Shropshire Magazine

The four property experts offer their opinions to Shropshire Magazine editor Henry Carpenter (centre).

A downturn in the property market has been threatening to burst onto the front pages for the last few years, and it has now done so. But how real is this so-called crisis? And if it does exist nationally, to what extent is it mirrored in Shropshire? We assembled a handful of leading estate agents from the county to discuss the present situation and the outlook for the next 12 months, with the questions asked by Henry Carpenter, editor of The Shropshire Magazine. The panel: Guy Bielby, Halls; Martyn Haden, Strutt & Parker; David Miller, Miller Evans; and Tony Morris-Eyton, Savills

Henry Carpenter: What are the reasons behind the gloomy headlines?

Tony Morris-Eyton: In this country we are well aware of the Northern Rock crisis and the effect that’s had, but it’s a wider world issue beyond property even though it is also linked to the sub-prime, or unauthorised, uncontrolled secondary loans in the US. We have some of those in this country but on a much lesser level; thankfully, our banks are much more diligent.

David Miller: I agree, and the knock-on effects of the headlines is that the confidence that the general public has in the property market in the UK has simply evaporated. I think the public is concerned that we are in situation at the moment where the house prices may drop by 10–15 per cent. They are concerned, they don’t want to commit to buying at what may be the peak of the market, so everyone is holding back. Something has to give; I would suggest that what is key is a drop in interest rates, and I am sure this is going to happen – which may well be enough to return confidence to the market.

Guy Bielby: The market thrives on stability. If we move away from stability then people’s responses and their ability to perceive will wane. What we’ve got to do with the rise in interest rates and the credit problems is to put that security and confidence back.

Martyn Haden: I’m not entirely convinced it’s necessarily an interest rates issue. We always say the same old thing, that the market is cyclic, and every 15-odd years we go through this sort of scenario. The last time we went through it interest rates were at 12, 15 per cent, Black Monday. It is, as David says, a confidence issue. There are specific reasons but it is lots of things are interconnected. It is a confidence issue but it’s also about educating the general public. We were all working in the business when it happened last time – have we reacted quickly enough.

HC: In your opinions are we seeing a crisis unfold?

David Miller of Miller Evans.

TM-E: We’re not seeing a crisis. In early January at Savills we had an enormous number of viewings, almost as much as ever before on corresponding dates. But a number of sales at August’s figures last year have to be tempered slightly in 2008 – there has to be that little bit of leeway to make the deals work.

DM: In order to achieve sales there has to be a slight adjustment in prices. I don’t think there’s a recession or a slump or anything like that, but maybe a mini-crisis, a crisis in confidence really, as we have already said. It is a question of educating the public; although we have many years of increase, just occasionally you have little blips for various local, national and international reasons. You have to run with it . . . and you have to be realistic. There’s a lot of pent-up demand out there, they’re just holding back. A lot of foreign buyers are coming in. It’s a mini-problem which we’re going through and as I say I think a drop in interest rates would help.

TM-E: I assumed that many applicants would drop out, but I’ve been amazed to see the number of people who still want to look. There is demand, it hasn’t fallen away as it would have done in the early ’90s. We’ve got a turnover of houses that augurs well.

MH: We’re seeing a high number of viewings but we’ve got to educate the buyers about what is sensible right across the board. Both buyers and sellers are sitting on the fence, waiting for an indication of what’s best to do.

DM: I totally endorse that, and I think we just need a change of emphasis from how wonderful it’s been over the last few years. It’s not that we’re in a recession, it’s just not a very buoyant market and so people need to be sensible with pricing. This needs to be explained by us and the media. If properties are put on the market for the right price then they’ve got every chance of selling.

GB: Interestingly this morning I had to speak to someone in one of our offices and I asked for a general view how the market is moving. Despite the doom and gloom that we’re hearing, they were saying that sales are not much below this time last year – and that’s for properties right across the board. There might be apprehension with first-time buyers, but the buyers are there. Martyn’s quite right though, there are buyers who are sitting on the fence and have been for the last few months.

HC: If we could look more towards Shropshire specifically, 2007 looked to me to be quite a good year. Do you agree? And have other factors such as HIPs and increased duty had an impact?

TM-E: I think 2007 was a very good year. Funnily enough I think HIPs worked to our advantage in that for those dealing in country houses there was a great wave of activity in May when the market was at its strongest. It got us going earlier in the year than we might have done.

Tony Morris-Eyton of Savills.

DM: I’m going to have to disagree slightly with Tony here. It was a pretty good year but it tailed off for the reasons we’ve been talking about. I personally believe the HIPs idea is such an ill-conceived and unnecessary thing all together. I think it did have a detrimental effect on some parts of the market because people were unsure about it, they thought it was going to be an additional cost and was another factor towards downturn. I don’t think it’s been helpful at all quite honestly.

MH: I think people can get slightly paranoid about it all, that there’s a huge conspiracy theory involving interest rates, HIPs and everything else. The general public are very, very cynical about HIPs.

DM: We’ve no requests from prospective purchasers so far!

GB: I would say that for our middle market, the £350,000–£550,000 bracket, it has been hard going for the second half of the year. First half not so much of a problem really. The introduction of HIPs probably gave people too much choice. As a consequence it was taking people longer to view, taking longer to make a decision; therefore the sales rate slowed. Buyers for the more specialised properties, those which only come up every few years, will home in on them.

HC: What about stamp duty?

MH: Again, I think there’s a lot of resentment out there from people paying the amount they have to pay. People already paying £250,000–£300,000 still pay the best part of another £10,000 to the government.

DM: There is a huge amount of resentment. Thresholds haven’t been raised in a way they should have been over some years now.

HC: Over the next 12 months, what geographical areas and what types of property are going to be affected, if at all, by the way the market appears to be going?

TM-E: I’m not sure it’s going to be so much geographical areas, it’s going to be the nature of the properties. Pretty properties pitched at the right price are going to sell better than those in slightly less attractive areas. There’ll be more of a two-tiered market, which is what happens when markets become more difficult.

Martyn Haden of Strutt & Parker.

DM: We have to remember that Shropshire is a lovely county, and increasingly well known throughout the country as that; we should be less affected than elsewhere. I would be optimistic that we’re in the right part of the country to bear the problems that are out there.

GB: There’s nothing dramatic happening to the county, with no massive new industry or anything else. If you have something pretty or very unusual it will move much faster. Similarly if you have lots of properties of the same ilk it creates competition, and it’s always been that way.

HC: What about land and agricultural properties in Shropshire?

GB: At the moment there’s a strong demand for agricultural land. In fact there’s a constant demand for land right across the board – there are always people who want land even with smaller acreage for equestrian purposes, security, privacy, or whatever. We find the demand for agricultural land is very much staying.

TM-E: We sold a farm at Burlton last year. Out of 25 viewings, 15 came from Ireland. A combination of that interest and higher commodity prices in agriculture have ignited that confidence, and I think farmers are generally feeling quite confident now.

MH: The Irish farmers are looking at the situation with absolute glee. They are paying £10,000–£15,000 an acre in Ireland where here its £4,000 or £5,000 an acre. They acquire a lot of land for next to nothing and it’s a very active market.

HC: And the urban situation?

DM: In Shrewsbury anyway an awful lot of the town centre has been converted into apartments. It’s about supply and demand, and at the moment there’s a worry of oversupply and not enough demand. All seem to sell well when new but prices are less good for secondhand apartments and may drop more.

HC: I get the impression that you don’t think the media has been fair. Is that true?

TM-E: The problem we have is that in the modern world, news is instant – people want instant headlines for the short term. We’re dealing with something much longer term, where people are going to live. We need – and they need – stability and confidence.

DM: I think the media has to be careful because they send mixed signals out to the public about things that we don’t really know the answer to. Also, what can apply to one type of property doesn’t necessarily apply to any other. The media has to be careful – we don’t want to talk ourselves into a housing recession when in fact there isn’t one.

Guy Bielby of Halls.

GB: The media pays great attention to huge upturns and downturns such as have been seen in London, and this is applied on a national scale when in fact the news should be regionalised. It sends mixed messages which people take to heart.

MH: The media is aware that the general public’s biggest asset is their home and hence any comment they can make about that aspect is going to be attention-grabbing. Whether they realise – or care about – the consequence of what they are doing is another thing entirely. It’s a very British disease sitting around the dinner table talking about property. It’s not something we’re going to be able to change I’m afraid, but it’s up to us to educate the public into reality rather than the extremes covered by the media.

HC: What advice would you give to someone who either wants or has to sell their home?

DM: It depends what it is and where it is. Carefully select an agent who could give that type of property the maximum chance to sell. On top of that, realistic pricing is going to be the key.

TM-E: If you see a number of agents, don’t necessarily go for the one suggesting the highest price. Go for the one best suited to the type of property you want to sell. Select an agent you gives you the confidence, who you believe can deliver. There are definitely buyers out there.

MH: Speak to a minimum of three agents and take a sensible, average view on the advice. Sometimes it comes down to personalities. It’s horses for courses and the market’s there.

GB: Talk to your agent about what’s been sold. There are many houses and flats and so forth for sale in the newspapers which you can take a line on. Compare your property with those – it’s not always possible to be entirely accurate but you can get something which is fairly close to it.

HC: Hands on hearts, if we reconvene at this time next year will you all be sitting here with beaming smiles on your faces.

TM-E: We’re going back to more normal conditions. We’ve had a bull market. There will have to be a balance between buyers and sellers, and properties have to be pitched at the level to create the market which is probably a little lower than where we are now, but not dramatically. The real unknown is what happens in the wider financial markets. It’s very important that the world economies hold up.

MH: I think we’re in for a difficult time but I don’t think it will be impossible.

GB: I don’t think we will necessarily see too much doom and gloom and see a terrible year. It’s up to agents to control their own businesses and look at the response they are having.

DM: I think it is one of the more difficult years to predict what is going to happen with so many global factors to take into consideration, but on a local level I think it’s a fair ‘guesstimate’ that the smiles will gradually return to our faces as the year goes on. It’s going to be a difficult time and I’m sure that quantities of sales will be lower, especially in the first quarter. But I have a suspicion that if interest rates fall a little and the public sees that things aren’t quite as bad as suggested then confidence will slowly return.