By Anna Tyzack
COULD THE BOTTOM OF THE MARKET BE IN SIGHT? FOR THOSE READY TO TRADE UP, THAT DREAM HOME IS FAST BECOMING AFFORDABLE – AND CANNY HOUSE-HUNTERS ARE OUT LOOKING FOR BARGAINS.
Exactly when will house prices be at their lowest? It’s the question to which every potential buyer (and estate agent) wants an answer. When I asked property experts to call the bottom of the market, their predictions (or best guesses) ranged from last Thursday to May 2010 – with midnight on September 16 2009 as the midpoint. “They don’t ring a bell at the bottom of the market,” says Trevor Abrahamson from Glentree Estates, “but if they did, it would be ringing now. Over the next few months prices will hit the bottom.”
Prices have already come down so dramatically (40 per cent in some cases), that people are beginning to see value for money. “It’s not about timing, it’s about the opportunity,” says Chloé Macintosh from Fulham, who wants to spend about £1.5 million on a new property. “If I fall in love with a house I don’t want to miss out.”
Chloé, an architect for interior design website www.mydeco.com , lives with her husband and two sons in a spacious four-storey Victorian house. She’s put in a new kitchen and landscaped the large garden, “but we know it’s not our perfect house”, she says. For the past two years she has dreamt of creating a lateral family home in a commercial-style building, but was priced out of the market by property developers. “It was difficult to find opportunities at good value. They would get snapped up as soon as they appeared on the market,” she says. With less competition from developers, she believes now is her chance to move up the property ladder. She put her own house on the market before Christmas, but when it didn’t sell immediately, she reduced the price from £910,000 to £850,000. It sold earlier this week for just under the asking price. “It was bought by a family with daughters working in London,” she says. “It was exactly what they were looking for. Now I can start looking for what I want.”
Catherine and David Ainslee, from Newbury in Berkshire, are also determined to move. They built their six-bedroom house, Watermeadow Lodge, six years ago, but are now after somewhere with more land. “It suited us before, but now we want more space for our two sons to run around. We fully accept the dire financial situation but we don’t want to put our lives on hold,” says Catherine. “It’s all relative – although our property will sell for less than we originally hoped, we will also be buying one for less too.” They’ve put their house on the market for £950,000 with Knight Frank, and are prepared to extend their mortgage on the next property. “If you can get a mortgage and have a steady job, life goes on,” says Catherine.
It’s not only those with families who believe that now is a good time to shop. First-time buyers Celine Herweijer, 31, and her fiancé Mike Johnstone, 27, have started looking for a flat in Primrose Hill, north London. “We have a 25 per cent deposit and it’s a complete buyer’s market,” says Celine. “We were ready to buy in 2007 but when prices started falling we sat tight and waited. In those days, a lot of my friends who were buying were outbid and the whole experience was very stressful.”
Celine and David are looking to spend between £350,000 and £400,000, and will start putting in offers within the next fortnight. “We’re renting at the moment so we’re not desperate to move, but if we find the right flat at the right price we will.” Estate agents John D Wood have told them that two-bedroom flats in Primrose Hill have fallen in price by 10-15 per cent, and will drop a further 5 per cent by the end of the year. “We could wait another six months and prices will have come down further. But if you can get that much off now, you win anyway.”
According to Tom Hudson, of buying agents Middleton Advisors, lifestyle buyers will characterise the market in 2009. They are financially stable, and moving not out of desperation, but because they want to take advantage of a quieter market to buy their ideal house. “They may be moving for a new job, or want to be nearer a particular school. Or they see now as a good opportunity to buy,” says Hudson. “People might have been looking in an undersupplied market for 24 months and want to get on with life. There’s a strata of buyers who have September as a cut-off date.”
Prices are expected to fall another 5 to 10 per cent by the end of the year. But over the past few weeks buying agents have noticed a shift in buyer mentality. “People realise there’s still quite a lot of property on the market and it is highly unlikely they will have to bid against a competitive purchaser,” says Camilla Dell of buying agents Black Brick. “And sellers are realising that if they hang on, they will only sell their property for less.”
Ed Mead of London-based estate agent Douglas & Gordon has also noticed a change of mood: “We have now clearly moved on from the market which was characterised by a 75 per cent lack of confidence on buyers’ part and 25 per cent funding problems,” he says. “Buyers are really out in droves and are willing to buy, at the right prices, but getting a mortgage is best described as a nightmare.”
For those that can get the finance (or don’t need to borrow), there are some attractive offerings, although it’s worth taking the time to research where the biggest drops have occurred. Price falls have been geographical: well-heeled parts of London and the Home Counties have been hit hard due to the stockbrokers and bankers affected by the banking crisis.
But for many, the dream is becoming affordable: a town house in Belgravia, belonging to designer Jane Churchill, now costs £3.95 million (was £4.5 million), while for under £500,000 you could buy a three-bedroom flat in Chelsea, or a pretty mews house in Battersea. Medium-sized houses, such as Chloé Macintosh’s in Fulham, hover around the £800,000 mark, and enormous houses in Hampstead or the nicest parts of Clapham cost about £1.75 million.
Further out, a listed country house or rectory need no longer cost more than a million. Although it is still tricky to find a bargain in West Berkshire and Oxfordshire (largely due to lack of supply), in the West Country, the Midlands and the North, and second (or third) home hot spots, properties that would have once sold in two weeks are open to offers from buyers with cash in hand. “By the time the market has bottomed out it will be too late,” says Dell. “Our advice to buyers is to get stuck in now.”
Of course, some clever people will hold out, and buy when prices are lowest. But even so, they cannot expect to capitalise on their investment soon. After prices have bottomed, experts expect them to plateau for a year or more, while excess supply is soaked up. “No one wants to catch a knife when it’s falling, but people with cash don’t know what to do with it,” says Trevor Abrahamson, who has seen three recessions.
“I think the window of opportunity will be quite short, adds Camilla Dell. “We might just look back on this time and say it was a good time to buy.”