As we enter a New Year Nick Churton of Mayfair Office takes a look at what may lie ahead for the property market.
Although mature estate agents are apt to say that they have seen it all before, this time it is different. No one has seen this market under this set of national and international financial conditions before. But what is rather refreshing is that the uncertainty now cuts down the speculation aspect of a house purchase and strips the requirement to buy down to the real and age-old essentials. This makes for easier choices.
Le Corbusier, the pioneering architect, stated that, “The requirements for a house should be to provide a shelter against heat, cold, rain, thieves and the inquisitive”. He didn’t add that a house should also provide its owner with an investment return of seven per cent year-on-year.
For the first time since the 1960s property investment can take more of a back seat in the house buying mindset and, instead, fundamental life requirements can come back to the fore. Of course with other financial instruments providing so little in the way of return, property is a natural arena in which to invest. But with little or no indication about if or when the market, outside central London, will return in any strength we are left with simpler decisions and choices - does a property suit our requirements in size, location, style and price?
It is although our needs have been simplified in the way they may have been fifty years ago. With less frenzy and greater choice, for a while at least, this may be a very good time to choose a primary or secondary home for all the very best lifestyle reasons.
We quickly learn to expect that there is an investment opportunity to be gained from property purchase in a rising market. But we are rather slow to appreciate the reverse is likely in a poor market and/or in particularly adverse economic circumstances as we have now.
2011 was a hard year in property and this year may not be much better. We may have new American, Russian and French presidents, more ructions in Europe and the Middle East, and greater privations at home before we see improvement. But still there is a reassuring level of market activity that has more to do with need than discretion. This is the market we have and this is the market we have to deal with – and deal with it we will.
Real buyers and sellers should not be deterred. Indeed they should be encouraged as the more life there is in the property market the more life there is in the economy. But those still insisting on the sort of financial profit they may have achieved several years ago should perhaps think again and get real. It will be the enlightened who get to the top of the property class in 2012, not those in denial.