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Ignorant Steve

Knight Frank - Heart Of England Local Views

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Received the Knight Frank Local View magazine over the weekend. We bought through KF so are on their mailing lists as quality upstanding pillars of the community.

Their various offices based in Gloucestershire, Warwickshire, Oxfordshire, Worcestershire and Birmingham are all given space for a review of the current market.

Makes fairly interesting reading.

The overall impression given is that this summer has seen 40% more activity than last year with most buyers spending cash. Very limited supply of the best property is leading to sealed bids and often above guide price deals. However almost all offices state that this is unlikely to continue next year. Supply expected to rise and demand remain static or fall. No sign of market recovery until 2011 is the consensus from KF.

Lots of offices quoting average falls from peak 15% in the best areas to 25% in the more remote areas.

Current buyers were mainly entrepreneurs and board level directors. Professions such as accountancy and solicitors are not yet buying in great numbers.

Hardly any distressed sales occurring.

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Hardly any distressed sales occurring.

Surely this depends upon what you call a distressed sale.

To me, a sale on death/divorce is a distressed sale and I can see no reason why the number of these is going to change year on year.

But if you define distressed sales as just those caused by people not being able to afford the mortgage, then it might be correct to say that there are few of them.

tim

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Surely this depends upon what you call a distressed sale.

To me, a sale on death/divorce is a distressed sale and I can see no reason why the number of these is going to change year on year.

But if you define distressed sales as just those caused by people not being able to afford the mortgage, then it might be correct to say that there are few of them.

tim

The latter is my understanding of a "distressed" sale, ie the seller doesn't want to sell, but is forced to for reasons of financial "distress".

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Hi Steve

Perhaps it is important to note that in the main Knight Frank sell rather expensive properties. Of the 380+ properties they have for sale in the West Mids, only 25 are for sale at less than £200k.

I have always felt that the bottom end of market suffers before the top end. I guess it makes sense. In a recession I suppose it is usually blue collar manufacturing / retail / distribution employees or lower paid workers that get hit the most.

My theory is that in a recession, there is less vertical manoeuvering in the housing market; instead moving has more of a horizontal aspect. This means that the higher end is protected from the knock-on effects of the falling prices in the lower end of the market. But over time, the effects of falling prices in the lower end eventually feeds through. As such, there is a lag in the relationship between price movements of houses in different price brackets.

The lower end of the market is really struggling in Coventry. I use one street in particular as my bellweather. It is a street that i have identified as the kind of house the average person on an average wage (£22-23k for Coventry) could afford.

Last year there was 3 or 4 houses all up for £155 - 156k. Up for ages and no sale. Some have shifted now - All £120-130k. New instructions are coming on at £110-130k.

My guess is that anyone wanting to buy a 3 bed terrace in an average area should be looking for a time when a house in this street can be bought for £80k. But if you are looking a little further upmarket, then it could be another 12-18 months after this point before buying makes sense.

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Hi Steve

Perhaps it is important to note that in the main Knight Frank sell rather expensive properties. Of the 380+ properties they have for sale in the West Mids, only 25 are for sale at less than £200k.

I have always felt that the bottom end of market suffers before the top end. I guess it makes sense. In a recession I suppose it is usually blue collar manufacturing / retail / distribution employees or lower paid workers that get hit the most.

My theory is that in a recession, there is less vertical manoeuvering in the housing market; instead moving has more of a horizontal aspect. This means that the higher end is protected from the knock-on effects of the falling prices in the lower end of the market. But over time, the effects of falling prices in the lower end eventually feeds through. As such, there is a lag in the relationship between price movements of houses in different price brackets.

The lower end of the market is really struggling in Coventry. I use one street in particular as my bellweather. It is a street that i have identified as the kind of house the average person on an average wage (£22-23k for Coventry) could afford.

Last year there was 3 or 4 houses all up for £155 - 156k. Up for ages and no sale. Some have shifted now - All £120-130k. New instructions are coming on at £110-130k.

My guess is that anyone wanting to buy a 3 bed terrace in an average area should be looking for a time when a house in this street can be bought for £80k. But if you are looking a little further upmarket, then it could be another 12-18 months after this point before buying makes sense.

Yes Knight Frank are only top end. I thought the general tone of the magazine chimed rather well with most of the comments on this forum as to how the market has performed over the last few years.

I'd assume that the better houses in the best locations would fall first and recover first. This is certainly true in London.

So if KF are only seeing a recovery in 2011 for their types of property then the average 3 bed in Coventry may well continue on reducing and not recover for many years.

Ages ago I was predicting average falls of 10 - 15% across the country, but saying poor quality houses in places like Stoke (or Coventry) would fall by up to 70%. So by that metric an average place in Cov may well fall 40%.

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I have it on reasonably good authority that Savilles in Salisbury have increased the number of agents dealing with repos from 2 to 22 in the last year or so.
Savills in Salisbury have 22 agents dealing with repos. Er no. You may have got that Savills in Salisbury told you Savills now have 22 agents dealing with repos (and sensibly, it makes sense to have more than one agent per office versed in repos), but 22 in one country office - yeah right. I bet they've not even got 22 agents in that office.

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