By Peter Watson, FRICS, Director of Flick and Son
A little over two years ago few of us had heard of the terms “credit crunch” or “sub prime lending”. Two years on there is good news about the state of the property market as the most recent RICS survey of its estate agent members points to a recovery in the level of confidence in the property market, which many thought would take years to return.
The RICS survey conducted in August reveals that there has been a sharp increase in the number of surveyors recording an increase in residential property values and that sales activity has dramatically improved. The RICS research is consistent with the picture painted by other house price indices and points to a positive picture for the housing market, particularly in East Anglia where sales activity is at a notably higher level on a regional comparison.
Although property analysts are divided, many continue to believe that property values remain too high when judged against normal criteria such as household income/property value ratios. In the face of continuing economic uncertainty are current price levels sustainable or might prices yet reduce again before bottoming out.
A key finding in the RICS survey is one of a critical shortage of properties for sale coupled with a resurgence in demand, but what if supply and demand become better balanced in the months to come? Certainly there may be further price reductions in the face of unemployment, lack of mortgage financing and higher taxes as such falls are likely to be regional and should in themselves prove to be relatively short term.
As a “market” residential property is unique. Houses are to people variously a necessity, a lifestyle choice, a luxury, an income producing investment or a speculative vehicle for long term capital gain. Those who move home have two choices, either to buy or to rent, but to satisfy the other criteria the only real option is to buy, which is why Flick & Son is confident about the outlook for the residential property market in Suffolk and particularly along Suffolk’s Heritage Coastline.
Residential property will always be in short supply in such a protected rural and coastal area such as ours. As a response to improvements in road access and increased mobility opening up our area, building sufficient new houses to meet demand is simply not an option; in any case, it is impossible to genuinely recreate our period town, village, countryside and seaside houses to add to the remaining stock of such delightful properties. As a lifestyle destination, Suffolk is one of the most sought after counties in the country and the towns and villages along the Heritage Coastline fulfil the luxury criteria like few other. Add to this the fact that the area is very attractive to investment purchasers looking to speculate for long term gain as property values have largely held firm along the Heritage Coastline not only through this recession but also through the recession in the late 1980s/early 1990s and the case for an increase in property values in Suffolk looks to be a strong one.