What’s on the mind of Chris Sapey of Sapey & Co?
Is the current recovery sustainable? For anyone involved in property, last year was an absolutely dreadful year with low demand, lack of credit and subsequently falling house prices. Many agents went into administration and those still in business looked to 2009 in dreaded anticipation. However 2009 has, to date, been better than many so called property experts predicted, at least certainly in this region. We have seen a major upsurge in genuine applicants registering with us and the number of properties being sold. Indeed some properties have attracted offers from several buyers and we have had to seek best and final offers. There are, however, currently fewer properties coming to the market. The question everyone is currently asking is: “is this upturn in activity sustainable or are with going to see it fizzle out later this year?” Undoubtedly we are still in the throes of the recession and we are also facing an uncertain situation with the government with the Labour party clinging on to power despite lacking popularity and having no coherent policies for reducing government debt. Banks and mortgage providers are still restricting the availability of funds whilst at the same time increasing their charges.
Traditionally, though, the property market has tended to show signs of recovery earlier than the rest of the economy. This is partly due to the fact that the property market tends to be the first into a recession and secondly its recovery helps to drive the rest of the economy. The key to the recovery being sustainable is two fold. Firstly the banks must further ease credit and on sensible terms rather than profiteering through increased loan margins and excessive arrangement fees. The whole idea of the government bailing out the banks was to enable them to lend to the public and ease the credit crisis. Secondly we need to see an increase in the supply of property coming to the market. The current legislation regarding Home Information Packs (HIPs) is still a major deterrent to potential vendors testing
the market. If only the government realised this and abolished HIPS we would see an increase in supply and sales. The government would benefit from increased revenue from stamp duty.
Assuming that the two issues above are resolved then we could certainly see a sustained recovery in the market. We will not see a return to the dizzy markets of 2007 for a while but we will see a continuation of the stabilisation of prices and even some increases in prices. If the banks and government fail to act we will probably see the current volume of sales continuing for the remainder of the year with any further improvement being postponed until next year. We at Sapey & Co are confident that there will now be a steady but slow sustainable recovery and indeed we are even opening a new “Prestige & Country Homes” department to promote this.
*You can contact Chris Sapey, MRICS at Sapey & Co on 01603 616666