1
Jul
Caught by the Tide
Nick Churton of Mayfair Office offers a timely warning for those
playing the UK property market in the UK this summer.
"Anyone caught by a fast incoming tide will know the feeling.
The children were off exploring caves and rock pools, and it was so
nice sunbathing on the beach. There seemed plenty of time to
get to safe ground before the tide turned. But really there
wasn’t. The tide is no respecter of the tardy, the
forgetful or the ignorant. It is a game of chicken with only
one winner. King Canute taught us that in the 11th
century.
The same has just happened in the UK property market. Those
who were cleverly waiting for the market to bottom out may now be
too late. In certain parts of the market the tide appears to
have turned. Right now it seems as if many of the
‘steals’ have been stolen. The snips have been
snapped up. Property going for a song has sung. The
tide has turned and - like many who wait until the ebb’s
final retreat - they may be taken aback by the speed and strength
of the flood.
Those who wait for the bottom of the market are invariably too
late. It is never a good plan to try and second-guess the property
market. What nobody could have possibly foreseen was that
there would be a dearth of good quality homes coming on to the
market this summer. This has put a premium on the price of
some of those that have come on. This must not be mistaken
for an increase in property prices generally. We are too
early for that. Indeed figures show a slight dip in prices in
May But sellers of really good homes in very popular
locations are in the driving seat for the first time in a couple of
years. It is the first real sign of any sort of market
recovery.
Much of the unsold property that has been on the market for some
time is now changing hands. Figures show that asking prices
and selling prices are converging. Sellers pricing their
homes correctly and buyers with cash or increasing access to
mortgage funds are clearing the backlog. Inevitably the banks
will get round to mainstream lending again – once they have
capitalised sufficiently. Then first time buyers will pick
off moribund new-build flats and houses that were caught at the
high water mark of 2008. Then the market will really move
from slow to full ahead.
So what should opportunist buyers do now that the market tide may
be past its nadir? Well there may be fresh chances in the
autumn if the market does a double bounce - this is a possibility
as reduced public spending, and higher unemployment and taxes seem
unavoidable. But to be on firm ground act quickly before the
tide does come in. After all, as any seaside holidaymaker
will tell you, it is always better to be damp than drowned."
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