The Futility of Most Property Price Stories
Well, no, it can’t all be true. Quite frankly, I don’t think that anyone actually knows or can accurately predict what will happen in the property market in the coming couple of years. Why do I say that?
Well, so-called experts were predicting the housing market crash for about 10 years, every year, until it actually happened a couple of years ago. When it finally happened, a very few people were right and most people had become so sick of trying to call it that they’d simply moved on to other things (probably reporting on the weight gain or otherwise of people who could loosely be called ‘celebrities’).
We’ve had a horrible couple of years in the property market and, after a while, I think even the Press, collectively, realised that people were getting tired of reading all of the gloom about house prices so they moved on to other pastures (epidemics, pandemics and the like). After a year or so of relatively consistent reporting, the Press got bored, realised that as a nation we are obsessed with property prices and so started reporting on prices again.
So, once again, there must be a temptation amongst some journalists and newspapers to try to gain attention by being totally sensational in their reporting. Which is why I think we are suddenly seeing so much Charlotte Church-style reporting about the property market with so-called experts and surveys lending weight to completely opposite opinions about what is going to happen in the housing market (note, ‘is going to happen’ as opposed to ‘hazarding a reasoned guess’ which, I’ll be honest, is the best I can manage).
What must be borne in mind however is that people have been getting this stuff wrong for years so it’s almost impossible to know which sensational story to believe. I remember very clearly that, a couple of months before the housing market stalled and then went into reverse, a very influential centre for social and economic research in the UK placed the possibility of property prices in the UK falling at…wait for it…4%. In other words, a 1 in 25 chance. These people represented the cream of economic thinking in the UK. If they can’t get it right, with the reams of information at their fingertips, then what chance does anyone have?
Should We Just Give Up Trying to Predict What Is Happening in the Market?
Well, to an extent, I think we should. But that would be totally contrary to our human instincts to try and reason and find patterns so I don’t think we will.
So what’s the solution then? The solution as far as I’m concerned is more to look at what is actually happening on the ground in the property market. By speaking to other estate agents and by evaluating the data coming out of my own business, I hope that I’m in a better position to let people know what is happening in the property market than most.
So What’s Happening in the Property Market in Scotland at the Moment? Selling Activity Is Not Noticeably Down
July and August is traditionally a quiet time of year for property in Scotland with holidays taking their toll on house sale activity. However, ours has not been a traditional property market for a good couple of years now. So, more than two years after we saw prices starting to fall in a sustained way for the first time in several years, how is the market looking in the summer of 2010?
The first thing that has been notable this year is that we haven’t seen the volume of property sales take a noticeable tumble during July. I’ll be honest, this is fairly anecdotal and is based on the activity levels that my firm, MOV8 Real Estate, has been seeing.
That said, it stands to reason that the summer months are going to be quieter in general (at least until something changes in the way that properties are marketed by estate agents – see below). Why? Well, when you’re on holiday with the option of sitting on a sun lounger, relaxing and enjoying your meals being cooked for you, the last thing you want to be doing, generally, is sitting inside at a PC and browsing property websites. Neither will you probably be receiving the Scotsman’s weekly Property Supplement in Florida nor the local newspapers and you most certainly won’t be looking in estate agent’s windows (except with a view to buying a holiday home in the exotic locale in which you find yourself!). Even if you are at home, families generally have their hands full with the kids being off school and have less time to browse for properties.
However, all that being said, we’ve already seen three sales this week (it’s only Tuesday at the time of writing) which really isn’t bad for this time of year and our sales figures for the past few weeks have been right in line with what they were earlier in the year. It’s hard to know, however, whether this is down to the traditional buying seasons not really happening so much now as they used to or whether it’s down to the method by which we market our clients’ properties. What do I mean…?
How a More Proactive Method of Property Marketing Might Mean That the Days of Traditional Spring and Autumn Buying Seasons Are Numbered
To be honest, I don’t think we’ve seen the end of the traditional spring and autumn property buying peaks and the traditional summer and winter lulls, at least in so far as the wider market is concerned. I sincerely hope that my company is now more immune to the traditional ’seasonality’ in the market. So how can I hope that we would buck seasonal trends and why do I think that seasonality will continue to affect the wider market?
The majority of estate agents still rely predominantly on ‘broadcast’ marketing for their clients’ properties. In other words, they throw the information out there in a general way and then hope that property buyers will find that marketing message through using websites, newspapers or (much less so these days) trekking round estate agents’ offices looking in their windows (on that final note, we moved to new premises a month ago with two large windows to display our properties in, having been on the second floor without street-facing windows for three years prior to that, and we haven’t sold a property yet because somebody saw it in the window when they were just passing by).
Buyers are, for the most part, seemingly content to rely on having to go looking in these channels by themselves. Indeed, when we ask them if they would like us to actively inform them of properties that match their search criteria, many seem either completely surprised as if they’ve never heard anyone asking them this before (which will be the case much of the time) or sound slightly stunned that such a service even exists. Anyway, as long as property marketing continues to be done this way by most estate agents, the market will peak and trough in line with the number of people who are in the country, focused on thinking of moving home and actively searching these websites, papers and shop windows for properties.
I’ve heard from other estate agents that they are finding this time of year quieter than earlier in 2010. However, I’m not noticing a huge drop-off in the number of people who are interested in buying property. The important statistic that I’m looking at is the number of potential buyers that we add into our system who ask to be informed (or rather, whom we ask to allow us to inform them) of properties when they come to the market: the total for the month just passed was just over 300. For a month that is traditionally quiet, that’s a pretty good indication that quite a lot of people are still looking for something.
If, however, estate agents start to provide a much more proactive matching service like this, adding buyers to a database and sending them emails about properties that match their criteria, the seasonal patters will start to matter much less, both to them and also, most importantly, to their property selling clients. Why?
With the wonders of modern technology, these people will be informed by email of properties that they might like the look of even when they are abroad during a two week holiday. Such a large number of people these days have iPhones, Blackberries and other devices that they get email on that, even when they are sitting by a beach sipping a pina colada, they will get information about a property they like, drop the agent a quick email in reply and have a viewing lined up for the day they get back from holiday. So although they may not have time to browse for properties, and indeed they may not even be in the country and able to search the traditional channels to find property, they are still finding out about properties that suit them without them having to do any more than simply open up an email.
So, How Soon Will We See a Marketplace Where Buying Activity is Stable Throughout the Year?
In my opinion, we’re a long way off this kind of approach to databasing and ‘matching’ properties being commonplace. Indeed, I can count on one hand the number of estate agency businesses in Edinburgh and the Lothians that I know for a fact actually take this approach at the moment. In Glasgow and the Central Belt, the larger estate agency chains all talk a good game when it comes to this but, from speaking to most people who have heard the usual ‘I’ve got 20 buyers on my books who’re looking for a flat just like that’ patter, most have been sorely disappointed that this assurance didn’t turn into anything and that they felt they relied almost 100% on broadcast advertising of their properties like Rightmove or GSPC to find a buyer.
Until such times therefore as the majority of estate agents in any geographic area start proactively matching properties to a significant database of property buyers who can be contacted, wherever they are, and informed of properties that might suit them, property market buying activity will be down to the vagaries of the number of property buyers who are out there with enough time and motivation on their hands to look for properties in addition to the motivation to then buy them. How long will this be? Hmmmm. Put it this way, I’m not holding my breath!
Speaking of holidays, I’m taking what I hope is a well earned one next week so I wish you good weather, good fun and a lovely August and I’ll speak to you next month.