Sell your tractor and go buy a house
That was the week in property, by Mike Hoffa
20th February 2012
There’s a very liberal type of outrage being expressed in many households at the moment.
Shock, horror, the price of diesel has hit a record high at 143.05 pence per litre, meaning it’s risen at twice the Consumer Price Index rate and it now costs you £114 to fill up the 80 litre tank on your commercial van, according to the BBC.
It’s apparently due to a perfect storm of rising crude oil prices, restricted supply and some refineries closing, although I have to say the term ‘perfect storm’ is overused these days and it seems to be rolled out as an excuse for just about everything. Struggling to lose weight? Ah – that’ll be the perfect storm of the gym being too far away, the corner shop having a special offer on crisps and that dodgy knee flaring up again.
“Nor are all the doomsayers who maintain that the UK property market has yet to crash even further and that you’re better off renting…”
However, the point is that those diesel-loving ecowarriors in their cardigans are finding it’s now quite pricey to fill up their people carrier and are not feeling quite so smug anymore (Ed – have you been speaking to Jeremy Clarkson again Mike?).
Nor are all the doomsayers who maintain that the UK property market has yet to crash even further and that you’re better off renting, because rents continue to go the same way as diesel. In fact, the Guardian reports that rents saw a rise in January for the first time since LSL Property Services started compiling its survey back in 2008. That’s not saying they haven’t risen for four years, but more specifically that they have never gone up in January before.
So what’s behind it all? Well, the Guardian puts it down to a number of factors, which can be succinctly described as a perfect storm of too many tenants looking over the Christmas period, not enough houses to go around and landlords needing more beer money. Okay, so I made that last one up but we all know you need three things for a perfect storm, otherwise it’s just a difficult breeze.
“…a perfect storm of too many tenants looking over the Christmas period, not enough houses to go around and landlords needing more beer money.”
But don’t expect it to change anytime soon. Supply and demand means rents are not going to drop in a hurry and the general consensus on the economy is that growth is going to be “sluggish”, suggesting low interest rates for some time to come and little sign of another big drop in house prices.
So if you’re sat there waiting for the price of houses and diesel to come down, I really wouldn’t hold your breath. If you don’t take action now you might be hit by a perfect storm of not being able to fill up your tractor, never owning a home and having to put up with me saying I told you so – and I wouldn’t wish that on anyone.
About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.
Mike’s question of the week: Time to call it a day on waiting for another crash?
Mike Hoffa says “Fortune favours the brave”
Sunday, February 26th, 2012Fortune favours the brave
That was the week in property, by Mike Hoffa
27th February 2012I’m depressed at the moment, very depressed.
We’ve just been beaten by the Welsh in the six nations rugby and I have to say that hurts. Okay, so I know the England team hasn’t exactly been setting the world alight recently but it’s the nature of the loss that annoys me. As a team, England have done quite well at ‘sneaking the win’ recently, most notably against Scotland.
What I mean by that is their ability to spot an opportunity and jump on it, despite their lack of international experience as a team. In particular, I’m talking about Charlie Hodgson and his uncanny ability to know when there is a small chance of stealing the ball and scoring a try. Sadly, it was Wales’ Scott Williams that turned the tables on us this time, demonstrating that exact same ability.
“…they have just announced they are pulling out of the London, selling around £500m of commercial property…”
It’s something that all good sportsmen and women seem to have. That skill at knowing where to be to take an opportunity seemingly before anyone does – almost like they can sneak a look a few minutes into the future and act on it.
You also see it in business and I cannot help but wonder if Hammerson, the FTSE100 commercial property company, has it in abundance. You see they have just announced they are pulling out of the London, selling around £500m of commercial property over the ‘medium term’, according to the Telegraph.
So does this mean they can see the London market is about to plunge?
I very much doubt it. London has remained very healthy throughout the recession and will no doubt continue to stay strong, so I wouldn’t start selling your city portfolio just yet. Therefore, for a company of Hammerson’s size and experience to pull out they must see even better growth opportunities outside London, and to be more specific they are looking very closely at the ex-London retail market.
“It’s another indicator to me that this terribly miserable period of recession and stagnation is about to disappear.”
This is good news for all of us. If they think now is a good time to invest in retail property then it also means they think we’re pretty much at the bottom and things are only going to go one way – up.
It’s another indicator to me that this terribly miserable period of recession and stagnation is about to disappear. You heard it here first – the boom times might just be on the way back.
For sure, if retail property starts to go up in value it will be down to simple supply and demand kicking in. If there’s more demand than supply it also means we’re all spending more and things are looking a bit brighter.
Of course, it all depends on what they mean by medium term, but commercial companies don’t tend to think in terms of decades these days when they’re looking for a financial return.
So my money’s on Hammerson. Fortune favours the brave and I think they might have just stolen a march on the opposition. For all of us, let’s hope so.
About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.
Mike’s question of the week: Do Hammerson see the light at the end of the tunnel?
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