The last recession started in 1989, writes Tim Hayward of Jackson-Stops & Staff in Norwich. And after a short revival in 1990 / 1991 there was no real recovery in the housing market until 1995. The fundamentals of this recession are of course different from the last. The banking system was not in a state of such flux as it has been recently and in the last recession, interest rates were up to 15%! With interest rates at their lowest recorded levels, this has undoubtedly softened the impact of this recession not only in the housing market but across the economy.
This time the housing recession started in the spring of 2007 and 2008 was a very tough year. The first sixmonths saw a slow market and the leak of a possible stamp duty holiday from the Chancellor’s office in July brought the market to a stand still for two months before it was revealed that the stamp duty threshold would be raised from £125,000 – £175,000. This news was hotly followed by worsening news by the banks and I believe a lot of potential buyers and sellers decided to wait until the start of 2009 to see where the market was going.
Is there a market out there?
January and February was as ever a slow start to the year but the last four months has seen a great deal more activity in the market and this has been reflected in reports from our 40 offices around the country. We have seen reductions in house prices across the board varying from 10%-25%. Inevitably this has been governed by supply and demand and where there are a number of similar properties available in the market there has been more pressure in reducing prices to compete. Special houses in great locations will as ever always demand a premium in the market and this is still proving the case. Large country houses, waterside and coastal properties lead the way.
So yes, there is a market out there and if anything there is a shortage in supply of good property which if sensibly priced will sell in a bear market like this. Inevitably sales are taking longer but buyers have a much more positive attitude with regard to buying. Those sellers in and coming to the market are serious about selling particularly with the added costs (HIP) of getting their property into the market.
Whether the market is bouncing along the bottom or whether it still has another 5% to go down, only time will tell. The underlying fact is that we have seen some fairly large reductions in values from an overheated market and a steady and active market is a positive way forward. If you are thinking about going to the market, now is a good
time to make preparations as the end of August will soon be upon us.
*Tim Hayward is at Jackson-Stops & Staff on 01603 612333.