Wednesday, 30 November 2011

Bottoms up in Bath!

The big Christmas lights switch on with John Cleese in Bath last Thursday has signalled the official beginning of the festive period and as we know this is usually followed by the swift hibernation of the UK housing market!

However, in recent years with increasing access to property via web portals and smart-phone web apps the housing market has become far less seasonal and 2011 as a whole looks to be continuing that trend.

The early ‘New Year’ market was particularly buoyant in the southwest region and certainly out-performed the perceived stronger selling seasons of spring and early summer and this has become somewhat of a trend in recent years as quick decisions about property are made following the Christmas and New Year break.

The early autumn market too used to be a popular period for both buyers and sellers but the summer holiday hangover seems to have lasted longer in recent years and that is certainly true of 2011 in the southwest as the market didn’t really start to pick up until early October. We’re now rapidly approaching the end of November and viewing levels are still encouraging even though quality stock is in short supply and the viewing to offer ratio has come down to approximately 1 in 8 for October which was 1 in 49 in September. Activity is such that we have just released two new properties to the market, something that we would not have generally advised in years gone by and after just a few days we have had several viewings on both and an early bid on each.

It is also worthy of note that the greatest activity, particularly since the summer has centred on property below £1m and even more so on those below £500,000 suggesting that should a recovery be forthcoming it will have been supported to a greater extent from the bottom up rather than from the top down! In Bath we are particularly keen on increasing the level of city centre property that we are dealing with but we are now focusing just as much on high quality flats and apartments as we are on fine Georgian town houses due to the greater demand.

I am convinced that with just a few more positive headlines regarding the housing market we will see the return of buyers for the regions prime country houses, although in many cases significant price reviews will be needed as unrealistic pricing has been a fundamental reason for the severe lack of activity and confidence in this sector of the market in recent months.

So the Christmas parties, drinks receptions and general celebrations will have to wait at least for a few more weeks while we still have willing buyers and motivated sellers. We have all learned a great deal from the 2011 market, particularly from the vantage point of our new office here in Bath, the recovery is clearly going to be a slower process than many ‘experts’ predicted back in 2008/9 and old fashioned proactive agency together with realistically priced property will be the key to a successful 2012 and we’re eagerly anticipating a busy and productive New Year.

Patrick Brady

Residential, Bath

Monday, 14 November 2011

Learning to live with whatever ‘the new normal’ is

I’ve been told recently that ‘being on the brink is the new normal’ and this is how it is going to be for the foreseeable future. There is the temptation to head for the hills but that’s a little difficult for us in the flatlands of eastern England.

Yet in the past month, I’ve read comments by property grandees and gurus which suggest parallel ways in which we can survive and actively thrive in this new normality.

At a strategic, long term investment level, it’s difficult not to agree with those – like Jeremy Newsum of the Grosvenor Estate - who favour a quiet acknowledgement of the fact that while there is a good reason to panic and thereby to join the throng and sell wholesale, it’s probably best not to. We will only add to our own troubles.

The most sage should just sit it out day-to-day and resist the temptation to follow too closely the lead of the markets at such times.

Property, after all, is but a tiny part of something bigger which is happening.

While there’s the feeling that we neither know what that something bigger is, nor do we know how it will play out, it’s better to control what we can than add the to mayhem.

Yes, there are select deals to be done because even a modest return on property is better and safer than other many asset classes.

While the cool advice is to choose to do nothing on one level, there is a level where a more thrusting approach is required. This advice is encouraging us to adopt tactics now to embrace this ‘new normal’ and come to terms, quickly, with the opportunities emerging and on offer to us by this new world order.

This advice talks with confidence about now being a time for new skills, new sectors and, even, new sub-sectors. So while the world is ‘getting more global every day’, it seems the way forward for property advisors is to become more specialised and niche to get in tune with our more fragmented markets.

It is cheering that while property is a dry investment, it’s still considered an investment with a return, nonetheless.

Anyone advising clients with retail and leisure interests will get what is meant by the need for specialist advice in fragmenting sub-sectors.

What we can all agree on is that we’re in a time of price correction when it comes to assets. The hurt we’re taking in property is probably only what we’re due anyway post-2008, if we really stopped to think about it.

As we look around to other business sectors, let us be thankful that if price correction is the worst punishment we’ve got to take and with the addition of working a harder in new ways for our clients in order to advise them better on all things niche, then we’ve got off quite lightly.

If a state of affairs goes on for long enough then it’s normalised - so we’d best get used to it.

While it’s a good time for neophiles, it’s a bad time for haters of business jargon and I am going to add to their groans here by suggesting that, perhaps, the default state of being for the foreseeable future is one of renewal becoming the new normal.

Will Mooney MRICS

Commercial, Cambridge

Wednesday, 9 November 2011

Investing in fundamentals

This week’s housing market reports and predictions are as contradictory as they are arbitrary, which is de riguer in an uncertain world.

In times of uncertainty, investments in fundamentals are seen as a safer haven. Concerns over European leaders being able to tame the sovereign-debt crisis have further boosted demand for gold as a safe haven investment. Spot gold prices reached $1,804.10 an ounce, a seven-week high, in yesterday's trading in New York.
Farmland prices have almost doubled in the past five years and are somewhere around 5% higher than a year ago. Over the past 10 years agricultural land has grown 204%; which is twice the increase shown in London property prices and notably above the 6% growth experienced by the FTSE 100 during the decade. Even best English shotguns have been targeted by investors with record prices being paid and valuations rising around 3-5% a year.

Residential property, however, which is as fundamental an investment as most of us own, is, it appears not the darling of the press it once was. It is cheaper to buy than to rent. Yet, we seem to have become immune to the charms of historically low mortgage rates and the opportunities as differentials gaps narrow.

Rising commodity and fuel prices have exerted growing pressures on household incomes. But there are waiting lists across some of the quality marques for their latest range of smaller SUVs. A client tells me track side, bookmakers have reported as much as a 20% increase in takings, certainly Ladbrokes’ recent quarterly results showed a 2.5% increase over the same period last year.

The property market in Hampshire is frustrated. We have any number of excellent buyers but a steady flow of fresh properties coming to the market is being hampered by media sentiment and a feeling that perhaps it is better to wait until spring. All of this is quite understandable but our mailing lists are full of purchasers who have see the light of buying in this climate.

November, whilst not a classic time to launch a sale, offers the backdrop of an autumnal landscape and the focus of Christmas. Yet the mild weather and turning shades has given us some wonderful days. Both rivers and the countryside teem with life and entomological hatches are still a valuable food source. Game feeders provide further food for over wintering song birds and skeins of geese can be heard at dusk as they return to the safety of the river from a day’s grazing. The clocks changing gives a welcome sunrise to us early dog walkers and it is not cold enough yet for a winter coat. But as surely as night follows day, winter is close by. If the weather patterns of the past few years are repeated, we may have to wait a long time until spring. Whilst autumn can feel like a prelude to the main event , we must be careful what we wish for. Perhaps the thing that is most missed by those who leave our island for warmer climes, are the seasons. This year, mother nature has excelled herself with the loveliest autumn display. Jack frost, surely cannot be far away.

Matthew Hallett

Head of Residential Sales, Winchester

Tuesday, 8 November 2011

New “Small Capital Grants Scheme” for Farmers in England poised to be launched

Following the coalition government’s decision to abolish Regional Development Agencies (RDAs) the England Rural Development Programme (ERDP) has been in turmoil.

The ERDP forms part of the Common Agricultural Policy and elements of the programme had been developed and administered at a regional level by the RDAs. Thus their abolition has left a vacuum and threatened the delivery of European funds for the remainder of the programme which runs to the end of 2013.

However the government has recognised this problem and has taken the scheme back in hand to be administered by DEFRA. What this means is that they have done away with the regional delivery programmes and developed and national programme so there is now conformity across the country.

To my mind this makes a great deal of sense because under the old scheme, whether or not a farmer or rural business qualified for grant aid depended on the programme which was developed by the various RDAs. This lead to unfairness on occasions where for instance a business in Hampshire may have qualified for grant aid whereas across the regional and county border in Wiltshire, a very similar business may not have.

As you can imagine, the process of harmonising the various regional schemes has taken time and some difficult decisions have had to be made on what schemes to drop, although the national programme is now just getting up and running. The first of the new schemes which is about to be launched is called the “small capital grant scheme”.

This is an exciting opportunity for farmers although funds are likely to be limited and so farmers and foresters should be ready to make an application the moment the grant scheme opens which it is believed will be sometime in mid-November.

The scheme will initially be open for about eight weeks before it closes to allow the applications to be assessed and then the scheme will open again for another eight weeks and so on until the funds are exhausted.

The grant aid will vary from £2,500 to £25,000 although until the rules are published it is difficult to be precise as to exactly what investment proposals will qualify but in broad terms it is understood the money will be targeted at increasing the competitiveness of the agricultural and forestry sectors.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

Tuesday, 1 November 2011

Confidence and bumblebees; the great intangibles?

Aerodynamically, a bumblebee should not be able to fly but a bumblebee does not know this, so it goes on flying regardless. The housing market, it seems, like bumblebees, carries on regardless, despite seemingly unending evidence and opinion in the media that it shouldn’t.

At the start of 2007 the average property price to income ratio was 4.4, by the second quarter of 2011 this is 3.6. The cost of borrowing is at record low levels. It is, on average, cheaper to buy than to rent.

As an island with one of the highest property owning rates on the planet, ownership of your own little piece of England is as natural as it is to talk about the weather. Our country’s rich history and diversity has brought so many benefits to life in modern Britain, yet the fundamental of your home being your castle it appears is hardwired into our country’s psyche. With rising life expectancy, the prospect of actually paying off a mortgage has allowed family homes to become meaningful parts of retirement plans.

Yet the dripping tap effect of daily reporting of negative headlines has left quite a puddle. A two year old views a puddle as the most exciting thing in the world, grownups, however, tend to avoid them (although I, for one, cannot resist a splash in my wellies, when no one is looking, as I walk my dog at 6:00 each morning!). Yet properties are selling and people are moving, for the much same reasons they moved last year and are likely to move next year.

The autumn is in full flow as burning shades of leaves fall to the delight of children and the frustration of gardeners. Halloween has passed and we look forward to celebrating the thwarting of Guy Fawkes’ Gunpowder Plot . Gunpowder was discovered in the 9th century by Chinese alchemists searching for an elixir of immortality. As a byproduct of his work to improve mining safety, Alfred Nobel developed the forerunner of modern smokeless ‘gunpowders’ in 1887. The irony of these twists and turns of history is sadly apparent, as we prepare to commemorate Armistice Day at 11 o’clock on 11/11/11.

Bumblebees, regretfully are in decline. Of the 25 species found in the British Isles, three are nationally extinct and many more are seriously threatened. However, there are many plant species which require bumblebees to fertilize them. Confidence is the pollinator of our market; encouraging vendors to sell and purchasers to buy. Yet confidence can become a self-fulfilling prophesy, as those without it may fail or not try because they lack it and those with it may succeed because they have it. The housing market it seems, like the humble bumblebee is surviving. There were plans to reintroduce the short –haired bumblebee back into the wild this summer.

Also, the Heritage Lottery Fund are directing £340,000 towards the charity Bees For Everyone, a Bumblebee Conservation Trust initiative, to assist its 20,000 volunteers with an awareness campaign to help protect the endangered bumblebee.

I have high hopes for the bumblebee and a reintroduction of confidence back into the market with the optimism of a new year and all that awaits us in our Olympic year.

Matthew Hallett

Head of Residential Sales, Winchester