Fri 13 Feb 2009
It appears to me that whenever anybody inside the property industry dares to suggest that the property market may be showing some signs of life, a faint pulse perhaps, those outside the property industry scoff at the very suggestion that this downturn will ever end, almost wallowing in their utter conviction that it never will.
Well, I am daring to tell you there are definitely some signs that the property market is starting to stir. They are faint signs at present but in my view, and Ive worked through two property recessions, they are the first inklings that the market is very close to or has even reached the bottom in London.
I am told, by those that should know, that the economy in general has at least two more quarters of negative growth. This being the case, it doesnt surprise me at all that the property market is ahead of the gameit always has been in the past and I vividly remember in 1992 being rushed off my feet and yet still reading doom and gloom in the press (the opposite was true when we went into recession in 1989).
Here are a few facts:
In London, we registered over 1,000 new buyers in January, the vast majority with substantial deposits (20%+)
A further 459 have registered so far in February
We have seen nine best and final offer situations so far this year. The latest (yesterday) saw a flat in Holland Park being shown to 35 prospective buyers, three asking price offers and an agreed bid in excess of the asking price. (The asking price was 12% more than a figure that was unachievable last year with another agent)
Prices in most areas have already fallen 25- 30% and in many cases are back to their 2004 levels
We have agreed double the amount of sales so far in 2009 than we did in the corresponding period in 2008
There are a substantial amount of overseas buyers in the market at present. So far this year we have agreed sales to the following nationalities: Italian, French, German, Japanese, Turkish, South Africa, Greek, Australian, Chinese, Spanish, Russian, Thai, Irish, Danish and even two from Mauritius!
What I am not suggesting is that prices are just about to take off once again, nobody in their right mind would want that and furthermore the economic conditions are not there. What I am suggesting however that it is an extraordinary time, probably a once in a generation opportunity to trade up to a larger property, trade down and buy a cottage in the country or perhaps most importantly buy a rental investment with any money you have sitting in a bank which is doing virtually nothing for you.
It is worth noting that, on average, since 1945, property prices have appreciated by 174% on average in any 10 year period. Obviously I dont know for absolute certain that we have reached the bottom however what I do know is that in, two years London property prices will be higher than they are now and in five years they will be substantially higher.