New scares over shares make prop­erty look safer

The chan­cel­lor has warned that the global econ­omy faces its most dan­ger­ous time since the 2008 crash, but what does that mean for the prop­erty mar­ket? Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

GLOBAL eco­nomic jit­ters and stock mar­ket volatil­ity have in­duced mild panic among prop­erty own­ers and in­vestors.

Yet the share in­dex losses could pro­duce gains for Bri­tish bricks and mor­tar, which is now be­ing seen as a safe haven.

Graham Bates, a suc­cess­ful prop­erty in­vestor and di­rec­tor of Res­i­den­tial Prop­erty So­lu­tions at Leeds-based Ed­dis­ons, says: “What we’ve seen hap­pen­ing in the fi­nan­cial mar­kets re­cently sim­ply high­lights the rel­a­tive sta­bil­ity of bricks and mor­tar in­vest­ment. Yes we’ve seen a bad down­turn in the value of res­i­den­tial prop­erty as­sets and a shaky re­cov­ery, but the falls are not as quick or sharp as many equity in­vest­ments.

“His­tory also shows us that we will get past this. The fact is that peo­ple need homes and whether for owner-oc­cu­piers or in­vestors sup­port­ing the pri­vate rental sec­tor, res­i­den­tial prop­erty will re­main in de­mand. What’s more, de­spite de­clin­ing val­ues, in­come from in­vest­ment prop­erty has strength­ened as a whole gen­er­a­tion of peo­ple now pre­pare to rent rather than buy.”

As for where in­vestors should put their money, he says: “In York­shire, as with all ar­eas of the coun­try, there are pock­ets of ar­eas that have and will con­tinue to out­per­form. In boom times, the old adage about ‘lo­ca­tion’ be­ing the num­ber one fac­tor was for­got­ten as de­vel­op­ers built al­most any­where to ful­fil the de­mand from buy­ers who lost sight of what re­ally made sense.

“To­day, it is very much about lo­ca­tion. Aside from York­shire’s golden tri­an­gle, it is busy, good qual­ity sub­urbs with great schools and trans­port links that should per­form well, along with prime city cen­tre lo­ca­tions where rental de­mand will re­main strong for ever more.”

Andrew Wells, part­ner at auc­tion­eers and valuers All­sop, agrees that buy-to-let is look­ing very at­trac­tive:

“The rental mar­ket re­mains a bright light in an other­wise fairly gloomy mar­ket. Ten­ant de­mand and im­proved avail­abil­ity of buyto-let mort­gages is stim­u­lat­ing more in­vest­ment buy­ing ac­tiv­ity.

“The gap be­tween rental yields and de­posit rates is cer­tainly at­trac­tive and with volatile stock and cur­rency mar­kets, bricks and mor­tar as an in­vest­ment class is com­ing into its own once again.

“At auc­tion we are see­ing strong bid­ding and some price in­fla­tion for good, well-let prop­er­ties where con­sis­tent ten­ant de­mand can be pre­dicted – these in­clude bet­ter qual­ity city cen­tre flats, stu­dent houses and good houses suit­able for pro­fes­sional lets or shar­ers.”

How­ever in­creased in­vestor in­ter­est doesn’t mean that sell­ers can sit on their lau­rels.

“Qual­ity, price, lo­ca­tion and pre­sen­ta­tion are still the prin­ci­pal driv­ers to a suc­cess­ful sale. Some parts of west Sh­effield, north Leeds, Har­ro­gate, York and Ilk­ley for ex­am­ple find buy­ers fairly read­ily if those four el­e­ments are in place,” says Andrew.

“Re­gret­tably there are still too many sell­ers hang­ing onto un­re­al­is­tic price lev­els in other parts of York­shire and have lit­tle hope of achiev­ing a sale. I was on hol­i­day in Wales last week and saw an es­tate agent’s ad­vert in a lo­cal pa­per – it was re­fresh­ing in its can­dour. The agent made a pub­lic state­ment that no prop­er­ties would be taken on by them un­less the seller ac­cepted the agent’s ad­vice on ask­ing price. I’m sur­prised more York­shire agents aren’t sim­i­larly straight-talk­ing.”

Prop­erty por­tal Right­move, which has just re­ported a 2.1 per cent fall in new sell­ers ask­ing prices, says there is ev­i­dence that that hous­ing mar­ket pos­i­tives have found an un­easy bal­ance with per­cieved risk, which may well in­su­late it from ma­jor price falls.

Miles Ship­side, di­rec­tor of Right­move says: “While the re­peated shocks to the fi­nan­cial sys­tem have se­verely lim­ited trans­ac­tion num­bers com­pared to pre-credit-crunch lev­els, the last four years have seen them sta­bilise, with an un­easy bal­ance de­vel­op­ing be­tween those that have a press­ing need to sell and those with a good rea­son and the ca­pa­bil­ity to buy. In spite of the con­tin­u­ing global eco­nomic un­rest, the UK hous­ing mar­ket has sev­eral unique fac­tors that should help to in­su­late it.”

These in­clude rel­a­tively sta­ble prices, low in­ter­est rates and a hous­ing short­age.

Mr Ship­side adds: “The UK does not have the chronic over-sup­ply of prop­erty seen in many other coun­tries. De­mand for hous­ing is high due to de­mo­graphic changes, in­clud­ing net im­mi­gra­tion boost­ing house­hold num­bers. These fac­tors give our hous­ing mar­ket more bal­ance and sta­bil­ity, but per­versely pre­vent a pos­si­bly quicker but more painful route to re­cov­ery via lower prices with higher trans­ac­tion vol­umes.”

Suren Thiru, hous­ing econ­o­mist for Hal­i­fax be­lieves the Bri­tish econ­omy is slowly im­prov­ing and ex­pects house prices to re­main sta­ble this year and next and Andrew Wells agrees: “It is dif­fi­cult to see where house price in­fla­tion will come from in the next two years. We may need to be con­tent with sta­ble, level prices.”

TIME AND TIDE: The house boasts panoramic views of Sand­send and the sea from a canopied bal­cony. It is a rare new-build in the sought-af­ter vil­lage, near Whitby, and was built over the last two years by owner Mike Forster, a char­tered build­ing sur­veyor.

GLOOM: Chan­cel­lor Ge­orge Os­borne de­liv­ers a warn­ing about the global econ­omy. Now houses are look­ing a safer in­vest­ment than eq­ui­ties.

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