Floating just far enough above the quagmire
Tuesday, December 07, 2010 by Ed Mead
For years it’s been said that what starts in London spreads out to the rest of the country. Whether that’s been true in the past or not those of us who live in London recognize now perhaps that there’s a disconnect between us and the rest. Resentment outside the Capital towards those of us that live and work here has always been rife, but having been convinced we were all in this together I’m beginning to think that the London housing market might just be different, and lucky, enough to avoid some of the larger slowdowns affecting those living elsewhere.
The first thing that needs to be defined though is what constitutes a slowdown. It’s been increasingly easy over the last few years to be smug about London property and it’s been the smiles on faces of these London homeowners that have perhaps been in the crosshairs of those looking to have a pop at us. We’ve been lucky in Great Britain, a quirk of geographical fate has determined that not only are we an island but also on the Greenwich Meridian. This means, and has done for centuries, that we’ve been politically and economically stable, and has meant that whichever part of the world is doing well, and there’s usually at least one, those who’ve benefited financially tend to want to have a place somewhere in London. Over the last few years pretty much everyone has hence why values have gone beserk.
But a slow down, or a poor market, can de defined in two ways, prices and volumes. What has perhaps surprised many is the resilience of Greater London in the maintenance of those prices, but what’s bad for the economy as a whole is what’s maintaining those prices, low volumes. And it’s going to get worse, or better, depending on how you look at it. Some agents are reporting record numbers of sellers withdrawing from the market. It’s tempting to ask why, the recently deserting foreigners, having taken advantage over the last three years of a weak Pound, now appear to be coming back because they fear for the future of their currency and are wanting to buy whilst their exchange rate remains relatively, for them, advantageous. Those of us who work in London are more likely to earn relatively well, have deposits and thus access to historically low mortgages, so it’s likely demand will remain relatively strong. So why are sellers abandoning ship when more buyers are chasing their properties. Taking off the market for Christmas always was a waste of time, and at the moment there’s an odd feel that’s unlikely to be as positive at the beginning of next year when perhaps more sellers will come to the market.
So, if you’re the kind of person who watches prices, London may well continue to confound. As someone who recognizes the importance of volumes to the wider economy I fear that this market is disappearing up it’s own b***side.
(This article has also appeared on the Big Property List website)