OPINION on the prospects for the property market is dividing into two camps:
those who forecast showers and the odd squall, and the pessimists who see
only dark clouds on the horizon.
Public mud-slinging between the two factions is yet to begin, but it can only
be a matter of time. Those who foresee only a slowdown are viewed as
mouthpieces of vested interests by their opponents - who, in turn, stand
accused of talking Britain into a housing recession with their woeful
pronouncements.
Meanwhile, almost every day both camps are contriving to find new
justifications for their standpoint. For example, reports that developers
are “mothballing” city-centre schemes until the climate improves caused
Assetz, an investment company, confidently to predict a 5 per cent growth
for 2008.
There is (unusual) agreement on all sides that the oversupply of such
accommodation could put more than a dampener on the whole market. In June
2006, Bricks and Mortar questioned why construction companies were building
tiny one-bedroom flats when families wanted three-bedroom houses. At that
time, the prices of these inner-city apartments were already
underperforming. Maybe buyers were guessing that the description “executive”
- often used in relation to these undersized properties - was inspired by
the hope that owners would be so exhausted by work that they would not
notice how diminutive their homes were.
Assetz now lines up with those who believe that house prices will be almost
unchanged next year (Hometrack and Nationwide) and those who foresee modest
increases (Knight Frank and Savills).
Halifax has yet to reveal its forecast. But its November survey, which showed
prices slipping by 1.1 per cent, did cause Capital Economics, the most vocal
pessimist, to declare that “our prediction for prices to fall by 3 per cent
year-on-year in 2008 is now beginning to look too conservative”. Martin
Ellis, Halifax's chief economist, interprets the data in a rather different
way. He argues that “a robust UK economy and the accompanying sound health
of the labour market provide strong underpinnings for the market”.
Mr Ellis also suspects that small price falls will lure out buyers currently
sitting on the sidelines. This may coincide, however, with a new difficulty
in obtaining mortgages from Halifax and other banks who have become more
circumspect in the wake of the credit crunch. Let us hope they know the
difference between prudent lending and tightfistedness.
SNOW PATROL
Suddenly Switzerland has charms among those who were previously inclined to
think it dull, if scenic. Lewis Hamilton, the Formula One star, is swapping
Stevenage for Geneva, supposedly to evade the paparazzi although the
attractions for the very rich of the Swiss forfait taxation system are
considerable. Your bill is based not on your earnings, but as a minimum on
the rental income of your home, multiplied by five.
Some among London's well-heeled resident-non-domicile international community
are also thinking of a new future in Geneva, fearing that the £30,000 annual
charge imposed by the Chancellor is the beginning of the end of their UK tax
privileges. A handy B permit allows you to live in Switzerland and buy a
property. You may not work, but easy flights mean that you could still hold
down that highly-paid City job.
Skiers who are modestly well-off, rather than loaded, are also pondering the
possibility of hideaways in such resorts as Verbier and Zermatt, following
the abolition of rules restricting sales to foreigners. But they may be
disappointed. As Simon Malster, of Investors in Property, a specialist ski
business, says: “It's good news and bad news”, as fresh controls have been
imposed by Valais, the Verbier and Zermatt canton. Valais will allocate most
of its second-home permits to those who were already in the process of
buying. Valais argues that second-home ownership pushes up prices beyond the
reach of first-time buyer locals.
However, Vaud, the neighbouring canton, has no restrictions on permits;
Villars, its key resort, may not be as swish as Verbier, the haunt of James
Blunt and Hugh Grant, but it does have summertime attractions.
Wherever you go, it seems, the purchase of a holiday hideaway can be
political.
BUCKS DOESN'T FIZZ
A celebrity link can be a good way to market your home, but it seems that
well-known figure should not be a politician. In October Tony Blair was
reputed to be interested in Winslow Hall in Buckinghamshire. But now he is
not buying this £3million mansion designed by Sir Christopher Wren. Moreover
the agent has not had a single offer. Mr Blair, whose bet on Connaught
Square in Bayswater is turning into a wise gamble, was perhaps told that the
sure-fire location for a country pile is the Cotswolds - less snobby than
Bucks, apparently.
So the chap from the Halifax says “a robust UK economy and the accompanying sound health of the labour market provide strong underpinnings for the market.â€
Is this the same economy with the largest personal debt in the developed world, where we remortgage and borrow to the extent that the average UK consumer spends 106% of his income?
Could somebody also tell him that employment statistics are largely irrelevent for now - e.g. US & Irish employment remain high yet house prices are plummeting, UK employment remained high the last time we had a crash (unemployment came later).
And is Halifax the same bank that just refused me a credit card? (no debt, no CCJs, £250,000 savings, never (ever) missed any kind of payment in 20 years). They would only do that if:
1) there is no chance of me being late in paying therefore no interest charges {which would not be legal}
or
2) mistaken identity - unlikely since I bank with them
or
3) the trouble ahead is far worse than we think
Joan Brooks, Tunbridge Wells,