. Buyer confidence will improve as the economy continues to grow and as many in the public sector realise that a spending review doesn’t necessarily mean redundancy.

Investment buyers will continue to see property as a much better revenue stream than savings accounts which will produce disappointing returns for some time to come. First time buyers with good deposits and proof of earnings will find borrowing easier as the year unfolds and we will continue to see a steady stream of professionals moving to the area to work at the Norfolk and Norwich Hospital, the University of East Anglia and Aviva.

November 2010

Tuesday, 02 November 2010

Why go to auction?

Auctions have become very fashionable of late, especially in Norfolk. Whilst I think there are some very good auctions to be found locally where you will find unique or quirky properties that are best marketed in this way I also feel that most of what goes to auction would achieve a better price if sold by private treaty. Auctions are also where you will find lenders off loading properties because they want their money quickly and they don’t give a hoot how much the property sells for as long as they recoup their losses.

It is well known in property circles that if you want to bag a bargain you go to auction. So why would sellers want to sell their property at a discount? What is even more of a mystery is why local authorities choose to sell their surplus property stock at auction. Why should the tax payer fund discounts to property speculators?

Auctions you see attract only a small section of the property buying public. If you go to auction you need to have cash or a mortgage offer and you need to have spent some money beforehand satisfying yourself that the house isn’t falling down and you need to have lots of courage. These prerequisites exclude most buyers and as any good salesman will tell you, if you want to achieve the best price for any product you market it to the widest audience not the narrowest.

So yes, auctions have their place but the quantity and frequency of auctions locally tells me that they occur not because they are an effective means of achieving the optimum price for the client but rather that they offer great profile to the agent concerned.

October 2010

Wednesday, 13 October 2010

How affordable is housing in the UK?

Call me simple but I don’t buy this line about lack of affordability in the UK property market. The media and particularly the dear old BBC never stop going on about how unaffordable property is in this country particularly for first time buyers.

Well let’s just look at the facts. Firstly house prices in East Anglia are about as low as they’ve been for about 5 years – already starting to sound affordable wouldn’t you say?

Interest rates are lower than they’ve ever been – sounds even more affordable.

Now let’s look at the average UK house price, which is £167,000 according to the land registry, and the average UK income, which is £40,000 according to the Office for National Statistics. Now I know we don’t earn quite as much as those clever folks in London so our average salary here in Norwich is a little less than the UK average but so too is the average house price.

So let’s look at the plight of first time buyers – a one bedroom flat in a decent part of Norwich can be acquired for about £90,000 and a person on average income in Norwich earns £30,000. So with a 20% deposit a first time buyer needs to borrow a multiple of 2.4 times their salary - sounds very affordable to me.

The issue here is not affordability at all. The issue is that first time buyers have changed the game. They don’t want to buy one bedroom flats which is what people of my generation did 25 years ago, instead they want a 3 bedroom house and that is why the BBC talk about there being a lack of affordability in the UK housing market.

The evidence of this trend is all too easy to spot from where I’m sitting. I sell 3 bedroom houses to first time buyers and I sell 1 and 2 bedroom flats to landlords who then let them out to young people who live in them until they can afford to buy their 3 bedroom house.

Now don’t get me wrong, first time buyers and indeed any type of buyer are entitled to buy whatever they want but what they shouldn’t do is complain about how unaffordable property is because in truth they haven’t had it so good for years.