MARKET NOW ALL ABOUT EQUITY

11/10/2011

By STEWART McINTOSH. While the doomsters have been ringing the plague bells to warn us another property clanger is just around the corner, one agency spokeswoman has claimed that the pessimists are using outmoded measurement methods.

“The DNA of the housing market has changed,” she says. “The flow of equity currently drives the housing market and where it does not reach, there will be little real price growth. The factors driving the market nowadays are new wealth, bonuses, savings and investment, domestic and overseas. Equity, not borrowing, is the key.”
That is good news for Edinburgh and some of the more prosperous areas around Glasgow, where equity is available if people have already sold their home or their savings are high enough. However, clinching the deal rarely happens quickly these days.
Offering estate agency and property management services in both Edinburgh and Glasgow, Ben Alexander of D J Alexander, says “caution reigns” at the upper end of the market. “People are looking to buy but are unlikely to take the plunge before selling their current property, un less something really exceptional comes along. Serious inquirers are people who have managed to sell their property or former expatriates who have spent a lot of their working lives overseas and are now looking to move back into the Scottish market because they believe this is a good time to buy.”
Perhaps surprisingly, 50 per cent of property currently handled by DJ Alexander is still being marketed at “offers over” an upset price and, in some cases, are achieving a substantial premium
However, Alexander admits some vendors, having tried and failed with the “offers over” strategy, then switch to a fixed price approach. Even then, a few have to accept an offer below even that, although much depends on the individual circumstances of each owner. “People without a house to sell know it is a buyers’ market and for obvious reasons try to use this to their advantage. Having been through the selling experience themselves quite recently, they know what a struggle it can be.”

Extract from article in BUSINESS INSIDER magazine, October 2011