Back to Normality
Mon 14 Apr 2008
Many of the people that I have been speaking to over the past few months have described the current market as ‘tough’ or ‘challenging’ and in comparison to the past two or three years they’re probably right.
However, what I think we have seen so far in 2008 is a return to a ‘normal’ market, with the last two years as having been ‘abnormal.’ It is harsh, but probably true to say that over the past couple of years Estate Agents were, to a large extent, ‘order takers’ and whilst many were successful, the skills essential to become a first rate agent were not being learnt. The past 6 months have changed all that, the job has returned to being what it really is: exciting, frustrating, exhilarating and exasperating, all at the same time. Our job of maintaining the direction of a transaction while being the bearers of both good and bad news to buyers and sellers alike, has become even more crucial to the achievement of the results required by both parties. This market will have the effect of showing customers the positive contribution we can bring to the process and we are now able to provide a service that adds real value. I have lived through these markets a number of times over the past 25 years and the effect they invariably have of clearing out and cleaning up the industry is, in my opinion, a healthy one. The job is once again one in which talented people within the industry can shine. Some businesses will thrive in this market where they will be able to distinguish themselves from the many and I suspect some businesses will wither. The Estate Agencies with great systems and comprehensive training will push to the fore and those that considered training to be unnecessary will soon find it even tougher.
In my view fees, which for so long have been on a downward decline, will start to gradually climb to a sensible level. The difference now is that agents will really have to earn them and to prove the value of their service.
Prices in many cases have fallen 7-10% over the last 6 months however, to keep this in perspective; this is following a 31% rise in prices in Kensington and Chelsea in the preceding 12 months. The flip side is that we’re starting to see real value in the London market, smart buyers are back in force making ‘speculative’ offers which in some cases are being accepted. However, as in all markets exceptional properties still command great prices and the ‘cheeky’ offers are never accepted.
I anticipate a busy spring market, although quieter than the past couple of years and for prices to stabilise throughout the rest of the year. People still need to move and with rental returns edging up to around 5%, there is still a compelling argument for the buy-to-let market.
All in all, an average start to the year and I welcome a return to normality.