Property Expert Rob: Insiders View

July 24, 2016 by Rob Kahl

Insiders view

I thought it might be prudent to review where we and the housing market is at for 2016 so far and to look forward to what we might expect for the rest of the year and beyond.

Last year was so chaotic with the local housing market increasing by 15% according to the statistics and reports. Leigh-on-Sea itself had a lot of positive press throughout the year, featuring in numerous national polls for the best places to live or areas most likely to grow in value.

We had a new government that meant a bit of stability in the markets and interest rates were held at an all time low. It seemed that everybody wanted to buy and this was reflected in prices as demand far outstripped supply.

You may be surprised to learn that for an estate agent this type of market is not all its cracked up to be. A rising market can be quite difficult; selling the properties is easy enough, but inevitably you have more than one person that wants to buy every house so you end up having to let people down on a daily basis. Once a sale is running Vendors, quite rightly, want to push things along very quickly, insisting the longer the property is off of the market the more money they are losing.

Trying to value a property is a minefield. You could be too low in your valuation and sell the property immediately with the vendor then suspecting they are being short changed, or, it could be the opposite and you could value it too high with the property failing to sell as quickly as others and the vendor then thinking you aren’t doing your job correctly.

This year hasn’t been quite the same. Infact, we have had a period of instability. I am hopeful though that there are specific reasons for this and that the housing market is strong enough to tough them out and especially in Leigh-on-Sea we will be fine and see yet another year of growth.

The first thing we saw this year was some significant changes for buy to let investors. After the (now former) Chancellors budget was set, he announced that stamp duty was to be increased by 3% for people buying second homes or investment properties. Tax relief on mortgages was also to be changed and even times when Capital Gains Tax was to be paid was going to be different if you decided to sell up and cash in. This had the effect of people rushing to buy investment properties before the changes came into force on 1/4 and then once these changes were in place or it was obvious that a transaction wasn’t going to go through before this date, investors scarpered and the market for flats or other traditional buy top let properties dried up completely.

I expect the idea was to enable first time buyers to get a chance to buy these properties instead of always losing out to buy to let investors, but unfortunately, especially locally, prices are just too high for most first time buyers and the majority of buy to let investors we have are small time, not the multi property slum landlords they were trying to target. Our people are usually just trying to top up a dwindling pension pot or supplementing the loss of interest on any savings they may have incurred.

If you were not tuned into the housing market or weren’t looking at the finite detail of buying or selling at the beginning of this year, then you could be forgiven for not noticing the change. But I think even if you were on Mars you wouldn’t have missed the other big change that has affected the housing market and so many other's nationally.

If you are still none the wiser, let me tell you, apparently we voted to leave the EU, yes BREXIT is now a word we all know and use on a regular basis. It hasn’t even happened yet and probably won't for a couple of years, but it has certainly thrown a spanner in the works for all types of markets. As soon as the outcome to leave was becoming apparent sterling fell sharply and billions of pounds were wiped off of the value of the FTSE 250 companies. It certainly was panic station for a couple of days. However, it soon became apparent that this was more likely a reaction to the forecasters getting their predictions wrong (AGAIN) rather than a reaction based on any sound financial information and so far, although the sterling is still down we seem to have started to recover.

What any market hates more than anything else is uncertainty and this is true for the housing market. We are currently in a period where none of us really know what is going to happen, we don’t know what type of deal we are going to get from the EU when leaving, we don’t know how the rest of the world is going to react when we do and we don’t know how any of our markets are going to react. We are in a period of limbo until it has actually happened and we can move forward.

To date the Leigh-on-Sea housing market is still very positive, demand is still there. Things like our excellent schools, the easy commute into London, the charming Broadway and Old Town and of course, our fabulous coastline will still all be there regardless of what the market is doing. These are the things that appeal to people looking to move in to our area. Infact, the type of people that are looking for those types of things rather than investors just looking to make a fast buck are the ones we want right now, to make sure that our town continues to thrive in the community spirit that we all love so much.

So where does all that leave us now and in the future? I don’t know, I don’t think that anyone does, but I had better have an uneducated guess for you so here it is; although about half of us didn’t vote to leave the EU, I think that most of us have now accepted the fact it is going to happen and we all seem to be embracing it and thinking positively about the outcome. This has brought back most of the stability that was previously lost in the markets and things seem to have recovered.

There was talk of dropping interest rates even further! Last month it was pretty widely expected that rates were going to be dropped to 0.25%. Once again these predictions were proved incorrect and interest rates were held at an already low 0.5%.

I hope this sends a message that things aren’t quite as bad as the media like to portray and that the Bank of England has confidence that things will be okay. I suspect that this year will be another year of price rises, but wont be on the scale we saw last year where people were struggling to keep up. I think that over the course of 12 months house prices will increase by about 5% which is about average for a ‘normal’ year in Leigh-on-Sea and has proved pretty sustainable over time.

I appreciate that there will be people that bemoan price rises, say that wages aren’t increasing at the same pace and that they are already too high for most people to be able to afford. I have a lot of sympathy for this argument, I really do, but from a purely professional stand point, house price increases show a confidence in investing in bricks and mortar as well as in Leigh-on-Sea itself.

N.B Lastly I would like to take the opportunity to congratulate Jo on the new look of the Leigh-on-sea.com website. It looks great and I am sure will be a big hit with all of her existing customers as well as attracting plenty of new ones. Here at Scott & Stapleton we work closely with Jo and we appreciate how much she has to do herself. Without her drive, dedication or passion she has for our little old town and everything she does, it would be a very different place.

This article is by Rob at Scott & Stapleton.Tel: 01702 471155

To read all of Rob's previous articles please click the link https://www.leigh-on-sea.com/tag/listing/blog/property