Market Forecast 2010
15 January 2010
THE OUTLOOK REMAINS CHANGEABLE
As the snow retreats and schools reopen, our fixation with forecasts can now
turn from the meteorological to the mercantile providing a potent opportunity
for failure, after all it was Einstein that stated, "There is not the slightest
indication that nuclear energy will ever be obtainable", and Wilbur Wright who
declared that "Man would not fly for 50 years", two years before his maiden
flight.
More recently Gordon Brown's declarations in June 2007 that "we in Britain
have moved beyond the old stop-go economic instability of the past" seems as
mistimed as Irving Fisher, Professor of Economics at Yale University's,
statement in 1929 that "Stocks have reached what looks like a permanently high
plateau."
How then should we approach 2010? It is said that to know your future, you
must know your past, but then Black Swan theory illustrates that looking to the
past does not protect from the unknown; and as recent years have shown even
having an army of economists, analysts, supercomputers, the accumulated
experience of history and the theories of brightest minds, both living and dead,
is no guarantee of omniscience.
So with market forecasting apparently remaining a dark and arcane art beyond
the grasp of governments and corporations and having exhaustively trawled
through market data, economic statistics and research reports I resolved to
remove the element of uncertainty by seeking a professional futurist.
Unfortunately, even the tarot reader I contacted would not commit to a forecast
for property market in 2010 despite the lure of her palm being crossed with gold
at 700 GBP/oz.
The problem facing those trying to make predictions for the coming year is
the small niggle of uncertainty; uncertainty regarding the economic recovery;
uncertainty regarding the election; uncertainty regarding the return of lending;
uncertainty regarding interest rates and so on....and for these reasons there is
not only a broad range of opinion between commentators but also a broad range of
opinions from commentators - so while the wintery weather may be clearing, the
outlook from property commentators remains changeable. Below is the menu for
your perusal...I am sure you will find something you like.
To contribute your opinion, and to see what others predict for the market in
2010, please click on the link on left hand menu at the top of the page.
THE DIRECTORS CUT
The visions of our Department Directors
MARKET OVERVIEW
Simon Rettie, Managing Director.
'Traditionally January is a busy time in the property market in Scotland as
sellers make the New Year's resolution to move. Economic conditions aside it has
been proven time and again life must go on. People get married and divorced;
have children and send older children off to university etc. After nearly two
years of relative cautiousness there is a level of constrained demand built
up.'
'It remains to be seen how projected increases in unemployment figures and
further redundancies play out and to what affect. Encouragingly investors are
still re-entering the residential and buy to let property market in Scotland
especially in city strong-holds like Edinburgh's New Town, Glasgow's West End
and Aberdeen.
'The greater recognition of quality will persist within established popular
locations with easy distance of Edinburgh such as Elie, St Andrews, Gleneagles,
Dunblane, Bridge of Allan and rural Perthshire attracting the greatest ease of
sales. Out-with Glasgow locations such as Kippen, Killearn, Drymen, Strathblane
and rural Stirlingshire will remain extremely desirable in 2010 while in
Renfrewshire Lochwinnoch, Kilmacolm will continue as popular locations and
elsewhere in Greater Glasgow Thorntonhall, Stewarton and Bothwell are also
predicted to fare well.'
RESIDENTIAL SALES
Tony Perriam, Director of Residential Sales, (0131 624 9040)
has a positive view for the prime market in 2010.
"We expect to see strong market activity in prime areas in the first quarter
of 2010 from impatient buyers and by the end of the year we expect prices in
these locations to have increased by up to 5%. However, in less accessible or
fringe areas we expect prices to remain static supported by a gradual easing of
mortgage supply as lenders become more competitive.
There is a danger of over-supply of available property if the election
creates "pause for breath" at some stage between March and May leading to more
difficult second quarter and there may also be continued heavy weather for
investors with continued lack of "Buy to Let" mortgages and anxiety over CGT
increases."
LAND & DEVELOPMENT
Will Scarlett, Director of Land & Development, (0131 624
9041) expects funding for development to remain a major challenge in 2010
despite the weight of cash building up with the major funds in the commercial
market seeking scarce Prime Investment stock.
"We anticipate further action taken by banks on a number of property firms
may lead to increased liquidity and transaction levels. Now that we are over 18
months into the credit crunch we see evidence that banks have got their own
house in order and are now in a position to take decisions; equally where
administrators have been appointed, their labours are beginning to bear fruit.
PLC house builders are tentatively returning to the land market, albeit
largely on a phased payment basis. The market for stone built, well-located
conversion properties remains active. We expect a number of small to medium
sized developers to return to the market if they can source funding.
In summary, for those with finance, significant buying opportunities will
exist in 2010."
NEW HOMES
Matthew Benson, Director of New Homes, (0131 624 9031)
states that at present new build housing starts in Scotland are being supported
by the Affordable Grants budget.
"This figure is substantially forward spent for 2010/2011 and the resources
for grants are going to come under increasing pressure as will all aspects of
public sector spending.
Unfortunately we project a further round of redundancy and constriction in
the house building sector as these strains on cash flow continue to affect
balance sheets."
RURAL MARKET
Chris Hall, Director of Rural Sales, (0131 624 4074) expects
the estate market to remain sluggish unless the offering is exceptional.
"Buying an estate is a discretionary purchase and it is not only the purchase
price that needs to be funded but the ongoing annual ownership cost which is
typically in excess of £100,000 - £200,000 often in post tax income.
In 2009 only five estates were offered for sale in the open market in
Scotland and three remain unsold. The farmland market will be slower than in
recent years despite continuing restricted supply and closing dates will only
feature with the best farms and small stock rearing units; out-with commuter
zones will see longer selling periods.
Residential property north of the forth will depend on general levels of
supply - if the restricted supply of around 50% of norm persists then demand and
supply will remain in balance but increased supply could create longer selling
periods and downwards price pressure on secondary quality property."
LETTINGS
Diarmid Mackenzie Smith, Director of Letting, (0131 624
9036) sees continued uncertainty in the job market, the lower end housing supply
and mortgage availability may fuel demand for rented accommodation in 2010.
"The election may spread fear of commitment to mid to high level rents with
tenants looking to rent in the lower end of the market.
An anticipated early year increases in supply of properties to let is
expected to feed a Spring recovery in demand from currently low seasonal
levels."
RETTIE & CO. HERALD COLUMN
This year in an attempt to share our property knowledge and experience with
the masses we will be contributing a fortnightly column to The Herald's property
magazine, Scotland's Homes.
The first issue, out this week, considers the property market's New Year
Resolutions for 2010. If you have any comments or suggestions please do not
hesitate to make contact in contacting me.
TWITTER
To follow Rettie & Co. on Twitter click the blue button.
WITH HINDSIGHT...
"This 'telephone' has too many shortcomings to be seriously considered as a
means of communication. The device is inherently of no value to us." -- Western
Union internal memo, 1876.
"Drill for oil? You mean drill into the ground to try and find oil? You're
crazy." -- Workers whom Edwin L. Drake tried to enlist to his project to drill
for oil in 1859.
"Airplanes are interesting toys but of no military value." -- Marechal
Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.
"Radio has no future. Heavier-than-air flying machines are impossible. X-rays
will prove to be a hoax." -- William Thomson, Lord Kelvin, British scientist,
1899.
"We don't like their sound, and guitar music is on the way out." -- Decca
Recording Co. rejecting the Beatles, 1962.
"The Americans have need of the telephone, but we do not. We have plenty of
messenger boys." -- Sir William Preece, chief engineer of the British Post
Office, 1876.
"They couldn't hit an elephant at this dist..." -- Last words of Gen. John
Sedgwick, spoken as he looked out over the parapet at enemy lines during the
Battle of Spotsylvania in 1864
"That virus is a pussycat." -- Dr. Peter Duesberg, molecular-biology
professor at U.C. Berkeley, on HIV, 1988
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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