There are regions to be cheerful – for some

Despite mounting evidence that the housing market is stabilising, some areas are still in a downbeat mood. Meanwhile, people suddenly want to be property developers again …

Anne Ashworth

The MPs expenses scandal provided the nation with interesting insights into other people’s often strange interior tastes. But the reforms that will result from these examples of taxpayer-funded purchases of £620 chandeliers and the like have not been the only consequence of the affair. The media’s preoccupation with politicians’ second homes meant less coverage of the prices of all properties. In the absence of the unremittingly dispiriting headlines of previous months, people felt able to come to their own conclusions about conditions in their neighbourhoods. It appears that many started to think that it was time to buy.

This not-much-news-is-good-news explanation is the reason given by some estate agents for the stabilisation of the housing market in May. In fact, the mood had begun to change some months before, though the Communities and Local Government (CLG) index for May does show the average pace of decline definitively slowing — even as the reputation of MPs took a downward turn.

But the CLG numbers and Chesterton Humberts’ June poll of polls, released this week, also illustrate why some homeowners are baffled by recent headlines indicating signs of recovery. A shortage of supply is supporting prices. However, this scarcity is most acute in London and the South East. While prices may be rising in 52 per cent of local authorities, the climate remains chilly in unemployment-affected parts of the North, the Midlands and Wales. For sellers in these areas, reports of recovery seem greatly exaggerated.

These regional differences are set to be one of the key characteristics of the market for some time. The determination among buyers not to overpay is another. In the latest survey from the Royal Institution of Chartered Surveyors, Peter Hayward, of Hayward Tod Associates, in Carlisle, describes overpriced homes as “invisible” to potential purchasers.

One manifestation of the determination to secure a bargain is the new demand for what Americans euphemistically term a fixer-upper and the British call a wreck. David Adams, of Chesterton Humberts, discerns a reluctance among buyers to foot the bill for someone else’s refurbishment; instead, they see a wreck as a way to build up equity. As a result, they are offering 5 per cent below the asking price for a “renovator” (another US euphemism) but are often forced by competition to pay the asking price. Last year successful offers for fixer-uppers were as much as 15 per cent below asking prices.

Jeanette Winterson, the novelist, is restoring a wreck in the Cotswolds. This project is a labour of love. By contrast, Adams suspects that some of those currently chasing renovators are people who have lost their jobs and see development as their next career. He wonders if they are aware that, “in a rising market, you can do up a property and sell it for much more than the equivalent in the same street. You cannot do this in a flat market”. Those MPs who were caught up in the second-homes scandal and may soon need to find other employment should be cautious about relying on the joy of wrecks.

Bold move by Boris Boris Johnson, the Mayor of London, this week referred to his £250,000 fee from his column-writing second job as “chicken feed”. He later claimed that he was joking. But Johnson may have been thinking about his recent purchase of a £2.3 million house in Islington, which would not have been possible on such earnings — even taking into account his £140,000 mayoral wage, which gives a total of £390,000.

In the boom, the creditworthy were easily able to borrow five or six times their salary. Today, three times salary is the norm. This means that even the handsomely remunerated can find themselves excluded from the fastreviving market in the capital’s smartest postcodes. Fortunately, the proceeds of the sale of Johnson’s previous property seem to have allowed him to make up the difference between the price and what a bank would lend.

The mayor’s recent house move seems also to have concentrated his mind on better housing for all Londoners. He has set out space and other standards to which new homes must adhere, in a statement that has, apparently, infuriated developers. Johnson has said that there will be no more pokey, new-build homes fit only for “Bilbo Baggins and his Hobbit mates”. This should be the standard throughout the UK. (Anne Ashworth, The Times).


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