sonswan, on 04 May 2012 - 12:42 PM, said:
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.
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...