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Iom Sales Slump


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#1 Gerinako

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Posted 21 December 2010 - 12:59 PM

http://www.iomtoday....sland_1_2871337

HOUSE sales in the island have slumped by 15 per cent over the past year, according to one estate agent.

And average Manx house prices have levelled off but remain way above those in the UK.

Cowley Groves director Graham Wilson said the average house price had fluctuated between £260,000 and £350,000 for the past three years and currently stands at £298,764 – but Nationwide quoted an average UK house price of £164,381 in October.

Mr Wilson admitted it had been a ‘very difficult year’.

He said the market was now heavily stacked in the buyer’s favour and vendors had to price their properties competitively if they wanted a sale.

‘Property sales during 2010 are down on 2009 regardless of price band and healthy new listings have resulted in a market that is heavily stacked in the buyer’s favour,’ he said.

‘Having said that, it’s not all doom and gloom as locally, properties are still selling, providing they are very keenly priced and meticulously presented.

‘This activity tends to be in the £200,000 to £400,000 price range and also tends to be the recently listed property as opposed to the older stock.’

Mr Wilson said the housing market had too many keenly priced properties for over-priced houses to achieve any interest whatsoever.

He said today’s buyer’s market attracted the inevitable cheeky offers but these had, so far, been quickly refused, unlike in the UK where prices were falling steadily due to desperate vendors having to sell to bargain hunters for well below market value.

Ian Lloyd, manager of Cowley Grove’s Ramsey office, said: ‘It has been impossible to predict – the market is all over the place.

‘This year there has been no pattern to sales at all.

‘We have sold properties close to £1 million and others close to £150,000. But without any doubt at all it is definitely a buyer’s market.’

Mr Lloyd said properties in the north offered better value for money and some sold this year had gone for in some cases hundreds of thousands of pounds less than if they had been in Douglas or Onchan.

And he said that properties requiring renovation had become one of the popular areas of sales as they were often valued under market price and attracted first time buyers as well as investors.

#2 DeadLegs

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Posted 31 December 2010 - 05:26 PM

Its really coming to something when an Isle of Man estate agent doesn't put out the usual marketing b******s intended to make everyone believe its a sellers market!!

Lets summarise a future for the Isle of Man..

1. The EU has determined that a central plank of the IOM's economic strategy of tax competition does not comply with their rules of what is and what isn't acceptable, and the UK Government is agreeing and effectively saying "sort it out, don't expect us to defend you on this!". This is because most businesses pay corporation tax at 0% so long as at least 55% of profits are distributed as dividends. IOM residents then pay personal income tax on that dividend but anyone not resident on the Isle of Man (i.e. parent companies, rich folk in the EU, don't, thus maing such companies attractive tax saving vehicles for The Monied. The IOM Government will be forced to act so expect the tax advantage removed if they can't produce another bit of clever smoke and mirrors.

2. The UK Government is continuing its scheduled reduction in the amount of money that the Isle of Man Government gets under the VAT sharing agreement, and the IOM Government hasn't exactly reduced its spending plans and is reluctant to reduce its spending at least until the current politicians have been voted back into office for another cushy 5 years.

3. The UK Government is under incredible pressure to reduce its own deficit and revising the VAT sharing agreement again has not been ruled out, especially as the reductions so far seem to have affected the IOM Government not a jot, while mass redundancies and programme cuts are going on in the UK.

4. The amount of money shared to the Isle of Man Government historically has allowed it to pursue its low personal and business tax agenda while spending like cost was no matter.

5. Base Interest rates are being predicted to rise to 5% (compared to 0.5% presently)

With the income from VAT share reducing, there is therefore good reason to expect rates of personal taxes and the level of the tax cap to increase, to keep the IOM Government in the black.

There is expectation that if the corporation tax rates (or dividend distribution rules) are revised to comply with EU rules about what is and isn't acceptable, the gains to the IOM Treasury may be wiped out by the effect of corporations leaving (employment especially).

There is also good reason to expect at some point the IOM Government will despite its attempts to protect the positions of incumbent politicians at the ballot box, be forced to face the fact that when the voters are expected to pay for a greater proportion of the IOM Government spending rather than the UK Government (via the VAT sharing agreement) that many will demand a reduction in government spending. With the way the IOM Government has structured its capital projects (a bit like a PFI) they may not be able to find savings there, as they continue to be contractually obligated to pay long after the project is supposedly completed... so they may look at mass redundancies, or benefits cuts (population 80k, benefits approx £200m), which again will be a big problem for the IOM economy as the IOM Government is a significant employer and eroding benefits like Mortgage Interest Relief At Source (or equivalent still available on the Isle of Man, I believe) will erode the disposable income available to people working on the Isle of Man to keep their mortgage lenders satisfied.

I therefore fully expect that many of the properties which had sat unsold for over a year on estate agent websites will continue to sit unsold, unless the sellers get real about their aspirational values. In the case of sellers who bought quite recently, they will likely have to accept a loss compared to the price they paid, but a smaller loss soon may well be better result than a bigger loss later).

I expect the numbers of properties coming to the market to continue to increase, and eventually the bubble will burst.

I expect rich tax migrants who thought they could buy an expensive flat to attempt to convince their own tax inspectors that they had moved to the Isle of Man, will regret that decision when they cannot liquidate their purchase easily or without a loss, and be annoyed when on one of their brief visits to keep up the charade, they meet their neighbours who had been installed by the Social Security because the property developer got fed up with waiting for buyer who could afford the asking price and went for a Social Security funded letting to keep the cash flow in the black.

Edited by DeadLegs, 31 December 2010 - 05:38 PM.


#3 DeadLegs

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Posted 31 December 2010 - 05:45 PM

Sorry, just in case there are any pedants reading.. I believe it was a working group that reports to some important body of the EU called ECOFIN that made that determination according to their published criteria of what is and what isn't acceptable. And I'm an outsider speculating, I have no inside or privileged knowledge. All Errors and Omissions, IMHO.. etc.

I will add that I've personally noted properties given aspirational values of £350k being sold subject to contract for close to £100k less... but still not completing for months and months and months!!

#4 Gerinako

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Posted 05 January 2011 - 09:21 AM

Good post deadlegs.

As an other point; I have a safe job here, all my friends are here, and due to rental/property prices im forced to live at home still.
(I could comfortably afford rent on a property now but I wouldn't be able to save a deposit to buy in the future - big negative to me)

This has led to me deliberating on whether I should move off island once I've saved a reasonable sum, I'm still undecided but it's definitely an option
And I know I'm not the only one considering it having discussed it with a few others!

Edited by Gerinako, 05 January 2011 - 09:22 AM.


#5 DeadLegs

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Posted 27 March 2011 - 09:15 AM

..A little update.. I was listening to some Estate Agents trying to explain why they were making such half hearted attempts to steer the sellers towards more realistic asking prices. It boils down to every now and again, a property that has sat unsold for four years or more goes at full asking price because some rich bugger from Africa has turned up and bought it in a hurry. So the "exceptions" are keeping them from adapting their marketing strategy to the current reality of stagnation, looming interest rates and tax hikes, or anticipated job losses. Pity the sellers who are accepting this idiotic strategy when the tipping point is past and the iom property market hurtles headfirst into reality. Plenty enough owners have told me that their homes have been sat on the market for years and its them who suggest reducing the asking price to get some interest, not their Estate Agent (and then is it enough of an adjustment in asking price?) or have sold their houses subject to contract several times but then had the buyer think again, revise the offers down and then walk away because the seller was too optimistic.

There also still appears to be a problem with some sellers still viewing the IOM property market as if it were still as it was five years ago, with properties coming on the market at outrageous asking prices despite significant problems of damp, roof problems and other significant defects. In those days there was a significant under supply of properties and even properties requiring many hundreds if not tens of thousands of pounds of work would sell at asking price.. BUT THERE IS NOW A GLUT OF UNSOLD PROPERTIES STAGNATING ON THE MARKET!

The estate agents like to claim that even if the prices were adjusted downwards that the sales would still not materialise but economics 101.. just as during periods of under supply the achieved prices rise to suit current market conditions, in a period of sustained over supply, prices fall to suit market conditions. There are buyers and sales to be achieved in a Buyer's market but not at the prices that suited a Seller's market!


The IOM Government has in its schizophrenic way begun to acknowledge its spending unsustainably with statements made opposing suggestions that fuel duty be cut by 5p a litre when before the recent UK budget it was being considered for the benefit of rural areas. Still, the minor redundancies they solemnly announce seem to be ones where job positions are lost without reductions in actual total headcount.. employees are moved from one department into empty posts in another department, and then the vacated post in the first department gets declared redundant and the press release declares redundancies arisen as a response to cost saving reorganisation of the civil service.

Incidentally after the recent manx budget, a few people spotted that while apparently dodging the EU's objection to the 0/10 corporation tax rules (they believe) by ending the requirement that at least 55% of company profits be distributed each year (so apparently removing the disadvantage any iom shareholder had relative to a non iom shareholder in taxation on dividends received), that since there is now no need to distribute dividends you may be able to use a company as a tax free savings vehicle -- expect the accountants working for the rich to notice that!). The top tax man says he will ensure adequate tax avoidance measures are in place to prevent this.. and if so, won't that just mean the EU will continue to have legitimate objection to the 0/10 corporation tax rules??

- the IOM government is in my opinion carrying on spending about £50m more than its income, using the reserves to fund the difference (at least until the election later this year). Unless the structural problems in the IOM Government taxing and spending strategy is addressed, eventually this reserve will be depleted. When the tax man comes looking for the money, and home owners cannot quickly liquidate their homes to move to a lower tax environment, or a more economically sustainable environment, the tax man will metaphorically be shooting fish in a barrel. Well they'll be able to send bailiffs in to seize properties for auction if tax bills are not paid voluntarily... Even forming a company to route all your income through may not work for long, as the IOM Government might introduce a land tax or equivalent (no, I've not heard any rumours but is it ruled out??). Why not once the politicians have been safely voted in for another term?

#6 DeadLegs

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Posted 27 March 2011 - 09:25 AM

Good post deadlegs.

As an other point; I have a safe job here, all my friends are here, and due to rental/property prices im forced to live at home still.
(I could comfortably afford rent on a property now but I wouldn't be able to save a deposit to buy in the future - big negative to me)

This has led to me deliberating on whether I should move off island once I've saved a reasonable sum, I'm still undecided but it's definitely an option
And I know I'm not the only one considering it having discussed it with a few others!


I feel for you G. What the people of the IOM really need are more affordable homes for rent, since that would allow proper mobility onto and off the island when needs require it. Corpy homes for families that need corpy homes, not for families where every adult is in a well paid job, has a nice car, goes on lovely holidays each year, buys all the current gadgets, has a sky subscription, and even owns a couple of other properties for let. But those people have votes and are grateful to the politicians who make things so!

#7 Gerinako

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Posted 01 June 2011 - 10:27 AM

Saw the first bit of desperation creep in on the FTB bracket.

5% Cashback on sale price on completion.

#8 Gerinako

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Posted 15 June 2011 - 08:03 AM

http://www.rightmove...g&sc_id=5451089 Hahahaha.....no f'in chance

#9 DeadLegs

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Posted 04 August 2011 - 05:38 PM

Saw the first bit of desperation creep in on the FTB bracket.

5% Cashback on sale price on completion.


..don't see why this might be better than just accepting a lower offer... as I presume accepting a lower offer means less estate agent fees, lower borrowing, smaller conveyancing fees, lower stamp duty.. and one less round of money changing hands.

#10 Simon Brown

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Posted 06 August 2011 - 05:14 PM

I sold a house on the IOM (aka the Rock) a month or two ago. The market is collapsing, the idiot politicians try to do everything they can to keep the market going but it's crash time.

Pull out while there's time...

#11 DeadLegs

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Posted 01 September 2011 - 09:15 AM

http://www.bbc.co.uk...of-man-14715863

However word from a relevant internet gossip site is that estate agents are RAISING their valuations on properties that are not selling! I suspect there are still enough estate agents who have a rather unconventional view of the way prices move in a depressed, stagnant and over supplied market.

#12 Gerinako

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Posted 01 September 2011 - 02:08 PM

Sales down 1/3 from this time last year http://www.iomtoday....third_1_3731584

#13 DeadLegs

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Posted 01 May 2012 - 12:37 PM

I'm hearing that house sellers who are getting fed up with no viewings are withdrawing their properties from sale so that they can either place them back on the market later as a "fresh" offering or so they can put them to the lettings market instead. The Isle of Man Government hasn't even started to address its spending in any meaningful way.. I don't think the market is likely to recover for many decades after if eventually reacts to reality..

#14 sonswan

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Posted 04 May 2012 - 12:42 PM

I'm hearing that house sellers who are getting fed up with no viewings are withdrawing their properties from sale so that they can either place them back on the market later as a "fresh" offering or so they can put them to the lettings market instead. The Isle of Man Government hasn't even started to address its spending in any meaningful way.. I don't think the market is likely to recover for many decades after if eventually reacts to reality..


Deadlegs,

I agree with you - but is it just me or have we not actually seen a significant correction yet in the housing market here (here- assuming you are a resident!). Yes we have seen some falls but sellers as your comment would also suggest appear to be fairly stubborn at present despite things not moving.

I just wonder when we are going to see some real reduction in prices. You would think with bad jobs news recently, the state of government finances etc that the valuations may have come down more substantially by now. Seems to be taking a long time to filter through.

Any thoughts?

#15 DeadLegs

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Posted 13 June 2012 - 03:05 PM

Deadlegs,

I agree with you - but is it just me or have we not actually seen a significant correction yet in the housing market here (here- assuming you are a resident!). Yes we have seen some falls but sellers as your comment would also suggest appear to be fairly stubborn at present despite things not moving.

I just wonder when we are going to see some real reduction in prices. You would think with bad jobs news recently, the state of government finances etc that the valuations may have come down more substantially by now. Seems to be taking a long time to filter through.

Any thoughts?


In my opinion, some houses on the market are owned by people who don't need the money, so they are prepared to wait (the stock market is a bit volatile and interest rates for depositors are low, and its not their only home). Other houses were purchased with a mortgage, and while repayments are not too high, they can afford to keep up the repayments rather than take a loss on the sale. On a similar vein, if they purchased near or at the top of the market, unless they are being forced to sell quickly, they probably feel entitled to the same money back. In many respects the Isle of Man has been a pretty good place to leave a house unoccupied for long periods with little risk of someone vandalising it, stripping the copper, lead, roof slates etc or squatting in it.

I agree that we have yet to see the penny drop.. although the Chief Minister has made statements that should send shivers down the spines of its civil servants, the government seems to have held off from significant redundancies and made up the shortfall in its income from its reserves. I'm guessing what they are hoping that by incrementally reducing head count, the Isle of Man economy will not experience a SUDDEN change. In my opinion, it is a flawed policy, as unless the lost income can be replaced, by the time the reserves are spent, it will still be in the position of needing to make harsh cuts and increase taxes, except it won't have reserves to use for any UNANTICIPATED eventualities. I understand the plans that are currently being proposed and aired in the local media are pie in the sky, because they expect growth of 6% each year. I also note the central government has been increasing every licence fee, duty and charge it can, and begun shifting responsibility for some things onto local commissioners etc.

Part of the blame for the lack of downward pressure in agreed prices has got to come from potential buyers who I expect are being too generous in their offers when they make them, or are being frightened off by the asking prices and not bothering. I would also blame the Estate Agent valuation professionals for allowing owners to have unreasonable expectations. An agent told me that owners are asking for valuations from different firms and asking for the property to be marketed at the highest one, frequently exclusively with the firm that came up with that valuation because of the discount offered in fees. I once went to view a property, hated it, decided the asking price of half a million was far in excess of reasonable, so offered around 250k. Not surprisingly the owners rejected my offer (phew!) but it made them think again about what was reasonable, and I recall that not long after, they accepted an offer approximately half way between what I had offered and what they had originally aspired to. I still would not want that property at the price it sold at.

At the moment I'm happy with the flexibility of renting, as more unsold properties transfer to the lettings market, so there should be a downwards pressure on letting prices (but again, similar aspirational prices being encouraged by the agents I think... lots of empty lets!). If I need to leave, then I won't have to wait for someone else to buy my house. Actually, I wonder are mortgage lenders accepting Isle of Man properties as collateral against new purchases in the UK?

Perhaps the next budget we will see more CS cuts, and less mortgage relief /social spending which will affect peoples willingness to take on large mortgages. Certainly the price freezes on electricity will be expiring round about then...




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