What a difference a year makes!
Wed 13 Jan 2010
This time last year we were all approaching the coming year with a mixture of fear and trepidation.
The World was in turmoil, the property market had been the first to enter recession (we were the Canary in the coal mine) and had been on the way down since August 2007 and we were expecting a miserable year ... and then the phones started ringing.
By January 20th last year, we had registered literally hundreds of new and surprisingly motivated buyers and by the end of the month that had risen to over 1000.Commentators were still talking the market down (easily done when the facts to hand are three months out of date) and were unable to believe it could be anything but dire. Meanwhile, we actually saw the market starting to recover, strongly. In fact, on the 13th February last year I wrote a blog outlining why I could see the bottom of the market only to be rounded on by those someway removed from what was actually going on, 'typical estate agent' was the cry.
Well, the market continued strongly for the rest of the year in London and in my view we ended the year with prices having risen 10-12% from their lows, with much larger gains for some of the 'A1' properties - flats and houses in excellent locations which satisfy all the necessary criteria. We have many examples of properties that have sold and are continuing to sell for MORE than they did in 2007.
On to the present: I wanted to wait at least a week before I gave an opinion on what is happening and what may happen in 2010. Only 10 days in and 2010 has started brightly. Well over 500 new buyers have entered the market with a similar numbers of prospective tenants. It's still too early to say if we will see the same intense energy in the market that we saw last January, but the signs are looking good.
In addition, were starting to see more potential sellers coming to the market with our Valuers diaries surprisingly busy so early in January. I predict that there will be a relative 'rush' of properties coming to the market in the first 3 months of 2010 before the market quietens until after the election. Talking of the election; it couldn't come at a worse time for the property market and has the possibility of 'spoiling' the traditional spring market, which is so vital to the UK property market as a whole.
The mortgage market shows encouraging signs of loosening up with increasing amounts of lenders entering the market and loan to value ratios increasing. (Buyers can once again obtain 90% finance albeit at a higher interest rate). This is not surprising as the margins lenders are currently able to charge are historically high. However, as more and more new sources of finance enter the market, Virgin to name just one, competition will increase, margins will fall and mortgage rates will come down. The lending market is completely different from this time last year, and I would suggest that you seek mortgage advice again, if you havent already done so (click for more information).
We anticipate the base rate will stay low for the whole of 2010 and unchanged until at least the second half of the year. This is undoubtedly a positive aspect for the property market and with pitiful returns from cash investments, we see the buy to let market strengthening throughout the year.
There is undoubtedly a danger that the Government policy of playing politics with the 'engine room' of the economy will drive out the very people and businesses that have the ability to create the wealth and jobs to pull us out of the hole we are in. This is more relevant in London than anywhere else. I find it difficult to believe that populism will triumph over common business sense, however there is certainly a sense of unease in some sectors of the market.
There is still much uncertainty in the economy as a whole and I dont see either a straight or flat road ahead, however we see London as a 'market within a market' and our view is that prices in London will rise across the board between 5-7% throughout the year with some pockets of prime London (garden squares, river views, etc) leading the way.
Keep an eye out for my next video blog, coming next week.