GREEN SHOOTS?!
Has the market bottomed out? After months of misery we beleive we are at least seeing a change in the market.
Our Consultancy Department is a good barometer of the market, and 2008 saw instructions for marketing reports down by around 65% from the previous year. Our clients ceased land purchases and the only reports required were assisting clients on land write downs. However, in the last 4-6 weeks things have changed; agents are reporting a substantial improvement in purchaser enquiry levels, sales are up on the corresponding quarter of 2008, and mortgage approvals are up by 19% in February. Housebuilders have increased their sales volumes and are flirting with the notion that they may be at last making a margin. Nationwide Building Society have registered the first increase in property values for March of 0.9%, whereas the Halifax still reported a fall of 1.9%. Our Consultancy Department has, over the last week or two, been inundated by new report instructions, and it looks like these housebuilders have called the market and are now looking to get back into land acquisition.
2008 virtually saw a close-down in the new-build market, with standing stock being sold off at fire sale values, and very little new stock being built. Stock levels are now running low and we expect that if things continue to improve, demand will exceed supply and we will at last see upward pressure on prices that will encourage housebuilders to press on with production.
One quarter of positive news cannot be regarded as a trend and it could well be a false dawn, but it has never been cheaper to buy a house with interest rates at unprecedented levels; investors have very few areas to invest their money, and property is being seen as a good option and a tangible asset. It is therefore reasonable to believe that things have bottomed out and we can look forward to a return of confidence and a level of normality that we have not seen for 18 months. We will see!