Miles Shipside, commercial director of Rightmove said: “For those select buyers looking for a quality property and who are willing and able to proceed, 2009 is likely to be the year of the deal. In spite of welcome Government and industry initiatives, desirable property you would not normally see in a forced-sale scenario will be available at prices that are exceptionally attractive for anyone in the position to buy their dream home.
“Sadly, the best buys will be at the expense of personal distress, but to the gain of the cash-rich who have been sitting on the sidelines. These include those who sold up close to the peak and are now waiting for the right time to re-enter the market. The location of the best quality bargains will be dependant on which popular areas are hardest hit by the credit crunch, with thousands of local markets operating their own supply and demand environment.
“How this will unfold is very hard to predict, but what is certain is that the traditional mainstream buyers will be the ones left sitting on the sidelines watching these quality deals pass them by, due to a continued lack of low deposit mortgage finance.”
Initial asking prices are now an average of 10.2% below the peak they hit in May of this year. Rightmove predicts average asking prices will bottom out a further 10% down by the end of 2009. Estate agents have reported to Rightmove that sales are actually being achieved at prices roughly 25% below those seen at the peak of the market. There are local markets that significantly differ from the average, with extreme exceptions where sought after properties have held their gains or over supply, driven by forced sellers of similar property styles, have led to peak-to-trough falls of as much as 50%.
On the basis that prices actually being achieved have fallen by a quarter, Rightmove predicts that overall prices are now within 10% of bottoming out. Due to the chronic lack of both mortgage finance and confidence, the rapidity of the decline is such that we are likely to see prices in 2009 at levels that persuade cash-rich and mortgage-ready buyers to re-enter the market in greater numbers. This will not be a price recovery, however, as the ongoing effects of economic upheaval and reticence to lend will leave prices bumping along the bottom during 2010 as well.
Shipside said: “It is impossible to accurately predict the bottom of the market and consequently the best time to buy, as you only recognise that moment when you look back at a consistent history of cheaper deals. Buying within 10% of the bottom of the market gives an opportunity to pick up the best of the quality deals, which will be harder to come by during an upturn as they are the first to go when more mainstream buyers come on tap.
“We are starting to enter that window of opportunity in some areas, though others have more unravelling to come, dependant on the lottery of employment prospects. In the hardest hit areas where unemployment and distressed sale supply will remain highest for longest, prices will fall further and remain stagnant for longer.”
Looking ahead he added: “While we predict 2009 will be the year of the property deal, 2010 will still be a buyer’s market. Speculative sellers wishing to trade up might then start to return in greater numbers. However, in 2009 forced sellers will still be competing for those cash and deposit-rich buyers, who in turn will find themselves competing with each other to pick off the best quality deals. That will provide a price floor where supply remains more limited.
“Remember, the majority of property buyers are looking for a home where, on average, they will spend seven happy years, instead of looking to make a quick buck. Rather than putting your life on hold, buying the right property in 2009, at what is potentially within 10% of the bottom of the market, may be a sensible move for those looking to enjoy their next home for a good number of years.”
Will 2009 be “The Year of the Property Deal”? Tell us what you think using the comment section below