The Health Of The Market

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13 November 2009

Flu Season

Last week whilst quarantined to my flat-cum-lazaretto like Northern Rock sub-prime lending (with what I suspected to be bore flu; the hybrid strain of man-flu and swine-flu) I pondered, through fevered delirium and a benylin fuelled drug haze worthy of Hunter S. Thomson, how the analogy of health is a useful one when considering the market. As the market moves into the winter flu season it is a probably a good time to sling a metaphorical stethoscope around our neck and snap on the latex gloves to take the pulse of the market and reach a diagnosis...you may feel a slight pinch but I can assure you that any discomfort will be temporary.

Thermometer please...

If we consider transaction volumes to be akin to the market's temperature then any significant deviation from the long term trend, or 37 degrees, is likely to be a symptom of malady. During 2006/7 there can be no doubt that the market caught a fever; transactional volumes during this time were 25% to 30% above the preceding 3 years trading levels.

Since then fever was replaced with chills as transaction volumes fell up to 70% in prime areas such as the Edinburgh's New Town or Glasgow's West End. The current low levels are now being driven more by a lack of supply of quality property than absent buyer demand; improving conditions over the course of the year have seen more buyers than vendors return to the market. Trading is now at between 40-50% below long term levels but what is important to remember is that there is wide variation in activity within the market; think of it as the market experiencing hypothermia with activity retreating from the extremities and now concentrated in the core, or traditionally desirable market sectors. 

Lending, STAT

While the temperature may give us a general indication of market health there are numerous other symptoms which are central to monitoring progress. Mortgage lending is the essential nutrition of the property market, vital to maintaining energy levels and keeping activity regular. The good news for the property market is that there has been a gradual improvement in mortgage lending over the course of 2009 with certain lenders returning to the market and other lenders such as the Woolwich recently introducing new tiers of lending not seen since the start of the recession.

The Council of Mortgage Lenders have also recently announced an upturn in buy-to-let lending in Q3, the first increase for two years and up 10% on the previous quarter. In addition to this they have also announced a 2% increase in lending during September compared to the previous month and have also cut their repossessions forecast by 35% to 48,000 from 75,000. These indicators, combined with warming competition should be seen as positive, although further progress in this area will be needed to truly rehabilitate the market.

So how did that make you feel?

One must also remember that mental health is an important aspect of overall well-being and the Nationwide Consumer Confidence Index is the market's hour session on the couch. This index has seen a strong upturn after the depression that racked the market during the tail end of 2008 and early 2009 and notably in the past couple of months the perception of the present situation has moved to the positive showing a clear shift in attitude. 

Lets consult the chart

Other symptoms that have also shown improvement include an upturn in traffic to property websites with Experian Hitwise reporting a 4.8 per cent rise in October 2009 compared to October last year, the first annual increase for over two years. Director of Research Robin Goad is quoted as saying: "Traffic to online property websites has been recovering gradually throughout 2009, but this is the first month that we have experienced an actual annual increase". Certainly our own website has had strong traffic in the past couple of months as the graph of 'Property Schedules Viewed' illustrates.

Also showing positive signs is the RICS Housing Market Survey which has reported an upturn in supply and positive price outlook for the future.

Prognosis

The can be no doubt that the prognosis for the market has improved since its was first admitted into the Recession Ward. However recovery is still far from firm and ongoing rehabilitation is required as certain ailments linger and the Governments experimental clinical trials continue. With RBS and Lloyds businesses in Scotland being taken into the operating theatre at the moment and with news regarding the administration of Kenmore, employment and enterprise in Scotland still face many difficult challenges ahead which have the potential to impact on market recovery.

I didn't know you did that...

Rettie & Co. is well known for our ability to sell houses however our service offering is far more diverse than most of our clients realise, for example did you know that we were involved in the following...

ACQUISITION OF DEVELOPMENT SITE FOR STUDENT HOUSING & HOTEL USE
Will Scarlett, Director of Rettie & Co's Land & Development team has acquired 1-3 Baxters place twice for different clients in the last 2 years.  The 30,000 sq.ft existing building, located in the East end next to the Playhouse Theatre, was acquired by Will from Royal London for student housing operator UNITE Group plc in March 2007 for 6.05m. Following a decision by UNITE to sell the building, Will again acquired the property for a Hotel Group in May 2008 for £7.75m. The hotel group have subsequently succeeded in obtaining planning consent for a 167 bed (60,000 sq.ft) hotel, restaurant and conference facility.

WOODLAND SALE IN INVERNESSHIRE
Chris Hall, Director of Rural and Professional Services, sold over 1600 acres of Inverlair Woodland, by Spean Bridge, Invernessshire for over £2m.

CONSULTANCY ON HOUSING ASSOCIATION AFFORDABLE RENTAL VALUES
Nick Watson, Associate Director, has prepared consultancy reports advising on rents of their affordable residential portfolio.

These are just a few examples of our breadth of practice and if you think we may be able to help you please do not hesitate in making contact with us, contact details below.

The importance of your health...

One in three people develop cancer in their lifetimes and one in three people over 65 die with dementia, of which Alzheimer's is the most common form.

With this in mind and with charitable giving in Scotland reportedly down 8% year on year Rettie & Co. will be co-sponsoring the Lennoxlove House Fashion Show in aid of Marie Curie and Alzheimer's Scotland on Sunday 22nd November.

With tickets only £25, of which the full amount goes to charity, for a heady combination of fashion, whisky and wine there can be few more enjoyable ways of supporting such a worthy cause; if the likes of Ranulph Fiennes can climb Everest in his 60s to support Marie Curie having a few drams and enjoying a fashion seems like a highly more enjoyable way of doing the same thing.

For further information or to book your ticket please click on the banner or link below.

http://www.lennoxlove.com/news/stories/fashion-show-sun-22nd-november

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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