Phil Spencer
I think that what is happening is that the press in general talks about 'the property market'. But there isn't just one property market - there are lots of property markets in different regions and in different towns. It's important to accept that there are different ones around the country, and that what is happening in yours may not be happening in someone else's in another part of the country. I've just read a feature in a newspaper that deals with new builds in the Midlands, and of course I feel sorry for people who have lost money in this particular story, but the sad fact is that they simply bought the wrong thing - there was a massive over-supply of the same types of property in that area.
The property columns seem to have become obituary columns but markets never stand still and there are opportunities in both upturns and downturns. Recent Halifax figures show house prices fell by an average of 2.5 per cent last month, the biggest fall in a single month since 1992. However, they went on to conclude that average prices were still 1.1 per cent higher than they were 12 months ago.
Many people are thinking about downsizing. Credit: Harry Penton
It is negative equity which forces home owners to sell and it is only when the numbers of forced sellers reach significant levels that a market actually crashes. Using data from 80 per cent of lenders, Experian estimate 8,000 people are already in difficulty and more than 23,000 would be in negative equity if prices fell by 10 per cent. A 20 per cent fall would mean 78,394. Given that there are around 14.5 million owner-occupiers in the UK - I do not believe these numbers would bring about the type of market collapse being hyped up in the press. Yes - there will be pain felt in certain sectors, but it is by a relatively small number of people.
Conditions have been shifting on a fortnightly basis and the market is incredibly polarised; different postcodes and price brackets behave quite independently from one another. It is therefore impossible for mainstream press articles to offer more than an idea of general trend. Without a clear understanding of how each of the various statistics are collated, the relevance to your circumstances, and from which stage in the transaction process they refer to, the information is of limited use.
It always surprises me and my colleagues at Garringtonwhen the market softens that so many people trading upwards fail to see a potential drop in price as a relative one, which can be more than recouped by purchasing under similar conditions. But that is precisely what 'sentiment' is all about and the reason why it affects activity to such a great extent.
There are risks for all sectors and just as everyone is repricing risk in the financial markets - so they will try to do so in the property markets. As we head into the summer, only time will tell whether the slowdown becomes more entrenched.
