My view is that this property recession will be ‘bathtub’ shaped and I would make an educated guess that the next few results from Land Registry will show very small movements either up or down which will mimic the results coming from those lenders who produce statistics. It must be said that with mortgages still so hard to come by, the figures produced by both Nationwide and Halifax must be limited in their usefulness.
The availability of mortgages is still a problem in the market and those currently buying typically have deposits of 25% plus. Even with a substantial deposit however, the process is not made easy and it seems that despite the government apparently putting ‘huge pressure’ on the lenders to lend, they are seemingly still intent on making the whole process as difficult as possible.
It is in spite of this difficulty that we have seen transactions increase this year and when the mortgage market eases, we will start to see actual prices recover as more buyers needing finance who are actually able to buy, enter the market.
Actual transactions in London have substantially increased this year with, interestingly, the main bulk of these being towards the lower end of the market – sub £500,000 and at Marsh & Parsons we have always been conscious not to ‘niche’ ourselves just at the top end. Nevertheless, in the last three weeks it appears that the middle to top end of the market is starting to wake up and just last week we have had two ‘attended exchanges’ one at just over £4 million and one at just under £2 million. Both buyers were in competition with other purchasers and both took the decision to exchange immediately in order to secure the house they wanted. We have now had over 70 ‘best and final’ offers this year – three were conducted just yesterday, which surely must tell a story about what is going on.
The real issue which is dominating the market, and will probably continue to do so for a while, is the lack of property for sale and all estate agents seem to be in agreement on this. As a result, some distinct areas of the market, particularly the family house market of south west London has seen a surprisingly rapid recovery in prices. Our Fulham, Battersea, Clapham, Balham and Barnes branches have seen large numbers of buyers chasing an unusually low number of available properties. Prices have not, and will not for some time, reach levels seen in 2007, but many of our would-be sellers are surprised when we inform them what their house is worth and more importantly, amazed by the number of potential buyers who view and who are actually making bids. Obviously, there are still those that mistakenly believe they can bid way below the asking price, but this is on the decline and interestingly, over the last 5 months the average gap between asking price and selling price has fallen from over 10% to just under4%.
I know it is not fashionable to find something positive at the moment but all sectors of the economy are not the same and the current levels of viewings and transactions point to the bottom of the market being reached and the start of the long and almost certainly shallow road to recovery.
Peter Rollings is head of London Estate Agents, Valuers and Surveyors Marsh & Parsons http://www.marshandparsons.co.uk/
Have your say on Peter Rollings London Focus using the comment section below.