by Rachel Crook
When it comes to property transactions, the current weak market may be one in which only the most savvy, well-prepared and best advised will prosper. Only this week Halifax revealed that the two per cent rise in prices displayed in its January index was wiped out by a 2.3 per cent drop in February.
As the lender explained, this sort of phenomenon is not uncommon. It pointed out that in three of the first ten months of 1990 house prices rose, even though the market was clearly in a downward trend. Similarly, it can now be deduced that the market is in decline because the three-monthly figure shows a drop of 3.6 per cent.
This explanation is the sort of fact that a well-advised investor may take into account, whereas anyone going out to buy a home on the strength of January’s figures alone may have been in for a shock.
Another apparently positive sign to emerge in recent statistics was the finding by Hometrack that the number of transactions soared by 35.9 per cent in February. Commenting on this, the director of real estate advisory firm DTZ Residential, Russell Taylor, insisted that this should be kept in perspective.
He stated: “I think this month-on-month increase in sales has to be taken in context. One should remember that sales figures went down so low last year that even one or two more deals will lead to a marked increase.” He added that while there are some areas of growth – such as cash-rich buyers chasing bargains and overseas buyers attracted by the weak pound – the overall level of transactions is still low.
One strong sign that investors may do well to be wary and take good advice is the guarded language used by experts in the industry about any possible recovery in the market. For example, Mr Taylor concluded his remarks about the rise in transactions by noting: “It may simply be the customary spring optimism we see at this time of year, so it is still too early to say that recovery is underway.”
Halifax chief economist Martin Ellis also used guarded language by commenting that there are “tentative” – rather than clear – signs of stabilisation in the market. The figures to which he referred as evidence of this were the recent Bank of England statistics revealing that 31,000 loans were approved for house purchases in January, a similar level to the monthly average for the second half of 2008.
To call this “tentative” may suggest there is no reason to be certain that this kind of finding will be emulated in the next statistics, or be improved on.
Economic uncertainty, therefore, may make it all the more important that those looking to buy get the best advice they can. Investors with an eye to the long term may dream of buying at the bottom of the market and enjoying a prolonged period of growth, but those who make ill-judged attempts to guess when this might be could end up with their fingers burned.
Those who use all the available information and advice to get it right, however, could reap a rich dividend.
- Property News from Lawpack: buying or selling your own house? Straight-forward advice on conveyancing and DIY house selling.
Published on: March 6, 2009