Welcome to the Doldrums

Good Monday Morning Folks.

Well it seems that we are already there. The wind has dropped; our progress has slowed to a standstill; everything is calm.

It’s hardly sixth sense on my part to forecast a few blogs ago that the UK property market will flatten out at the year-end. It always does. But the following extract from a recent article in The Times suggests that the freeze has already started (with my apologies for using research based on average findings):

House Prices Slip As Owners Aim To Sell By The End Of The Year
Rebecca O’Connor, Property Correspondent
Nov 16th 2009

Asking prices fell for the first time in three months in November as home-sellers tried to shift properties before the psychological Christmas deadline.  Rightmove stated that asking prices had fallen by 1.6 per cent between October and November to an average of £226,440 and it predicted further monthly falls, with recovery not expected to resume until February.

Miles Shipside, commercial director of Rightmove, said: “In all but the most buoyant of markets, home moving comes second to Christmas festivities. While the market has recovered from some dreadful lows, this month’s price fall proves that it doesn’t have the strength to buck seasonal trends. We expect three months of asking price falls before a tentative recovery in early spring, likely followed by pre-election jitters.”

(If you want to read the whole article you can find it at Times On Line. You will also find links to other articles that document the consistent monthly price rises across the country over recent months).

What’s the relevance of this to us as prospective purchasers as opposed to vendors? Answer: You have a few months in which the odds are stacked in any astute buyer’s favour. But the clock has started ticking so don’t hang about.

The general overall trend with property values is upwards, countrywide, so it will almost certainly return to that earlyish in the New Year. For the moment, someone has their foot on the ball giving us time to think without the pressure of time. This window presents a great short term opportunity until the ball is back in play again. If you wait until the spring and find that you have missed a particular bargain, you only have yourself to blame.

You should be identifying targets (the more the better) now while time is on your side. Check them regularly but don’t move until you think you dare not leave it any longer. You want the agent or vendor to bite your hand off for the sale. He/she is only likely to do that if you are one of a tiny number of prospects to show an interest in the property that he/she is desperate to sell. Remember your training - when you make your enquiry, be casual – don’t sound too enthusiastic. Get more information from an agent or vendor than you give in return. Find out if there has been much interest. Will the vendor take an offer on the asking price? In the region of what? (You may not get an answer to that one, but remember -  if you don’t ask you don’t get). If an agent or the vendor volunteers that, you know that you can usually push the numbers further south than they are indicating. Check my negotiating advice in Modules Two and Three.

The one fact that you must make clear at an early point is that you have adequate funding in place (don’t you?!) and can move quickly when you make an offer (can’t you ?!). That’s crucial. Crucial that you can do it – crucial that you tell any vendor. It’s the make or break factor.

That’s the positive side of the coin – now here’s the nag. It’s likely that the procrastinators amongst you will interpret the above article as evidence that you don’t have to hurry. To a point, you are right. I think you can be pretty confident that (apart from the circumstance above where you promise to complete by the end of December) you will be factoring the same purchase price numbers into your calculations for at least four months from now. However, if you are now consoling yourself that this means there’s no hurry, be cautious. When the spring comes, will you find another reason not to move?

My point is that there is always a reason not to do most things. Buying property well, demands effort, precision, research, time – in other words, work. It also demands that you have testicles (figuratively). If you have been finding reasons not to move, you may not have what it takes to ever make an investment. If you are just a window-shopper, either admit it or do what it takes to break that cycle, but stop wasting your own time kidding yourself. Volunteer your services to The Samaritans because at least the time that you are currently wasting on so-called research will serve someone else for the better.

Have you been finding reasons all year not to make your move? Saving a bigger investment fund? Waiting for the right opportunity? Not sure where you need to live? Whatever your reason not to make a commitment during the greatest slump in property prices in recent decades, was wrong. Land Registry stats for this year clearly indicate that median prices for all the locations everywhere in the country that I checked, have risen since April. Regardless of the profile of the property – house, flat, terraced or semi detached. So if the property prices that you are now hoping to drop, do no more than remain flat for the next few months, that will prove that you should have bought at the start of this year. Since then you have needed to find more money to purchase any residential property, so the time you spent increasing your savings was probably wasted.

Remember - whenever you make your move will almost certainly be better than waiting. The prices next week, next month, next year, are not likely to be lower than they are today. And they could be appreciably higher this time next year. But if by chance the value of your newly-purchased investment does drop a few percentage points, what do you care? You aren’t about to sell. And you now own a property…. And you now own a property…. purchased with someone else’s money. You’re an investor in the best-performing sector in the UK – PROPERTY….RESULT!!!

Have a good week y’all.

John