Apologies for the slightly late posting of this month’s property market update. The only excuse I have is that, as business goes from strength to strength, our head valuer has been off on holiday this past week and a half and I am filling in for him in his absence and, quite honestly, I’ve got some idea of just how much he gets through in a day now: kudos indeed!
Anyway, this month’s Property Market Update is overwhelmingly positive. We all like good news so here goes…
Across the UK, recently-released statistics from the two key house price indices indicate that prices are going up. Admittedly, the rise across the UK in the past month was only 0.1% but every little helps (I’d like to claim that I invented that catchphrase).
More locally, there are clear indications that property prices are rising. There are a couple of clear indicators:
- We’re seeing far more properties that are marketed at ‘Offers Around’ achieving more than the asking price;
- We’re seeing more properties achieving higher than the Home Report valuation;
- We’re seeing properties that had been ’sticking’ on the market finally selling, even though they hadn’t dropped their asking prices significantly.
Why is this? In turn:
- Desirable properties in good areas are attracting multiple interested parties who are bidding against each other at ‘Closing Dates’ – this level of competition usually leads to higher prices being achieved;
- Property values are rising in Edinburgh and the Lothians and in the Borders too: the property is selling a few weeks after the Home Report is carried-out so, naturally, it is worth a bit more than when the Home Report was done. That and, of course, the factor mentioned in point 1, just above;
- As prices go up and confidence returns to the market, and as more attractive mortgage products are available to first time buyers, people who have been sitting on the market for a while just holding out for the price they had hoped for a few months ago are now seeing the market catch up with their expectations, which is lucky for them!
Will It Last?
That’s the Million Dollar Question. Sadly I don’t have a Million Dollar Crystal Ball (and if I had a million dollars, I’d probably spend it on something far more interesting than a crystal ball, like a Bugatti Veron or by pre-paying my annual parking ticket spend).
So what does logic and reason say? Well, the government has just outlined austerity measures allegedly more punitive than those imposed by Margaret Thatcher in the 1980s and perhaps almost as tough as anything seen since the Depression MUCH earlier this century. The banking sector has been further shaken by news of liquidity issues in the Spanish banking sector (which bought up huge chunks of the UK banking market after our own banking system suffered major liquidity issues). The jobless total is due to rise. There don’t appear to be a huge amount of new mortgage products aimed at first time buyers. And that darned volcano in Iceland still won’t stop spewing more filth into the atmosphere than an angry Wayne Rooney does. That last point perhaps has nothing to do with house prices, admittedly. But it IS topical.
So when you take all of that into account, you wouldn’t really think that the outlook was terribly positive, would you?
But then all of that is based on logic. And most people don’t buy properties based on logic. They buy them based on emotion. I’ll credit my accountant for stating that what we are seeing in the property market at the moment, certainly in Edinburgh and the Lothians and in the Borders too, is perhaps testament to the fact that people just don’t want to allow house prices to fall. It almost seems that a collective consciousness has ordained that property prices in this area will not fall beyond a certain point. And so we continue to see property prices rise in the face of all sorts of data that should indicate a lack of confidence and a lack of willingness to spend money. The rises are not astronomical, which is great for everyone (’no more boom and bust’, anyone?). But they certainly don’t seem to be falling any more, in any sector.
Are There Exceptions to This Rule?
Yes. Buyers can still afford to be picky: there remains an over-supply of certain types of properties, particularly flats. Therefore shabby properties are still struggling. They will sell, at the right price but many sellers are not willing or able to drop the price by that much. It is most certainly worth the time and effort to bring a property up to scratch before selling it: it might be the difference not only of several thousands of pounds but even the chance of selling it at all. This applies more than anything to ex-rental properties.
Prices remain strong. The family home sector is buoyant. The prime property market is even more buoyant. Flats are starting to sell which weren’t selling at that price just a few months ago. Ex-rental flats and flats that look a bit down at heel will struggle as buyers still rule the roost. Therefore a bit of paint, some clean carpets and some nice cushions go a long way, particularly with properties in the one and two bed flat sector where there are far more properties than buyers for them.
Meantime, enjoy the rest of the World Cup and Wimbledon and I’ll give you another update in a month (and hopefully in the correct month this time!).