Tales from the Front Line
Damned Statistics
by
Stuart Baldock
on July 28, 2010 in
Buying in France
The well-known quotation about lies and statistics has never been more relevant than when trying to decipher commentary on the French property market. No-one really believes us when we say there are no reliable numbers to show if the market is going up or down and in what proportions. This is especially incredible to Anglo-Saxons, used to being able to obtain accurate information about almost everything.
Statistics are available. The problem is that they come from different sources, using different parameters, often reflecting what the author wants to prove rather than reality. Individual agents have far too small a view of the market to be a valid source, and the kind of multi-office agencies found, for example, in the UK just don’t exist. There are several professional organizations, the best known being the FNAIM (French Real Estate Federation) and many franchises such as Century 21 and ORPI. There are also the Notaries, through whom virtually all transactions must pass.
The FNAIM asks its members to provide statistics, but it is not obligatory. It is obligatory for agents who wish their property to be listed on the main FNAIM website – but so few potential buyers consult it that agents are not motivated to provide the information. The result is that only 5 – 10% of overall transactions are available to the statisticians of the FNAIM. Too small to count, really. The other professional bodies are even less representative.
Franchisees are again encouraged to upload details of transactions to their administrators – and this is one source of statistics but again it is too small to be meaningful. Often these statistics are not qualified: unusual transactions (outstandingly high value, or property in need of total rebuilding, for example) may be included in the overall averages, thus skewing the statistics. If there is a sudden ‘run’ on studios (which have a higher value per square metre than larger apartments) average value statistics may be false for that period.
The Notaries should be a good source and to an extent they are. The problem is that their statistics are at least three months behind the market (the average time from conditional exchange – for which no statistics are gathered - to completion) and don’t provide a day-to-day snapshot. Also their statistics are quite bald. It is not easy to know the condition of the property sold, which floor it was on, sunny or facing north… For houses it’s even more difficult to judge.
The only people who really know what is going on are the Property Registrars; they collect all the information – and the taxes – for the fisc. The fisc says it cannot provide statistics as everything comes jumbled together – residential, commercial, land… It would just be too expensive to sort it all out and provide accurate statistics. However, when the taxman thinks he is due more tax because a transaction has taken place at an unrealistic price (and this is not unusual) he soon manages to dig out and analyse the requisite statistics! “Damned Statistics” indeed for the buyer who has his conveyancing costs hiked by 30% or his Wealth Tax reassessed!
It's hot, but not that hot!
by
James Geddes
on July 14, 2010 in
London Property
The ongoing British fascination with the weather means that one regularly hears “It's too hot” especially in London during this current warm spell. So, spare a thought for those that come here for our summer from hotter climes.
What relevance has the weather to the property market you may ask? Well the link is clear. Whilst the British, Northern European and American buyers head off for their summer holidays, their position in the central London property market is filled by other nationalities, such as those that come to London to escape the oppressive heat of their own countries.
Traditionally this influx has been made up of people from the Indian sub-continent and the Middle East, with a few Eastern Europeans too and these regions have a tendency to think in US dollars. Thanks to the Bank of England's desire to keep interest rates low and the difficulty of the Government to plug the deficit, the value of Stirling against the US dollar in particular has plummeted. It was only 24 months ago that CABLE sat at over 2 dollars to the pound but this year the rate has been as low as 1.4 dollars to the pound and we are currently at a level of 1.5 dollars to the pound. This means that despite the unexpected price rises in central London since last summer, which are now slowing, these US dollar based buyers are still in a stronger position than they have been for some time.
Here at Property Vision, thanks to our link with HSBC Private Bank, we have found that when one side is down another is up. Because of this international spread of clients we are still busy and have clients that wish to purchase property in central London. The real problem is a lack of quality supply but then that is another story.
It's a Landlord's world
by
Sarah Daly
on July 7, 2010 in
Rental Property
From time to time in the rentals industry we see different conditions which favour either Landlords or Tenants. However, having been in the business nearly 20 years, I don't ever recall a market like this. In the Country particularly we are experiencing such a severe lack of rental stock that all good properties are receiving two or more bids to let and competition to secure the right house is fierce. With the scarcity factor now being a key component to the bidding process, we have recently been invited on all of our higher value transactions to submit "best and final” bids....... Where has this come from? This is not rental terminology and yet, time after time, we are finding this bull-market mechanism being used in the lettings market and a common theme has been that some agents have been a little behind the curve in their valuations and have not taken into account the simple economics of supply and demand.
Watch this space to see if rental values increase significantly should stock levels not improve - it's definitely a Landlord's market.
Prime London Update
by
Roarie Scarisbrick
on June 30, 2010 in
London Property
The summer of 2007 is generally viewed as the peak of the UK property market, but the reality is that the very top end of London's prime markets appeared to be invincible for another year, and thrived throughout 2008, until Lehman finally burst that bubble.
The post-Lehman fallout was dramatic, and the market stopped dead in its tracks. We were negotiating on an exceptional house at the time and backed-off when the news broke. When we returned to the negotiating table three weeks later, we were talking about figures almost 50% less than previously. Indeed, it is fair to say that in the six months following Lehman, the very top end of the market was hit worse in percentage terms than the wider market, although there were too few transactions to crystallise the fall.
There were less than a handful of transactions in the first half of 2009, and even heavily discounted asking prices (sometimes to 30% - 40% from peak levels) could not revive the market in the first half of the year. However, the market did gain momentum towards the summer, due to growing confidence and continually contracting supply of stock, pushing values up by 20% (again based on very few transactions).
The real activity in the market has been from January of this year. There have been between 15 and 20 house transactions in London so far this year at over £20m, against less than five in Jan - June 2009. A significant portion of the activity has been in North London, which accounts for around half of this year's biggest transactions.
Some of the big sales have been well publicised, including the large house on Eaton Square, which sold to Chinese investors at just over £30m, as well as the Royal College of GPs on Princes Gate which sold, again to Chinese investors, for £34m. In North London, a 12,000 sq ft house in NW3 has sold recently to a Russian family for over £40m. Indeed, the demographics of buyers are broader than ever, with Russians, Chinese, Middle Eastern, Scandinavian and even old-fashioned English buyers battling it out for the precious few houses available and sending values in excess of peak levels once again.
Guess this was not the only one - but I've just heard of an exchange being rushed through last night ahead of the CGT midnight deadline. I am guessing the potential 10% tax saving is more than the extra solicitors costs for burning the midnight oil!