Property: Confidence builds as green shoots appear

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The Independent Online
WHILE those on the front lines of the property market - the estate agents quoted in the article on the left - cautiously report gradual improvement, statistics from various higher bodies seem to confirm a return of confidence.

According to this month's survey by the Royal Institution of Chartered Surveyors, more than 80 per cent of members polled say prices have stabilised and improvements are at last penetrating middle and upper price ranges. This is crucial, as it allows chains to build up, multiplying the number of potential sales.

A large number of deals are still falling through as buyers try to drive bargains that owners will not accept, says the Rics. Yet even this may be abating. Completed deals rose more than 36 per cent in March over previous months, according to the 4,000 offices reporting to the Ombudsman for Corporate Estate Agents.

Meanwhile, Barclays Bank, the UK's eighth largest lender, reports that mortgage applications almost tripled in March, when 9,500 buyers applied for pounds 580m in loans, compared with only pounds 285m in the same month last year. This news follows a prediction early in the week from a Lloyds Bank economist that house prices could rise by 3 per cent on average this year.

ACCORDING to the Lloyds economist, the biggest scope for recovery is in London, the South-east and the South-west. This may be news to some, but not Yolande Barnes, of Savills in London. Six months ago, her suggestion that property prices might rise again in the near future produced snorts of disbelief - not least from me. But she stuck to her guns.

Now she is shaping up for a big 'I told you so' after recording the first increase in central London values since mid-1989. However, this is no boom; prices edged up only 1.8 per cent between January and March, and in prime spots like Mayfair, Belgravia and Hampstead. But these are the very places that led the country out of recession in the past, and this small green shoot will grow to vast proportions by next year, she thinks.

'We stuck our neck out and predicted increasing rates of growth in 1993, which would culminate in price increases of between 10 and 15 per cent between June 1993 and June 1994,' she says. 'This is still an unfashionable point of view, but we foresee that it is increasingly likely if the current rate of market activity continues and news of price increases leads to increased confidence.'

THE REVIVAL, however, has come too late to save London estate agent Folkard & Hayward, which crashed with debts of pounds 1.3m last week. Sellers have little reason to worry, as they will be looked after by the receiver until someone else comes along to handle the business. In fact, they already have other agents banging on their doors, such is the shortage of property on the market.

The business itself could have risen from the ashes by the time you read this, as former rivals are also queuing to buy the 11 offices.

BUYERS are quick to protest when builders dump leftover properties on to housing associations, fearing a drop in the value of their homes. Yet the alternative of putting tenants on to separate estates could be far more damaging to society as a whole, according to a new study.* It found that associations were being forced to build bigger estates which was producing cheaper homes, but also creating ghettos of poverty.

This lack of mixed tenure and income groups makes it hard to create stable communities, a repeat of the mistakes that created unpopular, crime-ridden council estates, says the housing consultant David Page. He looked at nine estates, each with more than 300 homes, and found tenants' income was only a third of the national average. The ratio of children to adults far exceeded levels that the Government's own research considered adequate for control by parents.

*Building for Communities, pounds 7.50, Joseph Rowntree Foundation.

INCIDENTALLY, and before would-be property tycoons start popping corks off the bubbly, rising confidence may not be the only reason for the increase in property sales since the new year. London estate agents Winkworth says housing associations were responsible for half the deals at its Hackney office in January and February. One insider has even estimated that 30 per cent of all extra activity springs from the race to beat last month's deadline for spending extra money allocated by the Government.