Market Comment

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4 September

Back to School

As the school run resumes and the summer tan fades as quickly as the rain washes away memories of sunshine; the preoccupation for many is now turning back to the business of business. For the property market September is traditionally the start of a buoyant autumn market and following a summer of speculation that future is now upon us. So as we are carried over this seasonal threshold like a new bride, with equal measure excitement and apprehension, will the autumn market be everything we expect or will we be left disappointed?

A perusal of the numerous headlines, press releases and market data over the past month gives good grounds for optimism as we turn the leaf on another calendar month. Mortgage lending, a symbiotic indicator for the housing market, has seen approvals reach an 18 month high, with the Bank of England July figures showing new mortgage volumes passing the 50,000 mark.  

In terms of the Scottish mortgage market, the Council of Mortgage Lenders Q2 statistics have shown a stabilisation in Scottish lending, mirroring whilst lagging, national trends. A positive sign for the Scottish market is that mortgages, due to property prices, have proved to be more affordable with Scottish buyers borrowing on average 2.55 times their income compared to 2.73 nationally; in current tight credit conditions affordability is a central concern for many prospective buyers.

In terms of mortgage product, HSBC's launch of a 1.99% rate mortgage in an attempt to aggressively gain mortgage market share will be an interesting story to watch unfold both in terms of take up and other lenders' reactions.

Nationally there has been much recent press given to the continued improvement of house price indices with Nationwide reporting 4 months of seasonally adjusted growth and Land Registry figures announcing the fastest monthly growth in five years. However these indicators should be taken in the context of continued historically suppressed sales transaction volumes and a limited volume of available stock. This said improvement is to be welcomed and whilst not getting ahead of ourselves this sort of upturn is indicative of people re-entering the market and transacting; a stark contrast to much of late 2008, early 2009.

Outside the Property Market

Outside of the property market, those of you who also watch the stocks & shares will have noticed the improvement in the FTSE 100 over the past 6 months, up to over 4800, a level not seen since October last year when many shares saw a rebasing as the credit crunch ravaged their values.

FTSE 100 (Source: GOOGLE Finance)

RBS, Edinburgh's troubled son, has now seen its share price pass the 50p mark having bottomed out on January 20th this year at 10p; a dramatic day characterised with a panic and uncertainty that now seems far removed from current conditions. In many ways the performance of the FTSE or RBS can be seen as similar to the property market; things are better, the worst of the trauma appear to be behinds us but we should not fool ourselves into thinking that good times are back; instead we should look for stability whilst hoping for sustained modest growth in the coming months. 

This caution is reflected by our Darling Chancellor as he enters the G20 under the threatening pennant of 'Double Dip Recession'; but whether talk of 'obstacles' and 'risks' to recovery will influence our continental bedfellows of Merkel and Sarkozy will have to be seen as they have already emerged from the darkness of recession. Without being swept up in a jingoistic competition with our European rivals companions, this advocation of caution should be taken seriously as there are certainly challenges ahead, however, there seems to be enough confidence in the government to continue with fiscal tightening over the course of the year as the higher rate of tax is introduced, fuel duty is increased, the stamp duty holiday lapses and VAT returns to its higher rate.

While there are continued issues with mass market operation relating to mortgage lending and unemployment we have seen a stirring in the market as those able to act are now recognising that in all likelihood the market nadir has been and gone and now represents a window of value before competition significantly builds within the marketplace. From a vendor's point of view we have also seen decisions that had been put on ice over the past 18 months now being enabled by the combination of life-stage pressures, improved stability of employment and financial position; as well as the realisation what is lost from one hand, can be reclaimed in the other.

45th Anniversary of the Forth Road Bridge

The Forth Bridge was officially opened 45 years ago to the day. The BBC has a short film on their website which includes time lapse video showing the movement of the bridge under traffic flow & weather.

http://news.bbc.co.uk/1/hi/scotland/8236685.stm

Contact Us

If you have any questions, would like any further information regarding the above content or would like to discuss how the Rettie & Co. Consultancy & Research Team can help your business, please do not hesitate to contact:

Andrew Meehan
Researcher
t: 0131 624 9051
e: andrew@rettie.co.uk
 

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