As always, I’ll give you a little indication of what I’m personally seeing happening in the property market at the moment and then an overview of what the wider Press is reporting has been happening. I’ll start with what I’m actually seeing, based on my experience as the owner of a solicitor/estate agency firm.
Not Much Change Since August: Traditional Property Market Wisdom Is Out the Window for the Time Being
It’s been a bit of a funny month has September…
We haven’t seen the usual huge flurry of activity in September that you would traditionally associate with what is supposed to be one of the busiest times of the year. This might have something to do with the fact that the traditional seasonality that we have seen in years gone by just hasn’t been happening in these past couple of years, since the credit crunch/financial crisis/property market slump all took hold.
Activity for us, in terms of the number of properties coming to the market, the number selling and the number of new buyers registering with us has been pretty much the same as in August which, in years gone by, wouldn’t have been the case.
Now, obviously we only have about 130 properties on our books at the moment so we represent a snapshot and not the whole picture when it comes to the housing market. For the time being too, the majority of our properties are in Edinburgh and the Lothians so we can only comment with any authority on what is happening there. So, what might be the reasoning behind this trend?
My feeling is that property buyers and sellers have had their confidence in traditional housing market wisdom shaken in the last few years. Traditional rules such as property prices never going down in certain areas and spring being the best time to put your property on the market have all taken a bit of a knock: people have seen the price of properties in those ‘safe’ areas go down and they’ve seen properties go on the market in spring, sit there for several months and then sell in November. It seems to me that buyers and sellers now are more tuned-in to what the media and their own personal experience are telling them than they are on relying on such traditional ‘rules’: people see two properties selling in their street or they read a story in the Press that prices have gone up by 10% and they then have some confidence that theirs might have a chance of selling, regardless of the time of year.
I am still cautiously optimistic about the continued health of the property market in the Central Belt and Borders regions of Scotland, which is where we do most of our business. The market seems neither to be hugely improving nor hugely deteriorating. It was pointed out to me recently by a financial advisor that the fact that our firm is doing above-averagely well compared to our competitors perhaps adds a slightly rosy tint to my view of the property market at the moment. He pointed out that many other solicitor/estate agents at the moment are really struggling and continue to down-size and make cut-backs to adapt to the new reality of the property market. He’s of course right and many solicitor/estate agents ARE struggling to make ends meet at the moment because property market activity, particularly in terms of new properties coming to the market, is at a MUCH lower level than it was 3 years ago (probably about half). So it’s a much smaller market but there are still the same number of estate agents chasing that lower level of business.
That said, I’m confident that good properties in good areas continue to have demand: it’s just a question of spreading the net wide enough, in terms of advertising and marketing of the property, to find those buyers. I’d still however urge anyone thinking of selling a property that is not in such a desirable area or desirable condition to try and do as much as they can with the one, single factor they can influence in that particular equation if they wish to sell it: in other words, the property’s condition!
General Property Market News in the Last Few Months…Some Caution
In a more general sense there is, as always, some negative Press concerning the housing market: just today there was a story about levels of lending falling for the fourth month in a row and property prices leveling-off. It has to be stressed of course that these are UK-wide statistics and I would urge anyone to treat UK-wide property market statistics with some healthy degree of caution. Why?
The housing market has ceased, to some extent, usefully to be seen in such macro economic ways. The property market now has to be seen much more in micro economic terms. This means that UK-wide statistics are of much more limited importance than the Press, when reporting them particularly in Scotland, would make out. Why?
During the property boom years, property was seen as a commodity that could be speculated upon, as a short-term investment where gains could quickly be made. Property shows on TV and content in the wider Press reinforced that view and so there was a bit of a feeding frenzy, regardless of location. The old adage of ‘location, location, location’ was secondary to ‘buy, buy, buy’, ‘do-up, do-up, do-up’, then ‘sell, sell, sell’. We saw a concertina effect in cities such as Edinburgh where the price difference between two similar properties, one in a lovely area and one in a not-so desirable area, became closer than it would traditionally have been. Those days are, for the time being, past us. Properties in nice areas are selling more easily than those in not-so nice areas and the gap in the prices is expanding. On a slightly wider scale, the Edinburgh property market has been outperforming locations such as Glasgow and West Lothian in recent months, for example.
Unemployment, availability of credit to certain demographic sectors, even the type of information that people are reading will vary from place to place and will have a direct effect on the local housing market. If the local newspaper has a particularly anti-housing market slant and focuses on the negative statistics, would that not affect confidence in the market and therefore the level of prices? If the local newspaper, however, has an editorial slant towards positive property market Press, will this not have the opposite effect and bolster confidence?
Property speculation and property profit hysteria has subsided as a UK-wide trend. I think that the property market has once again become completely local: Glasgow will be different from Edinburgh and Aberdeen, London and Manchester. I do therefore think that for local Press to focus on national statistics is, in many instances, less than helpful. Although it does of course make for a good story, so I can’t see it changing any time soon!