Well don’t ask an estate agent. Take them for a pint instead. They make great company. Estate agents are always positive. Now is always the time to buy and they are busy tucking away the deals. They see the world through rose tinted eyes: so forget estate agents for a balanced view of the state of the market.
So if you can’t ask an estate agent then what about national statistics? Rather you than me quite frankly. There’s just far too much math involved. And in any case you know what they say…………. “lies, damned lies, and statistics”!
You could well ask Mark Stucklin. He is the only commentator I know who looks at the raw data and draws his own conclusions and. He’s about as impartial as you can get. He’s skeptical about the statistics and he’s cautious: which is the right way to be in property investment. You can always afford to miss a good opportunity because another one will come along. But at all costs you want to avoid making a mistake.
Mark says “my feeling is that we are slowly reaching something of a bottom, at least in transaction terms. Barring any macro-economic shocks, 2011 will be the same or slightly better than 2010 for the overall market, though nothing to write home about.”
You can see his report here:
So what else can we say about the state of the market? Well, in addition to advising people to let a good deal go if there is any risk of making a mistake, I have a couple of opinions which I will share with you.
One is that national statistics are pretty meaningless because there are big regional and even local variations. Yes we know there is over supply nationally but what is the supply situation in your locality or indeed for the particular type of property you want? Sea views for example are restricted in supply. The local situation is far more important than the national situation.
Another opinion of mine is that most of the over-supply is complete rubbish: swathe upon swathe of identikit apartment blocks in the middle of nowhere with no supporting infrastructure. I think a lot of it will never be occupied. I agree it does have an effect on price but not as much as say flooding the market with oil does (or Mars bars for that matter). Property is not homogenous.
A lot of what has been built in Spain in the last twenty years is built to very low standards. Architects were instructed to spend as little as possible and make the developments superficially decorative so they sold well. People put up with it because prices were going up all the time. They thought they could always sell at a profit so they weren’t too fussy. Now those days are gone do they really enjoy hearing their neighbor having a pee because the sound insulation is so poor or having the mid July sun pounding into their living room because the architect gave no thought to the orientation?
There are plenty of pretty villas but not many of them are well built. And there is a dearth of well designed, well built, energy efficient property. As for demand….. we shall see. Energy prices dont look as if they are about to fall!!!
Author: John Wolfendale