Surelock Network Auctions July Newsletter

Welcome to Surelock Network Auctions’ July 2017 Newsletter. The General Election result only added to economic and investor uncertainty, while Brexit Negotiations aren’t helping either. These two issues are in a large part responsible for the weaker housing market we’re experiencing. Let’s delve a little deeper into the housing market picture and also at what investors think is happening.

Signs of a House Price Crash?

We know, that’s a bold statement, but like many of you, we follow UK house prices and activity very closely and this is something that’s being discussed more and more. But, if prices do slump sharply in the next year, it’s likely that London and the south of England will bear the brunt of any price falls.
Details signalling the possibility of house price falls include:

  • Prices already high and exceeding mortgage-to-earnings affordability for ordinary working Britons, in many parts of the country.
  • Property investors pushing prices higher in northern cities as London is too expensive and risky during Brexit negotiations and an unstable government.
  • More discussions from the Bank of England about raising interest rates.
  • Consecutive, monthly house price falls.

Economists and market experts are also increasingly concerned about prices and the possibility of crash.

Paul Cheshire, professor of economic geography at the London School of Economics told the Daily Mail on Sunday that a house price correction is due and calculates house prices could fall some 40%. “Historically, trends seem always to start in London and then move out across the rest of the country,” Mr. Cheshire said.

Indeed, according to figures from Knight Frank, in some regions of London house prices have registered multi-quarter declines, with a 0.3% fall reported in the second quarter of this year.
For those of you still interested in investing in property, particularly at auctions, now is the time to bargain hard and stick to your top price, no matter what!  Sure, in some regions in the north of England there are still property gems to find, but they’re few and far between – don’t get caught up in the excitement and use your head, not your heart!

Stock Market Struggling, Too

For the investors out there, it’s not just the property market that could cause some financial pain in the near future. There’s also growing concern that a stock market correction is due this year, too.

One big reason for that is the US central Bank – the Federal Reserve – has already raised rates twice so far this year and has clearly indicated it will begin removing the support blocks that have been in place since 2008. This will make borrowing more expensive, albeit only incrementally and if the economy can handle it.

Another detail to consider, is that companies are running out of incentives to attract new investors. And, when fewer investors are buying shares in a company, the price of those shares stop rising. That doesn’t mean they will always fall, but the possibility of share price falls increases, as different companies are considered less popular or no longer able to deliver such big revenue gains.

What this all means, is that investors are searching for value in property of all types and the stock market too. If they can’t find it, they’ll play safe and invest in bonds that give them a guaranteed, although usually low return. Or, they’ll bargain hard for the right property in the right area.

It’s going to be a tough year with investors showing caution in whatever they choose to invest in. If you’re looking to buy a home or do some stock market investing of your own, you should follow that advice, too.

We hope you enjoyed Surelock Network Auctions’ thoughts on the issues discussed in our latest newsletter. If you want to keep up-to-date with Surelock’s auction dates visit our website and to keep abreast of our news and views, take a look at the blog section.

 

Upcoming auctions: London, September 7th.

 

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