Beware of great expectations
This current property market in Cornwall has to be one of the most frustrating and confusing I have ever experienced in my 20 years as an estate agent in Cornwall. One week the market seems quite busy, the next very tough indeed. And so this pattern continues. In fact, never before I have worked quite so hard with so little to show for it!
So why is this? Well, the strong London market is skewing the statistics for the UK market as a whole. Include London in the whole picture and UK house prices are rising at about 5-7% per annum. Remove London, and prices in the rest of the country are still down more than 10% on a few years ago. Following these largely misleading statistics, many commentators have embarked on much "talking up" of the market, which is starting to push up asking prices.
Let's forget sellers for a minute and consider the buyers. The employment market is still tough and wages are falling, or static at best. So when you add all this up, there is quite a gap between the sentiment of buyers and that of the sellers. Sellers are fast becoming bullish, but the buyers are still largely bearish. This is what is still suppressing activity outside London and tells a lot about the direction of the market. When activity and prices have taken off in previous cycles, this has been driven by demand from buyers. Generally, what slows down a market is when sellers get greedy.
So what should we take from all this in Cornwall? Well, in a way, all the positive comment on the property market is in fact slowing it down, because all this optimism is pushing up sellers' expectations when buyers' budgets are not growing at all.
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As ever, Cornwall is behind the curve. While London and areas within commuting distance of it may be seeing the beginnings of an economic recovery, life for many in the South West tip of England is still getting harder, rather then easier. There are public and private sector job cuts, the end of the daily London flights from Newquay have just been announced and many more factors should remind us we are still in a recession here. There are many thriving small companies in Cornwall, but these are still hard times for the majority, especially after what has been a tough year for tourism.
The bottom line is to be realistic and resist the distraction of the London-driven property-market comment – which feels far too political of late. There are still more sellers than buyers and it remains a fragile market. To date, there has been no sign of the London activity rippling out beyond the immediate hotspots within commuting distance.
Yes, that has happened in previous cycles, but here we are some two years on from the start of London's acceleration, with no sign of any ripple in the Westcountry. In my opinion, London has fast become an international urban market, where people no longer yearn for the house in the country that they once did.
Having said all this, we have seen some really successful sales in Cornwall in recent weeks, including some concluded over the guide prices as a result of competition between buyers. But, without exception, the sales have come as a direct result of realistic pricing and a well-planned marketing campaign.
When you strip away all the comments and the sometimes misleading statistics, it really is as simple as that!
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