Three pieces of fairly positive property news this week.
Tony Pidgley, the Chief Executive at Berkeley Group, who also called the 1990′s housing market correctly, says we’ve reached the bottom of the market. “We all accept that, give or take 5 per cent, the market is somewhere along the bottom (of its economic cycle).”
Tony was interviewed in The Independent, and stated there will be between 35,000 and 50,000 construction starts on new homes in 2009. And you will recall that the government wants 240,000 new homes built each year just to keep pace with the demand for new households. So based on supply and demand prices will rise.
Also over the last couple of days, the National Association of Estate Agents (NAEA) said the average selling price of a two-bedroom flat increased by 1.6% during the month to £124,727, while the sale price for a three-bedroom terrace increased by 0.6%.
Top end, executive properties enjoyed the biggest lift, with the price for which they change hands soaring by 11.1% during February to average £591,111.
But three-bedroom semi-detached properties and four-bedroom detached homes fared less well, seeing their prices drop by 3.8% and 4.2% respectively.
Peter Bolton King, chief executive of the NAEA, said: “Smaller houses actually saw their value increase – this suggests that people who are buying are picking up smaller houses than they may have done previously, possibly because they can only get smaller mortgages. It may also reflect a trend of downsizing.
The price of small properties and executive homes rose during February but the value of other houses continued to fall, research has showed.
“The very top end of the market has also performed well, demonstrating not only that the very rich can still afford a high end property, but that with plummeting interest rates are now perhaps more tempted to put their money into bricks and mortar.”
The figures come after property website Rightmove said house prices rose for the second month in a row during March.
What does this tell us?
Well as we have felt for the last few months the huge bargains at the lower end of the market may only be with us for the next 3-6 months, as once financing improves more and more people will be looking to buy and snap up the bargains and properties at high yields.
We are busier than ever with new and existing investors – this morning I took a call at 8.30am from someone with over 5000 UK properties, looking to buy another 1000 over the next 6 months!!
It also shows that the larger family properties will continue to slow down, in my opinion, for the next 12-18 months as many professional families will have had a scare and be careful about taking on increased levels of debt on their family properties.
I firmly believe the market will continue to move in different camps ie the lower end of the market, the investment end where first time buyers and investors compete for properties, will be more and more competitive, while the £200,000-500,000 end of the market will continue to slow for the next 18 months.
From the stats above this is looking the way it is going, and I see no reason why this will differ. So buy as many investment properties as can just now, and hold off moving home for a while is my opinion!
