In this short series of posts we are thinking about whether the property market is poised for recovery and whether there is any evidence that the recovery has started.
One thing I have noticed is a much larger number of estate agents ‘Sold’ signs, and far fewer ‘For Sale’ signs, in my local area. The change has been noticeable over the last two months.
I agree that this is only anecdotal evidence but I think it is significant.
More evidence is provided by what I have witnessed at my local property auctions.
Property auctions are a great place to get a feel of what is happening in the property market. There are so many indicators. Firstly the type of property offered for sale, and then the number of properties for sale. Then there’s the number of people in the room, and the number of bidders. Then there’s the number of bidders for each property and how enthusiastically they bid. Then there’s whether the property sells and at what price. An auction gives an instant snapshot of the market as a whole.
I went to an auction a couple of weeks ago with the intention of bidding and buying a particular property but I never even got the chance to bid. I had done my research carefully and came to the conclusion that the property would not work if I paid more than £95,000. In the end it sold for £106,000, well above the guide price. That was the story of the day and most residential properties, vacant and tenanted, sold at what seemed to be very good prices, after a lot of very enthusiastic bidding.
A little while later I was chatting to a property contact of mine, in fact an editor of a well-known property investment magazine, who told me that he wasn’t surprised. In his opinion, based upon travelling around the country meeting property professionals and other investors, the recovery has started and is well-established.
If there’s still a ripple effect (the theory that value increases start in London before moving out across the country like ripples in a pond), and I think there probably is, then it seems to have reached the East Midlands.
None of this means that we are about to see a house price boom but it might just be the start of prices becoming a little more concrete. If this is true hopefully it will encourage the banks to lend more and to loosen their criteria. This in turn will encourage demand which will result in higher prices. This won’t be a quick process, it could take a couple of years but the sooner it starts the sooner we’ll see full blown recovery.
In the next post we’ll look at whether a property market recovery is good news or bad news for us as buy to let property investors.
Here’s to successful property investing.
Peter Jones
