Market Review 2008

Nigel Sellers, Director of Premier Property Search reports…

For many businesses and institutions associated and operating in the ‘property sector’, 2008 was a difficult year. Whether in commercial, residential, rural or agricultural sectors the economic and financial markets had a massive impact on every business.

Was it predicted or did those property journalists talk our way into the property recession?

At the time the media were blamed in talking up the property recession, but it was global events that triggered the housing market slowdown and this had considerable consequences which became a national phenomenon.  

Some commentators might argue it was due to:
- a lack of innovative policy making, with no contingency planning by our Government in the event that a global recession was just around the corner; there were already signs on the horizon particularly from the Far East
- while others might argue it was the banking industry being too concerned with its own self-preservation
- and finally there are those who place the blame even further afield, at the door of the much-maligned US sub-prime mortgage market

Without doubt the economic conditions which fuelled demand over the past decade with low inflation, low interest rates and low unemployment were under threat but no one could predict the timing?  

However, the real event that undermined the residential property market in the UK was the end of cheap and easy access to credit. This ‘tap’ had effectively been turned off, but not before it flooded the market with self-certification mortgages with ever-increasing loan-to-value ratios; this had dramatic consequences for buyers and in-particular the ‘buy to let’ market. That said, the market could not sustain the continuing property inflation, the bubble had to burst however people seemed to be putting off the inevitable. 

Many of our clients were reliant upon creative finance deals, their guaranteed annual bonus; their focus was more on job security with moving house a secondary consideration. Private clients put things on hold while corporate companies scaled down on recruitment and moving their personnel both in and out of the UK.  

2008 was a tough year.....
Yes, 2008 was a tough year and it was a difficult year within the relocation industry. However many clients had already committed to selling and moving; children had their school places confirmed, new employment contracts signed and life for many continued in earnest despite the uncertainty, turmoil and the gloomy economic forecast.

For the shrewd and astute buyer, this was the time to take full advantage of the falling property prices and we at Premier Property Search were able to help particularly with our clients who were ‘cash buyers’. It was a buyer’s market at long last, the biggest challenge for the selling agents and vendors was to accept the realisation that property prices had fallen from the dizzy heights of the last few years. This in turn caused a total lack of confidence in the market and a shortage of good properties being available.

- We received 25% more overseas enquiries from potential buyers as a result of the favourable £ exchange rate, compared with most other currencies.
- During 2008 we have been retained by Russians, Chinese and many people from Europe who identified that 2008 was the time to commit particularly as the value of properties in prime London areas were trading at 20% below the previous year

With a lack of activity from the selling agents, a shortage of stock to advertise finding suitable properties for clients was a tough ordeal; we found that our property services were needed more as a result of the changing market place and a shortage and choice of quality property.

Whilst the last six months of 2008 was a sustained period of inactivity for many selling agents, the market needed a period of stability to help bring back some confidence for buyers, sellers and in particular, lenders, who remained very cautious.

Prepared by Nigel Sellers
T: + 44 (0) 1962 793100
E mail sellers@premier-propertysearch.co.uk