Nick Churton of Mayfair Office offers summary of the first half of 2008 in the property market.
"The UK is now experiencing the full impact of the global credit crunch with the twin of sharply rising fuel, energy and food prices. These have had such a negative effect that property transactions in some areas are down by fifty per cent year on year, and latest figures show that mortgage offers are down by fifty-six per cent.
Many in the residential property industry believe that this is the hardest market since 1973 when the UK was going through the secondary banking crisis - the result of a lethal mix of rising inflation, rising oil prices, strict credit limits and companies running desperately short of cash. The only difference today is that we don’t have a pay and price freeze – yet!
There remains a risk that market conditions could develop into a full-blown crisis. There is no doubt that now is the right time to review marketing and take any necessary steps to stimulate a sale. It is natural to feel that adverse market conditions don’t or won’t affect the particular area we live in, and certainly won’t affect the property we are selling. Sadly they do. Everyone selling property in the UK is in the same boat. It is those sellers who recognise the prevailing conditions now who will benefit in the coming months. Those who don’t appreciate the situation and those who are determined to hold out for a wished-for rather than an actual market price will, every day that passes, see the value of their property erode.
Price is the key. There are buyers but they now have far more choice and are under much less pressure to buy. They are taking their time before viewing and certainly before making offers. They are making low offers and are not even viewing any property that, in their view, is overpriced. The seller who thinks they will try for a high price because they are prepared to come down is seriously misjudging this market. They simply will have no viewers, and without viewers there will be no buyer.
First-time buyers are struggling to find affordable property and are further hampered by lenders who have become reluctant to lend. Transaction times are getting longer and this in turn is leading to the unsavoury practice of gazundering, where a buyer will reduce the offer they have agreed just before exchange of contracts. This can be a cynical ploy but equally it may come from a genuine concern about falling prices. Speeding a ready, willing and able buyer to a quick exchange is essential to avoid falling into the hands of opportunists or those who may get cold feet.
But for many buyers with mortgage funds in place the opportunities are exceptional. Now is the perfect time to find a new property as there is so much choice.
With more property coming onto the market it is important to recognise that this creates greater competition and it is keenly priced properties that will sell quickly. Property priced optimistically is heading for a longer spell on the market and will ultimately sell at a lower figure while this trough continues.
Despite the bad news stories in the press and the underlying uncertainty in the economy it should be remembered that for those with foresight there are opportunities and benefits in all markets and this one is no exception."