Property Matters

A regular column for Konect by Turpie & Co 

March 2014 : It's Good to be Seasonal

Just about everyone will know of, or have experienced at first hand, the trials and tribulations of buying and selling property over the past few years. Until very recently, and since the start of the recession in 2008, the number of buyers and sellers in the property market was so low that traditional seasonal trends had all but disappeared.

It’s meant huge pressure for individuals looking to move, and for the estate agencies that serve them. Not even large, multi-office estate agencies have been immune from market forces, with many large chains recording months of no sales – that’s a situation that would quite simply have been unthinkable before the financial crash. Many smaller agencies have quite simply not weathered the storm, which in turn has meant less choice for buyers and sellers in the housing market. All of this has been to no-one’s benefit

Changing fortunes

There have been many ‘false dawns’, with agencies recording a couple of consecutive months of higher sales in the region – only for the market to fall back to zero after this brief sunny interlude. Now, at last, the tide seems to be turning.

Looking back, 2012 does seem to have marked a real change in fortunes for the property market. Volumes gradually started to rise again in 2012 and the first three quarters of 2013/2014 have seen a dramatic increase in volume. The number of sales transactions handled by our firm has doubled in 2013, compared with 2012. Across Scotland transactions for the third quarter of 2013 are up by 23% on the previous year, and across the UK mortgage approvals at 60,000 are at a monthly high compared with the last four years.

The return of seasonality

This improvement has been marked by the return of traditional patterns of strong spring sales, quietening down over summer holidays until the schools go back in August, with a second surge in sales volumes through the autumn months - with October being the highest volume of monthly sales recorded in 2013. Seasonality is definitely back. And, as in the pre-2008 period, the volume of buyer enquiries has fallen off as we approach Christmas.

Take advantage of the winter period – get ahead of the competition

Contrary to what many sellers believe, bringing your property to market just before Christmas can be very strategic and give you a real competitive advantage. Buyers viewing over the so called ‘quieter’ winter months of December, January and February can become frustrated by lack of choice as many sellers simply fail to put their property on the market. Many sellers suffer from the mistaken belief that nobody will be looking to buy until spring, but evidence does not bear this out. It all means that canny sellers can take advantage of this seasonal temporary imbalance of supply and demand by being one of the properties that is actually ‘new on the market’!

Other signs of recovery in the market

Another sign of confidence returning to the market is the return of the closing date. Closing dates are still a rarity in West Lothian, where we mainly operate, with the exception of unique or ‘one-off’ properties or in the consistent property hot-spot that is Linlithgow, where demand often outstrips supply.

There’s more good news too. Over the last 5 years of recession the gap between a home report valuation and the real selling price of a property has averaged anything between 5-15%. 2013 has seen this reduce dramatically and many houses are now selling for the full home report value or very close to it. This fact alone is a subtle indicator that house prices are rising, or at the very least, stabilising. Unlike in previous years, prices are most certainly no longer falling.

The return of new developments

The final positive sign (and probably the most significant of all) is the welcome return of new house building as demand improves.

Craigengall Crofts in rural West Lothian is a good example. As an exclusive high-end pioneering development, many questioned its viability at the time. Marketing new-build properties which aim to smash through the ceiling prices previously set for new-build houses in the area by several hundred thousand pounds is ambitious even in a strong housing market. In a recession, some might think it is nothing short of lunacy. December 2013 has seen the last property sold – in fact 50% of the site sold out in the last 12 months. It’s a real achievement in such challenging times and it is yet more evidence of returning confidence – among buyers, sellers, builders and, just as vitally, lenders.

Looking forward to 2014

No-one should be suggesting that the property market is ‘normal’ again. It’s far from being ‘normal’. I simply don’t recognise the ‘housing bubble’ that London media seem to think we might be about to enter or already have entered. Nevertheless, if the last quarter of our financial year continues in the same way as the first three quarters, I think most estate agents would be prepared to stick their necks out and say that both buyer and seller confidence has most definitely returned to the property market in Scotland. And that’s some really positive news for the economy and for all of us in 2014.

February 2014 : Embracing Help to Buy

The economic downturn of recent years was widely blamed on irresponsible lending by the banks. Whilst this did not apparently result in a huge numbers of repossessions, it did highlight banks’ exposure to high-risk debt and The City clamped down in order to protect its best interests. This resulted in lenders deciding to limit future mortgage loans to around 80% of the purchase price. All of a sudden, buyers had to find a minimum 20% deposit, causing the market to stagnate.

Indeed, some 40% of non-homeowners say they cannot afford the deposit required to buy (source FSCS). 

Help to Buy

In order to stimulate a “recovery”, as well as the building of sorely needed new homes, the Government introduced a Help to Buy Equity Loan for first time buyers and a New Build scheme. But these were rather limiting and did little to provide the stimulus required to prompt significant activity in the housing market.

A healthy housing market is so important to the wider economy that the Government has now extended Help to Buy to everyone. In essence the government will act as a guarantor to the lender for 15% of the value of a property purchase up to £400,000 in Scotland (as long as you do not own any other properties), meaning that most people will now be able to secure a loan with just 5% deposit, subject to other lending criteria such as earnings and credit-worthiness. There is no complicated application paperwork required – that’s all taken care of by the lender.

During these times of continuing low interest rates and property values already starting to show signs of a recovery, this could turn out to be the last chance for those who thought they might never have been able to get a foot on the rung of the property ladder or indeed those who felt trapped by falling house prices and reducing equity.

So 2014 might just turn out to be one of those pivotal moments for the British property market after all!

December 2013 : Don't wait til spring!

As we find ourselves in the middle of the dark winter months, there is usually the feeling that it would probably be best to wait until the spring before putting your property on the market. After all, spring is traditionally associated with a time of change and this has always had a bearing on the property market.

However, we would urge some caution on this. Firstly, serious buyers do not give up over the Winter, and can even become frustrated by lack of choice as many properties are withdrawn from the market over Christmas in the mistaken belief that nobody will be looking at this time of year. You can take advantage of this temporary imbalance of supply and demand by being one of the properties that is actually new on the market! Whilst viewing activity may be slightly less frenetic, you can be assured that every viewing will count, as you will only be dealing with serious buyers.

Many sellers will inevitably wait until the spring before putting their property on the market – which could flood the market and potentially thwart prices. However, the current backlog of frustrated buyers are already looking today.

So if you are contemplating selling in the next 6 months, we suggest you take advantage of the situation, be strategic, and position your property for an early sale at a time when demand is likely to outstrip supply – which is about now! 

November 2013 : The Power of pre-marketing

There is a strong argument for creating maximum exposure for a property during its time on the market, and much of our effort and resources are spent achieving the right exposure in the right places.

However, one of the most powerful ways of securing a fast sale at a high price can actually result from minimal exposure – or rather exposure only to a select few!

It works by taking advantage of the fact that people enjoy being offered something on an exclusive basis, especially when it's a property that is “just about to come onto the market”. So we often offer our new instructions “off-market” to our pre-registered “hottest” buyers first, resulting in a number of recent sales that were never even advertised! Additionally, promoting to potential buyers that we also have properties that don’t appear on our website or any portals creates a curiosity and a feeling that the buyer could be missing out on something good. This encourages them to register with us so they can then gain access to a potentially popular property with little or no competition.

The prices achieved using this method tend to be good as well, as buyers of such a property know that it's unlikely that the seller would consider anything other than the asking price during these early days of marketing.

We find that many sellers like the idea of an initial period of quiet marketing, especially in instances of a marriage break up, a death in the family, a prominent house in a small town, financial difficulties or any other reason where people don’t yet want it to be publicly known that they are selling. The concept also reduces the risk of overexposure or of the property “going stale” on the market.

Of course, it does rely on a strong register of qualified buyers and a full understanding of their individual property brief. 

October 2013 : Buying on instinct

Recent research concurs with our own view that most buyers buy on instinct, typically viewing their eventual home no more than twice before making a decision to buy.

Buying a property certainly appears to be a decision of the heart over the head. In other words, the “I’ll know it when I see it” approach turns out to be quite reliable. 

Despite the detail offered about their property by sellers when they instruct an estate agent to market their home, buyers actually register their preferences with a very broad brush indeed. They seldom, if ever, ask what type of boiler is at the property, or if there is a double wash basin in the bathroom or an aerial point in the sitting room before viewing it. These are small details which have little bearing on whether the buyer will find the property to be a suitable home.

Once certain non-negotiables, such as price, minimum amount of accommodation, and the general location of the property have been satisfied, buyers are primarily influenced by “How does it feel?” and “Could we be happy here?”. These elements are intangible, but if the right button has been pushed, virtually nothing will stop the buyer from wanting to buy the property. 

Of course, the brain then tries to over-rule the heart, forcing the buyer to revisit the property, just to make sure. During this second viewing the buyer will take a more detailed look at the property, and may take more notice of the type of fittings and the structural condition.

The brain will usually decide whether to support the heart solely on the strength of this second visit and the buyer will either make an offer there and then, or decide against. The estate agent’s job is to facilitate the right decision.

So sellers would be well advised to remember they are selling a home, not just a building, and work with their agent to promote the lifestyle benefits of their property – not just the features. 

September 2013 : Plans for a successful sale

Few estate agents use floor plans in their property particulars, yet research by leading property portal Rightmove has shown that properties with floor plans on their website receive 60% more leads than properties without. This confirms that buyers overwhelmingly prefer them to the usual write-up and written dimensions, and there are several good reasons behind this preference.

Firstly, where several properties are competing for a buyer’s attention, a schedule with a floorplan makes an immediate impression. The layout of a property is a major consideration when choosing a new home, and cannot adequately be described by words and room sizes alone. It is the relationship between the rooms in a property that can make the difference between a comfortable and attractive home and a purely functional one. This relationship is enhanced in many instances by the latest 3D and interactive floor plans available. 

People make buying decisions on how a property “feels” as much as they consider its size. Several smaller rooms are often more practical than one impressively large one, particularly when there is a family to consider. Only floorplans can accurately relay how the accommodation actually “works” in practice, illustrating how it could complement the needs of a buyer. 

Conversely, in instances where a floor plan alerts a purchaser to a blatantly unsuitable property, fruitless viewings can be avoided. This helps to improve the ratio of viewings that actually become sales, saving a great deal of time and frustration. There are also examples of buyers having bought a property that might have otherwise appeared unsuitable, but the floorplan helped them to visualise adaptability in the accommodation that encouraged them to view.

Floorplans suggest an open approach to property marketing. No longer do buyers have to translate euphemistic “agent-speak”. After all, the agent’s job is simply to match the right buyer to the right property without recourse to flowery misdescription, saving everyone time, and reducing the stress of moving home.