Market Comment by Paul Gillespie

Date: 28th June 2012

What a summer it is turning out to be! 

June was certainly an interesting month. It started with the excitement and “feel good” factor created by the Queen’s Diamond Jubilee celebrations and ended with England’s seemingly traditional penalty shoot-out exit from the European Football Championships (this time at the feet of the Italians rather than the Germans)! 

As I write, Wimbledon has just started and I have no doubt that the nation will be hoping for some rare British success. 

The weather has been somewhat mixed, lurching from brilliant sunshine and blue skies to grey clouds and torrential rain. 

The on-going drama of the Eurozone continues to dominate headlines and will undoubtedly do so for some time to come. 

This “mixed bag” of activity might have been expected to create some nervousness in the property market but the reality is that the market remains remarkably positive and there are still decent levels of transactions being arranged in both sales and lettings. 

Sales volumes are, of course, down from the peak of 2006 but have settled into, what I believe we should regard as, a “normal marketplace”. Those looking to buy or sell are able to do so providing they adopt a realistic approach to values. Values have risen but are currently fairly steady. The effects of tight mortgage lending balancing the pent up demand from buyers. 

The same is true of the lettings market although demand continues to outstrip supply. The significant increase in rental values seen over the last two years is slowing and, as we have been saying for some time, landlords should concentrate on avoiding void periods and having a quality tenant in situ rather than being totally focused on the last few pounds of rental income. There is growing evidence of higher numbers of defaulting tenants across the UK although in London and the South East these incidences remain small. 

A recent report from leading property website Rightmove showed that in Greater London and the South East tenants are paying around 40% of their take home pay in rent. This must be close to an “affordability ceiling” which will mean rental levels flattening out in the weeks and months ahead. 

July looks set to continue in much the same vein as June. Of course there will be exciting distractions such as Wimbledon and the start of the Olympics and Paralympics, and it is the prime summer holiday period, but the market will not stop and there are still many transactions to arrange and complete. 

The mortgage market remains tight but a number of lenders have been reducing rates recently and increasing the availability of higher loan to value loans. The team at The Mortgage & Insurance Bureau will be pleased to advise you on the options available for purchase, re-mortgage or buy to let. 

Later this year the will be “gender harmonisation” in respect of protection policies. This will result in premiums going up for women and couples as an equalisation between the sexes takes place. This makes taking a life policy now an attractive proposition rather than waiting. Again our qualified advisers will be pleased to discuss your personal situation. 

The “feel good” factor created by the Diamond Jubilee will, I am sure, carry through the summer period and any success on the sports fields will simply add to this feeling. Naturally the economic picture needs to improve but there are some signs of unemployment falling and more jobs being created. I fully expect the UK to move out of recession shortly and greater positivity to prevail. 

At Gibbs Gillespie we remain totally focused on achieving the best results for our clients and the team and myself look forward to being of assistance to you.

Paul Gillespie MNAEA MARLA
Founding Partner

For further media information contact Jo Ryan on 020 8869 9863.