SPRING IS IN THE AIR - IS IT THE SAME FOR PROPERTY?
17th April 2013
Generally at this time of year people are becoming more optimistic with the weather getting better (notwithstanding the last month) and the days getting longer. There is the age old question - similar to people talking about the weather - "is the property market improving".
In the last few Springs, there has been a great deal of positive thought that this will be the year the market improves and to some extent it has. This year the optimism is certainly returning with tempered with caution. Which is a good sign that the foundation of the recovery is getting stronger.
I will consider each sector of the market as follows:
It is clear that this is the market which we are all familiar with. The signs are very much there that good properties in sought after locations are still selling well. In fact some people argue there is a shortage. If you look at the residential development market,building new homes is beginning albeit on a small scale. The government in the recent budget has announced support for the construction industry. Opinion as ever is divided but the trend certainly is in the right direction.
At the front end of the market in the auction room it is abundantly clear that investors are turning back to property and in some cases paying almost the same prices as pre-recessionary days. A word of caution here though is that one good day does not make a summer but a beginning.
On the rental side of the residential market, rents are holding strong with demand.
The market for industrial properties has remained fairly even. Good quality accommodation on flexible terms is certainly attracting tenants. As people look to start their own businesses this sector of the market is strong but it is argued that there is a lack of good quality accommodation.
Sometimes the difficulty in the market is the price, where vendors expectations are still high but the quality of product does not match tenants' requirements. It is clear this is a chicken and egg scenario. But enquiries remain fairly strong.
This market is again one where there is divided opinion. Some people arguing that there is not enough good quality accommodation of sufficient size. Others argue there is an oversupply of office accommodation.
Whatever your opinion it is quite clear that this is very much a challenged market with some vendors turning office accommodation into residential.
If you are looking for offices then this is probably a good time to enquire as you are likely to get a good price.
A fairly good market exists for good quality retail properties in the right locations. In Sheffield, Ecclesall Road, London Road and surrounding areas are still strong. Although vendors have to be flexible with their demands. The same will apply in other towns and cities, where people are looking to start their own businesses. Retail investments are still very popular with investors. In fact there is a shortage of good quality investments coming onto the market, with vendors holding onto properties for future growth.
On a recent letting I was involved in, there were over thirty enquiries. We had many offers to pick from. Clearly this is not a isolated occurrence.
Therefore, it can be concluded that this market is arguably showing signs of improvement.
The auction room can arguably be considered a barometer of the market. The last few months in our auctions the room has been full, with results on the strong side. Clearly if you buy at auction you need to have done your homework and taken the necessary advice from professional advisers.
It is clear demand is returning. What is needed is more good quality stock.
This market is more for the professional buyers who understand the legal technicalities and are able to invest for the long term. More and more buyers are getting involved in this sector of the market.
If you wish to get involved in this market then please take legal advice and a Chartered Surveyor's advice before embarking on this market for investment.
It is becoming more and more evident that we are seeing overseas investment coming into this country, particularly in London where the market is strongly driven by overseas investment. This is now moving into cities like Manchester, Birmingham and Leeds. But without doubt the market in London is extremely strong.
As the world becomes more of a village, the property market is shrinking and is accessible to more people.
Generally speaking one could argue the Spring market is beginning to show signs of more sustainable growth. It is slow but more solid. Arguably this could be a year that starts to be the turning corner for property. The signs are certainly there.
By Mohammed Mahroof
Mark Jenkinson and Son