Property prices on the up - or not

"Property cheer at last" - that was the front page headline in last Saturday's Western Morning News with its report that house prices continue to inch up. But in its piece the WMN records the comments of a few estate agents who were not quite so bullish about the housing market as one might expect: in my opinion they are usually far to eager to talk things up! And the massive problem of affordability for the first time buyer was flagged up being a huge stumbling block in much of this low wage peninsula.

So what will happen with house prices? I hope if nothing else that they are stable now and into the future. It's noticeable that the WMN weekly property supplement is getting a little thicker and that top of the range properties continue to be advertised for quite ludicrous prices. Near me two Cornish cottages are for sale (different vendors and estate agents) at prices that I would describe as "very optimistic" and I shall be interested in seeing how much they eventually sell for. I have to say that with the economy being very fragile and with more unemployment to come I am glad not to be in the property game.

A current news story concerns a family - somewhere in Devon I believe, don't know where - who were facing eviction from their rented property because their landlord had fallen behind on his mortgage payments. What a horrendous situation! But with their plight having been highlighted somebody has come to the rescue and that story seems to have a happy ending.

House market picking up or a mirage

There are one or two estate agents making encouraging noises about the housing market but it's very difficult to know whether in fact it is the usual thing of that profession talking things up to instill a bit of confidence or are there any green shoots at all. I was interested to see that this weekend's property supplement in the Western Morning News has jumped back up to 44 pages. Having said that I now see it is headed ''New Year Property Review" and I know that every so often they have an extra large edition and incorporating those words "New Year" might be the clue here.

It should be remembered of course that we have just had the Christmas and New Year holiday when people aren't focused on moving house in the way they might normally be. And because house sales have subsided to such a low number the slightest upward movement will seem like a recovery to some. I would find it surprising to see any significant upturn in the market for many months to come what with the unemployment situation getting markedly worse and general lack of confidence in the economy. Not for the first time I'm pointing out that the cost of the Home Information Packs (HIPS) is a real deterrent for someone to put their home on the market and that tumbling prices are all very well but that aspect of affordability is negated by the much higher percentage deposit that has to be made by those needing a mortgage.

Lots of properties are now being advertised with "new price" attached to them. One particular house I know of in a super situation and with land had been on the market for £1.75 million, now it can be yours for £500,000 less! With much tighter lending criteria I can't really imagine things getting very much brighter for a long time to come; I prefer to be realistic even if it sounds as if I'm being negative.

More evidence of house market slowing

I've mentioned before on this blog that I have at least a cursory glance at the property supplement in the Saturday edition of the Western Morning News. Well today that hasn't taken very long because it has been slimmed down to 32 rather than the usual 40 plus pages! One house that particularly caught my eye was a restored period cottage on the bank of a very small creek that shortly discharges into effectively a small tributary of the River Dart. I decided to do a little bit of forensic investigation not because of any desire to purchase you understand but for my own amusement. The agents have decided to go down the route of having an 'Open House' next Saturday, a ploy that is increasingly being used by estate agents. Intriguingly they are confining this to one hour, from 2pm to 3pm. Aha I thought, I know this location (I've also looked at it on 'Google Earth') and I know that the creek will dry out completely at low tide. I then checked today's tide times and realising how much later high tide would be in a week's time soon deduced why that particularly short time window was selected. One particular thing I like to think about when looking at these property details is the little matter of the main aspect of the house. To me which direction your main rooms are facing is of more than academic interest; in this instance all I can say is that it would pay to be an early riser to benefit from the sunshine.

It's always been a source of wonder to me how the more expensive properties are priced. The one I've been describing has a guide of £1.5 - £2 million. These upmarket agents, all posh suits and expensive brochures, seriously underwhelm me with these 'guide' prices, it's almost like plucking something out of thin air. The top and bottom limits of the guide are half a million pounds apart for goodness sake so what is that supposed to mean? My own interpretation is that they assume that there will be a bidding war with the price moving upward. But is this realistic in today's financial climate? Another point about the 'Open House' scenario here is that it really needs some decent weather, if next Saturday is anything like today then it could finish up wet and windy, not ideal.

Turning now to my local weekly paper (East Cornwall Times) I see that a Tavistock estate agent is flagging up 16 of the properties currently on its books. Half of these are shown as "New" but the other 8 have "New Price" shown against them. One of these I know has already seen over 20% shaved off its original asking price. Where will it all end I ask myself.

Postponement of stamp duty may not work

With far far fewer mortgages completing in the UK these days the government understandably are wondering if they can do something to stimulate the housing market. One rumoured idea is that perhaps stamp duty on house purchase might be put off for a while, an idea that the Tories used at the time of the recession in the early nineties apparently. Now I don't know how effective the scheme was back then and would like to know but it seems to me that this isn't a good idea under present circumstances.

The first point I would make is that nothing is likely to happen for a few weeks so that I can imagine quite a few people might wait until a decision is made; on a £150,000 property there is at present 1% or £1500 to pay, in my book quite a chunk of money. I don't understand why options such as this are allowed to leak out, unless of course they want to float the idea and see how the media react first. If, as is being mooted, payment of stamp duty is merely going to be deferred then when and how will the house purchaser actually pay it. Would it be in the form of a lump sum or in instalments. If the former that would not be too popular with a general election on the horizon.

However at the moment surely it isn't consideration of the cost of stamp duty slowing the market right down. No it's the shortage of mortgage funds generally but more significantly it is the cessation of 100% or greater mortgages. With a purchaser, particularly a first time buyer, now having to find a deposit of 10,15, 20 thousand pounds which wasn't something that had to be done before the "crunch" then it's evident that tinkering with the stamp duty will not necessarily have the hoped for effect.

I've said before that Gordon Brown was chancellor whilst economic conditions generally were benign. It is his hard luck now that western economies are faced with horrendous problems and it is difficult to see just what the government, cash strapped as it now is, can do about it.

Buy an apartment: the car comes free

Last Saturday I wrote about estate agents having to be more inventive in the way they do things now that there is a contraction in the housing market. I didn't expect to report on an example of an agent doing something out of the ordinary quite so soon!

What this is about is an enticement to buy a posh new apartment in Newquay. Bradleys are the estate agents concerned and they are having a day where, if you commit to purchase on that very day you will receive a new car when the completion goes through!! Depending on which apartment you go for you could become the lucky owner of a Smart car or a luxury Mercedes Benz! It's all about injecting real urgency into the sale of these expensive new properties of course and it will be interesting to see how effective all this is and what other wheezes estate agents try.

Please note that I'm not a paid publicist for any estate agent and I shan't be purchasing an apartment in Newquay. Actually I'm quite content with my existing characterful car anyway!

More thoughts on housing situation

I recently wrote about the marked slow down in house sales and I would say "you ain't seen nothing yet". It has to be realised just how much the UK economy is tied in to the property market and the government are very slowly beginning to acknowledge this. At PMQs today it was a subject raised by Vince Cable, one of the sanest MPs in the House, and it forced Harriet Harman, deputising for the absent Gordon Brown, on to the back foot somewhat. It was right for Cable to admonish the government for not taking this matter seriously enough. Now of course it is understandable that the government doesn't want to talk down our economy but I think things will get much worse before recovery takes place. I'm no financial genius but it seems so plain to me that one of the persistent fault lines in UK plc is this constant mismatch between the change in house prices and variations in the rest of the economy. Self evidently greedy mortgage lenders have so relaxed their criteria for would be home buyers over the last few years that they have assisted in the creation of an unsustainable boom. Now we have properties losing value, mortgages drying up, monthly repayments on the increase, estate agents closing or at least laying off staff and the major house builders drastically reducing the sizes of their workforces. It is very serious and will get markedly worse I'm afraid.

At this point I'll mention one of my current pet hates and that is the Home Information Packs or HIPS. Although not affecting me as I'm not thinking of moving it is nevertheless something I constantly rail about. I've never been at all convinced that they would ever really assist the house transaction process and now they will depress the market even more. If you are a vendor and you feel that your home isn't going to sell for what it was worth say six months ago you are not going to be overjoyed about shelling out hundreds of pounds on a HIP before selling. I think some estate agents were prepared to pay the HIPS cost themselves upfront and then recover this money when the commission was paid out (might be wrong on this mind) but with fewer sales and lower end prices and therfore smaller commissions they would be less keen now I would have thought.

With so many mortgage products being pulled and lenders getting more cagey it is securing the finance that will continue to be by far the major stumbling block in the buying process and that is a matter that the HIPS can't address. And as for having a survey included in your HIP my understanding is that the lender will still insist on their chap doing another survey before coming up with the money. At least this was the way of things when HIPS came in and I assume that nothing has changed so in effect both vendor and purchaser will be paying for a survey on the same property - weird.

I have to admit that part of the HIP is the environmental assessment that our masters in Brussels have dictated should be done (are all the other countries in the EU conforming I ask myself) But as to the rest of the info in the packs I think the government were trying to show they were doing something without thinking things through. Par for the course I suppose.

One final comment: in this village folk seem to be sitting tight, I can't remember so few 'For Sale' boards around. Countrywide it seems that people with property to let will be the gainers whilst buying hopefuls sit things out in the hope that house owning prospects will get better again.

Housing market slows down

In every Saturday edition of the 'Western Morning News' there is a 'Westcountry Homes' supplement which displays details of many of the desirable homes currently up for sale in our lovely peninsula. I've just been skimming through the 48 pages in today's issue, not that I'm in the market as a buyer but it is just interesting to see what is on offer particularly if I am very familiar with the location. One thing pretty obvious to me is the fact that our economy and house sales are very interdependent perhaps more than they should be in this country. It seems to me that vendors are starting to accept that they may have to reduce their asking prices. Interestingly one estate agent is having an open day on four of its properties next Saturday, four properties in which they indicate that the asking price has already been reduced. I wonder how well this idea works in practice, yes it might galvanise potential buyers a bit but I can imagine a few local people just turning up on the day for a nose around, something different to do on a Saturday. From a seller's viewpoint I can see some benefits, if a potential buyer sees others looking around the place while he is there then he could be panicked into making a purchasing decision. I've not been in such a position myself so am just guessing.

I don't usually feel a great sense of sympathy for estate agents but right now things are getting tougher for them and they will have to be increasingly inventive and flexible in their approach.

Barmy house prices

In Devon and Cornwall we are well used to certain properties commanding extreme prices. When that home is almost on the beach that price can go into the stratosphere and in one instance last week such a house for sale became the subject of a media story. This particular property is directly overlooking the lovely white sand of Porthmeor Beach at St Ives in the far west of Cornwall. Here then we have a two bed roomed semidetached house whose main aspect is north west. It is accessed up a longish staircase from a courtyard at the rear. There are balconies front and rear but each of these are for the two halves of the semi with a dividing rail in the middle. Thus you are not getting any degree of privacy when your neighbour is taking the sun. From the lower ground floor (garage level) it's possible to walk straight onto the beach, but watch out for rising sea levels if climate change takes hold!

The Estate Agent particulars are here if you are interested. Oh, and I almost forgot - the price for this 'des res' is a cool £1 million!!