13
Jul
Caught in the tide...
Anyone caught by a fast incoming tide will know the feeling. The
children went off exploring caves and rock pools, and it was so
nice sunbathing on the beach. There seemed plenty of time to get to
safe ground before the tide turned. But really there wasn’t.
The tide is no respecter of the tardy, the forgetful or the
ignorant. It is a game of chicken with only one winner. King Canute
taught us that in the 11th century.
The same has just happened in the UK property market. Those who
were cleverly waiting for the market to bottom out may now be too
late. In certain parts of the market the tide appears to have
turned. Right now it seems as if many of the ‘steals’
have been stolen. The snips have been snapped up. Property going
for a song has sung. The tide has turned and - like many who wait
until the ebb’s final retreat - they may be taken aback by
the speed and strength of the flood.
Those who wait for the bottom of the market are invariably too
late. It is never a good plan to try and second-guess the property
market. What nobody could have possibly foreseen was that there
would be a dearth of good quality homes coming on to the market
this summer. This has put a premium on the price of some of those
that have come on. This must not be mistaken for an increase in
property prices generally. We are too early for that. Indeed
figures show a slight dip in prices in May But sellers of really
good homes in very popular locations are in the driving seat for
the first time in a couple of years. It is the first real sign of
any sort of market recovery.
Much of the unsold property that has been on the market for some
time is now changing hands. Figures show that asking prices and
selling prices are converging. Sellers pricing their homes
correctly and buyers with cash or increasing access to mortgage
funds are clearing the backlog. Inevitably the banks will get round
to mainstream lending again – once they have capitalised
sufficiently. Then first time buyers will pick off moribund
new-build flats and houses that were caught at the high water mark
of 2008. Then the market will really move from slow to full
ahead.
So what should opportunist buyers do now that the market tide
may be past its nadir? Well there may be fresh chances in the
autumn if the market does a double bounce - this is a possibility
as reduced public spending and higher unemployment and taxes seem
unavoidable. But to be on firm ground buyers need to act quickly
before the tide does come in. After all, as any seaside
holidaymaker will tell you, it is always better to be damp than
drowned.