Newsletter

Jan 2012
 

Our Property Market Predictions for 2012..

Welcome to our first newsletter. Our aim is to give our view on various subjects and current topics related to the local residential and commercial property market to keep you up to date and thus enable you to make a more informed decision when deciding to sell, let, rent or buy a property in our active areas.
Topics will include current buyer and tenant demand and trends, national and local economics/legislation and the likely impact on the market, new developments, up and coming areas, news on the mortgage market and many more. Please feel free to email us at: enq@courtneys-estates.com if you would like us to discuss certain topics not already covered and we will do our best to cover these subjects in future newsletters.


Sale Prices will increase by 20%, Lettings will increase by 40% next year and i will be buying my new Jaguar XK8 very soon... If only! Nostradamus had predicted the end of the world in December 2012 with the impact of a massive comet on earth. While i cannot profess to being a philosopher of his standing, i thankfully do not share that level of pessimism.

I do however think that we will experience a growth of 3% at best or a decline of 1% at worst for sales in the Hackney area. Whilst this is not fantastic news for vendors, it is still relatively good compared to other areas of the country and indeed the capital and is underpinned predominantly by the vast improvements in infrastructure and transport connections in the area over the last few years as well as a possible mini buying spree by long term investors in the run up to the forthcoming Olympics.

A large proportion of our sales in 2011 were made up of cash purchasers or those with large deposits. This looks set to continue into 2012 or at least the first half of it as lenders are still cautious to lend in an attempt to minimise their exposure to the ‘toxic debt’ they are trying to erode off their balance sheets. The eurozone crisis, the continuing uncertainty in the jobs market and our gloomy overall growth prospects will continue to affect confidence across the board.

The recent Mortgage Market Review by the FSA to tighten lending criteria comes as no real suprise to those in the industry and in fact most lenders are imposing these strict criteria anyway due to the current market conditions. Nevertheless the sound advice raised in the report will be made law as of 2013 (subject to amendments in the consultation process) to prevent lenders from making rash decisions again when the market improves.

When looked at rationally, the points raised (abolishment of self certified mortgages, reduction of interest only mortgages, tighter checks on applications in general) are all good ideas for the long term health of the property market and will hopefully prevent lenders and borrowers from acting irresponsibly or fraudulently.

In fact, what we are experiencing (and will continue to experience for a number of years) is what a ‘normal market’ should be and those vendors who are harking back to the years of easy money and double digit annual growth are unfortunately deluded and possibly bitter that they have not benefited enough or indeed at all from the champagne years of capital growth. The time it takes and their capacity to realise their flawed thinking will be determined by their individual financial circumstances.

The only missing thing in my view to make it a real level playing field is for genuinely hard working first time buyers to be given more leeway on the minimum deposit required for a mortgage (subject to stringent checks of course) plus a stamp duty exemption. With the government currently too reliant on stealth taxes (as the economy as a whole will take time to generate a healthy return), i cannot see either of these two wishes happening anytime soon..

And so in 2012 the majority of the pent up demand for property (in London at least) will be met predominantly by the private rented sector (as per 2011). In 2011 locally, we have witnessed an average increase of 10% of rents achieved. 2010 saw growth of around 8%. Fortunately for landlords and unfortunately for tenants, I think the rental growth rate may hit a peak of 12% in 2012 due to the continuing constraints in the mortgage market.

The tenants’ plight may be helped by a combination of more landlords purchasing buy to let properties and lenders easing the criteria for first time buyers (although i do not envisage either of these taking hold until late 2012/ early 2013). This could then lead to a combination of more stock and fewer tenants than we are experiencing now resulting in a lower growth rate (again not until 2013 at the earliest).
This is no bad thing, as responsible landlords will prefer a steady growth rather than the damaging boom and bust cycles that Gordon Brown had promised us was over all those years ago...

As with 2011, finding tenants who will pay the market rates for your property in 2012 will not be difficult as they currently stand at 7-8 for every property that comes on. What is much more important is engaging a professional and diligent letting agent to sift through the many tenants for your property and then recommending the most qualified ones to you using a combination of strict referencing checks and their own judgement of character.

My advice to those of you thinking of selling your property and whether or not 2012 is the right year is that it depends on what you are going to do with the money. Once you know how you will utilise your gained equity – you are almost halfway there. You should then call a reputable local estate agent around to give you a valuation and you will then be able to make a more informed decision.

A silver lining for potential sellers is that, with many currencies being devalued regularly in 2011 and into 2012 as well through the process of QE or ‘printing money’ to you and me, and with the stocks and shares being very volatile due to the choppy trading conditions of many companies, many long term investors will now be turning to property to deposit their cash in a bid to generate a healthy return.

Predicting the year ahead is a risky job. After all who in December 2010 would have predicted for the year ahead the Arab spring, the deaths of Osama Bin Laden and Muammar Gaddafi, The Japan Tsunami, The Eurozone debt crisis, The UK Riots and many other major events which have had a direct impact on consumer confidence.

In summary, the best advice i can give to potential vendors is to be true to yourself and the reality of your own financial position, make cuts wherever possible and take 20-30% off your most optimistic predictions of what you can achieve and then sleeping at night should be a lot more comfortable.

We have implemented that advice ourselves over the last 12 months. Whilst our annual turnover has been less than the pre-recession years our gross profit margin percentage has been greater than ever before as a result of targeted cost cutting, disciplined behaviour in not taking on unachievable or unprofitable business and in retraining of our staff to work effectively in the current market conditions..

So in that sense, the recession has been good for us in terms of acknowledging our faults and excesses and dealing with them quickly to turn things around. We hope that you too have the same awakening (if you are not already there) in the forthcoming year and work it to your advantage.

We wish you all a healthy and prosperous new year..