As uncertainty, apprehension and anxiety increasingly infiltrates every aspect of our professional and personal lives, to ‘keep calm and carry on’ can demand Herculean effort. In this article, Paul Sams shares his thoughts and experience of the property market to provide some perspective, and maybe even some reassurance.
With the impact of the pandemic, supporting the fight for Ukraine, rising energy costs and inflation and our rampant consumerism having been ‘locked down’ for a couple of years, was it inevitable we would be heading for recession?
Whilst some may say we have talked ourselves into it, my gut feeling is there have been too many unpredictable events, beyond our control, that have combined to create a perfect storm. But what does this mean for the property market?
Let’s be honest, a lot of us in residential property have done well as a result of the pandemic. No holidays, theatres, cinemas, pubs, restaurants, theme parks or car upgrades meant people were trapped looking at the same four walls, reassessing their lives with money in their pockets, and so what did they want to do when granted their freedom? MOVE!
With a record 1.2 million transactions last year, and money easy to come by with banks almost giving it away, even the worst (or should I say ‘humble’?) estate agents, mortgage brokers and lawyers did well without trying too hard.
A hugely successful local agent who I have known and respected for a long time, told me he had been sat in his morning meetings recently, when one of his young negotiators said, with genuine dismay, how awful it was that a five-year fixed mortgage rate with Halifax had risen to 3.3%. Really?
When my wife and I bought our first property in 2002, the 95% loan to value offer we had from Standard Life mortgages was 6.49% and we thought that was cheap!
I have lived through a recession and was able to thrive in business. There will always be those who will sit and worry themselves, sometimes into a paralysis, but I have always been able to teach myself pragmatism.
I cannot stop those who want to wage war. I cannot control the weather, I cannot stop Miss Sanna Marin partying in Finland (though I’d rather receive an invitation to join her) and I certainly cannot stop the economic downturn on the rollercoaster our world economy is currently on.
There are things, however, I can control. If there were 1.2 million transactions last year and 800,000 transactions in a more regular year, then I simply need to devote my time and energy into my relationships with new and existing clients and introducers of work to maintain and maybe even grow my share of the market. This can be done through innovation, leadership and setting a reassuring example for others to trust and follow.
Even in 2008, during the height of the last recession, there were 600,000 property transactions taking place. That is still a huge amount of work for us all to do. Of course, it won’t be as easy, but I have never considered property a sector for those wanting an easy life.
Whenever there is a downturn, people will flock to those who feel reassured by a quality provides, which in turn provides results. I have always believed that quality is the route to long term success.
There are many reasons to remain positive in the property world. The issues in 2008 centred around the banks having no money - now they have plenty. Then, there were too many properties available to purchase - now developers rarely have any stock properties available.
And to keep us all grounded when it comes to interest rates, at the time of writing this piece, Argentina had a base rate of 69.5% (openly recognising they may have to increase it further.)
So things are going to get bumpy, but let’s buckle up, brace ourselves and know that there will be light at the end of the tunnel.
*Paul Sams is Head of Property at Dutton Gregory Solicitors