Market Commentary - July 2000
So far, its been a rather cold and damp this summer - not terrible, just not very exciting.
I might just as well be talking about the property market as the weather. In London and the
south east, the froth is very definitely coming off the market. Houses that would have sold
quickly last year at more than their asking price are now only moving slowly and after much
haggling. Just as the boom centred on London and spread outwards, so the correction will be
felt more acutely in the capital than elsewhere. London has the highest concentration of
housing, a more mobile population and more money than other parts of the country - all
factors which tend to make it far more receptive to changing market conditions than other
parts of the country.
To be honest, most observers in the industry are rather glad that frenetic pace of last
year has slowed. All agreed that it wasn't sustainable and if it had continued, the most
likely outcome would have been a crash similar to 1989. As it is, there is a chance that
property prices will drop back to the long-term trend line without plunging down into
negative territory for very long.
Last year, I went on about the frailty of world growth and how the bubble would burst.
While the Internet bubble is now a pathetic piece of damp rubber, the rest of the world
economies have fared fine. There has been no massive crash and 2000 is set to be rather a
dull year economically, consolidating the growth of the past years. Pretty boring, but not
half as boring as not being able to move for 5 years because of negative equity!
If you're looking to buy, you might do well to look at houses that you think you can't
afford. The price might easily have been set several months ago by an over-ambitious agent.
Have a look, and if you like the place, put in an offer that you can afford below the asking
price. They can only say 'no'! (Word of caution - Work out your price limit and stick to it.
If you have sat down with a clear head and worked out what you can sensibly afford, that
judgement shouldn't change just because you've suddenly got the chance of a house with a
Smallbone kitchen and the mortgage man says he can get a good deal on 4 times your salary!)
If you're selling, don't just go with the Estate Agent who gives the highest valuation.
Choose the one who will market the property properly. Set the price at realistic levels and
try to get loads of people through the door to see the place. Once you've got several people
interested, use them to drive the price up. In the current conditions you are likely to do
better by getting several people to bid the price up, rather than aiming too high and not
having anybody express interest. However, if you do follow this approach, be honest with
the potential buyers and tell them what you're doing. People will understand that you're
trying to get the best price and you can have a meaningful discussion. If you verbally accept
an offer and then carry on looking for more offers, you will rapidly lose friends. Its called
gazumping, its legal and it may make you a bit of money - but do you really want to be viewed
as a cross between a rat and lizard?
June 2000's The Market
November 1999's The Market including sellers packs
September 1999's The Market including buy-to-rent