Looks like the doom and gloom merchants are out in force again. But who should property developers believe? We take a look at some of the property press over the last week for hints as to where the property development finance opportunities may be hiding.
Predictions of falling house prices:
On 13th July 2010 popular money website Thisismoney.co.uk reported that prices are set to fall. They quote four leading economic “gurus” each predicting varying degrees of badness. They included:
- accountants PricewaterhouseCoopers
- the Royal Institution of Chartered Surveyors
- the Council of Mortgage Lenders.
The prediction in the thisismoney article is that property prices could remain depressed for at least the next 10 years, possibly even seeing £40,000 taken off the price of an average house by the end of 2012. The cause of this continued depression is apparently the lack of employment and the prospect of higher interest rates. No affordability to sustain current prices let alone any increase.
Actual falls in property values:
on 19th July 2010 the largest property website on the web, rightmove.co.uk reported a drop in asking prices of 0.6% from June’s figures. Rightmove state that mortgage approvals are running at about half the number of new properties being placed on the market. Supply is outstripping demand. Rightmove predicted that house prices would end the year at the same value as January 2010, therefore they expect to see the gains early in the year completely wiped out.
Property Development Funding still an option?
The general public and policy makers are naturally fascinated by the reports with some people accusing the media of talking the market down, to others saying that the basics of economics still hold true and the market has to be correct before things improve.
Property development funders are obviously concerned that they are not funding development ideas that will sit unsold for months, but believe it or not there are still quite a few funding opportunities out there for good quality developments.
There are still regional hotspots where local conditions are ripe for development opportunities. So don’t be too despondent about reports of a falling market, keep looking and keep asking lenders to consider proposals.