After discussing the rental market with many Agents, it is a known fact that for each rental client we have, there are at least 10 properties for them to choose from making it difficult to rent at the prices and frequency as it was before September 2008. This has also driven rental prices much lower as it is a tenants market.
Almost three quarters of surveyors said that rents were falling. The percentage reporting a fall, rather than a rise, went up from 66 per cent in the previous quarter to 71 per cent in the past three months.
NAEA said (JULY 13TH) there was a slight fall in the number of prospective buyers registered with estate agents, with this figure decreasing to 290 in June, compared with 299 in May. However, the organisation points out that this is still the highest number for over a year.
This seems to have improved slightly where clients are making offers and buying properties instead of waiting for further reductions in prices. We have found that we are moving stock which has been sitting on our books for many months but the problem still is that there are no new properties coming on the market which has brought the Sales market to a stagnate position. My worry is that what happens once the current low stocks are all sold??
The banks are not helping by valuing properties much lower than the market value; this means that they would have to lend less. Which in turn has a negative effect on the sales market. The Halifax last week reported that house prices fell by 0.5% in June from the previous month.
My opinion is that there are goods deal to be had and there will be more.. it is buyers market, but be prepared to take a long term view on the market. The days of quick profits have gone for now, for 3-5 years maybe 7. But there is a fundamental housing shortage in the economy. When people are broke they make love to kill time, population booms and the lack of supply will increase in the long term.
Profits and the UK house market madness will return as string as ever. It just all about timing and resilience. Cherry pick. When the right property comes up that has not been on the market for 7 years, its time to get it and hold on to it. Larger deposits will be needed but this will increase yields and reduce risk. Its a good use of cash too for when inflation comes. So if you get in now, its a good time. But just be prepared to hold.
The true fundamentals of property investing are returning, the real investors will be tested, the amateurs will get burnt. Buy well, finance well and hold. Sell in 5-7 years time.
Mr Jay Mehta
Prestige Estate International Ltd