Musings of a London Property Finder

A month ago Anthony Bolton, frequently named ‘Britain’s leading fund manager’ gave an interview to Bloomberg predicting an end to the bear market and said that we are now at the beginning of a long running bull market. 

His reasoning is essentially that from his analysis of previous bear markets, in terms of length and severity, he believes we’ve passed the low point.  He regards sentiment as being at a low not seen since the 1970s, despite some recent improvements and that this has led to investors holding historically high cash positions.  Money market funds in the US are now half the size of the stock market, compared to just 20-25% in previous lows.  Further, on many metrics, stocks are on historically low valuations and he rejects the view that it’s different this time, and that we need to throw away what we’ve learned over the past 35 years. Specifically, he does not expect the S&P 500′s low of 666 to be revisited, and anticipates this rally lasting for several years. 

Bolton has been bullish about pretty much all sectors, including property and questionned the wisdom of holding only traditional ‘recession stocks’ such as government bonds.

This morning it seems rival fund manager Invesco Perpetual’s Neil Woodford has dismissed this view, warning that the downturn has ‘a hell of a long way to go’.  His reasoning is that economic recovery won’t occur until both the UK and global economies have rebalanced, which means reducing leverage and rebuilding the banking system to a point where it is prepared to lend to businesses again.

‘My view is the problems that led to this recession - problems of excessive leverage in the consumer economy, excessive leverage in the banking system - have not been corrected at all,’ Woodford said.

‘There’s been no discernible, no significant increase, in consumer saving. There’s been no rebuilding of balance sheets effectively in the personal sector.  If anything, leverage has increased in recent months and arguably because of course there’s been a fall in asset values and a fall in house prices. So there’s been no paying down of debt. The banking system has to some extent reduced its leverage but I believe it has a hell of a lot further to go.’

Certainly both views are based on truth and this London Property Finder firm certainly won’t be pitting their wits against these two city heavy weights, except to say that there still seems to be a great deal of cash sloshing about, certainly in property, both from within the UK and in-bound as foreign investors pile in.  Who can blame them?  They smell bargains when the Brits stop buying and sterling falls.  As we all know, many fortunes are made out of a recession and the canny are keen to invest where they see value. 

It is true that Joe Bloggs is probably more highly geared than he was 18 months ago, but then it’s unlikely he is going to get us out of the recession, except for the fact that he keeps spending and helping businesses to grow and banks to keep lending.  Also, we work closely with several banks and anecdotally they seem to be lending where the business plan stacks up and they think they are going to get their money back.  And that’s the point.  The mood seems to have changed, people with cash can see opportunities and they know they need to invest to keep their money working.

In my capacity as a London Property Finder, not a week goes by without me spotting a truly amazing bargain and if I had any spare money, I would certainly be shopping and it wouldn’t be shoes!

Technorati Tags: Bottom of the market?, London house price crash, London House Prices, London Housing Market, London Property Finder, London property prices

Tags: Bottom of the market?, London house price crash, London House Prices, London Housing Market, London Property Finder, London property prices

Cautious joyful musings of a London Property Finder

London house prices rose by 1.4% in April according to the Land Registry, our preferred house price index, which published it’s monthly statistics today.  For a Property Finder like me – that is good news as although we don’t expect sustained marked increases this year.

Leading the way was Newham, showing a 3.2% increase in sold prices since March, closely followed by Olympic borough Hackney where prices have increased on average by 2.8%.  Westminster saw the greatest monthly price fall – agreed house prices fell by 2.7% there.  The Royal borough – Kensington and Chelsea to you and me saw prices rise 0.6% month on month.

Despite the gloom and scaremongering of the mainstream press from August 2007, house prices in London didn’t start to fall until April 2008.  In Kensington and Chelsea it didn’t really start until August 2008, although the number of buyers fell sharply as soon as Northern Rock fell in September 2007.  So now we have had a full year of falling prices, London prices are down overall by 14.3% – far from the 25% – 45% predicted by many.  Hillingdon has borne up best overall over the last year, with prices falling by 11.9%, which is almost half the depreciation suffered by Tower Hamlets, where prices have fallen 21.6% in a year – the worst in London.

So what will happen now?  While we still feel that parts of the UK are over-valued, Scotland in particular, the view of many pundits is that house prices will now wobble along for a while, with some predicting a bounce early next year.  In our view stabilisation is good.  This time, London and country house prices have been sustained predominantly by the demand of foreign buyers paying in foreign currencies which have held up well against the pound.  There will always be a demand for London property, and with demand and a shortage of supply, there is always a market.

We have also seen a significant increase in enquiries from buy-to-letters and first time buyers.  Sadly, not everyone in these groups is likely to use a London Property Finder but it is at least anecdotal evidence that confidence is returning to the market and those with a decent deposit can get finance.

Technorati Tags: London House Prices, London Property Finder, London property prices, London sold prices

Tags: London House Prices, London Property Finder, London property prices, London sold prices

Musings of a London Property Finder

Well if ever there were green shoots in the London property market they have shown their true colours today.  Attendees of the Savills auction in South Kensington emitted a collective gasp as a 2 up 2 down in Portobello Road in Notting Hill was sold for £908,000 - that is £8,000 more than a similar property was sold for in October last year, since when prices have apparently tumbled.  Given that the house apparently needs near enough £100,000 spending on it – the only assumption that can be made is that the new owner believes the only way is up, or it is their dream location. 

We also highlighted 2 Brayfield Terrace which sold for £458,000, which is probably about right given that other houses in the road sold for about £100,000 more in 2005 and 2006 and it is a great location.

Another gem was 102 Old Charlton Road, sold for £275,000 at auction today.  It was a great buy when we tell you that according to ourproperty.co.uk, the one across the street was sold for £399,000 in July 2007.  2 others were sold in 2007 for nigh on £400,000 and another was sold for the same price a year earlier.  Number 70 was sold in November 2008 for £290,000, £15,000 more but it doesn’t look as nice – it’s one of the ugly ducklings on a largely Victorian Street, so will never be as desirable as 102, which with a lick of paint to the render, will look fabulous from the outside.  As for the horrors inside – well they are just waiting to be discovered!

The main message from the auction room in the view of this London Property Finder, is that plenty of people believe in green shoots.  We are seeing a huge increase in decent stock at auction compared to a year ago, including some in the lower reaches of the million pound plus sector of the market.  And most is selling for 20% or 30% over the guide which is what you would expect in a healthy auction market.  Investors beware: end-users have returned to the auction rooms and they are already getting carried away.

Technorati Tags: Auction property, London Property Finder, Notting Hill house

Tags: Auction property, London Property Finder, Notting Hill house