5
Apr
Market Comment - May 2008
Nick Churton of Mayfair Office takes a look at the UK property
market.
It is understandable that those who possess their own home feel
good when they see the value of their investment rising.
Conversely, those anxious to get their feet on the bottom rung of
the property ladder are keen to see values fall as their first step
would be made much easier.
But most would equate rising property values
with a booming economy that strongly adds to a feel-good factor
about the country generally.
In reality, the fact that prices are going up
or coming down makes little difference to most homeowners as,
unless they are seriously moving down market or out of the market
all together, the differentials largely cancel each other
out.
What is probably more important in our current
market is that there is so little turnover, with sales in some
parts of the country down by roughly fifty per cent from last
year. In many ways this is far more damaging than price
fluctuations, as the knock-on-effect is harshly felt in the overall
economy. Few people may feel great sympathy for estate agents
but they are the very small tip of an iceberg that, for the time
being, is melting. Removal companies, builders, decorators,
kitchen and bathroom fitters, carpet suppliers and fitters, DIY
shops, furniture shops, electrical appliance outlets and hundreds
of other allied suppliers and trades people up and down the country
rely for their livelihoods on a high turnover of
property.
A downturn in this sector damages the economy,
not just in real terms but also in overall national
confidence. Surveys may show that different people have
differing views on whether it is better for the market to go up or
come down, but ask Gordon Brown. In the real dark night of
his soul he probably could do with a buoyant and rising market
right now. For him the way the property market performs in
the coming months could be the last Chancellor’s saloon.
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