Green Shoots Anyone?

Well if you ask anyone in politics, then you certainly won’t get an answer. After all, answering questions isn’t part of the remit. (I’ve always wondered why it’s called Prime Ministers question time when answers to every question are avoided).

It seems that the only answer they have is to continue to cut interest rates.

However that’s obviously not the answer otherwise it would have had some effect by now.

Historically our economy has relied heavily on the property market. Never mind the direct relationship with people employed in the industry but just think of all the ‘spin-offs’.

Too many to list here but from plant manufacture to curtain poles from pensions to white goods, from company expansions to carpet layers. The list goes on.

People move house, they buy a new sofa / telly / dishwasher or bed.

Companies move buildings- new stationary / photo copier / IT system / telephone system.

People spend money but no-one in the government seems to understand or appreciate just how vital a healthy property market is.

If they did then they’d temporarily abolish stamp duty, (giving no time frame for its reinstatement – so as not to pre-empt deals). They would abolish void rates penalties, re-instate capital gains and now that we own most of the Banks, fix interest rates for 3 years – to give everyone (including the Banks) some certainty. Indeed, fix the rates at a sensible level – say base rate at 4% or 5% with lending 2% above. Something sustainable for everyone including savers.

If you talk to Banks now, some see base rates increasing by 1% next year, another 1% in 2011 and 1% to 2% in 2012. If combined with other incentives now, then why not get on with it and stimulate the property market with a hard shove in the right direction?

If the Government wants to have a pop at someone, then how about the credit rating agencies – or the press?

It seems that if anybody has the slightest involvement with the property industry – say manufacturing components for diggers, then they’ve probably had their credit rating drastically reduced or even removed! –How sensible is that? About as sensible as allowing the press to control the market.

It’s a mess out there – no doubt about it yet there are signs of movement....

Those of you looking for a deal ‘too good to miss’, need to start shopping now as it’s likely that the infamous ‘bottom’ is in close proximity.

Interest rates have to increase. When this becomes more certain then the market will harden (I’m not saying values will increase straight away but the ‘give away’ deals will dry up in anticipation of better times). Assuming that the sort of time frame already suggested is a reality, then it would be fair to assume also, that the ‘bottom’ is somewhere between now and the Autumn. So even if you buy or lease now and values fall slightly, the upturn will be assured.

If you have left your money in a Bank and they haven’t lost or spent it, then investing in property now at yields even at sub 10% looks much more attractive. So we’ll begin to see a little more movement in the Investment market this summer.

Now I’m not suggesting that one casts caution to the wind but moping about watching the news on the BBC or ITV isn’t going to help.

Turn over to channel 5 if you really have to watch the news – a sixty second bullet point update, giving equal billing to the economy as to Billy Connelly running naked around Piccadilly Circus. This seems much more in touch with reality.

In short, it’s time for businesses (including lenders) to take control and drive the market even if this is only in the form of rallying around.

The property market needed adjustment not annihilation – and with so many other industries dependent on property, its recovery should be first on the agenda, not some Bankers personal pension plan.......

It’s time for the Government (whoever is in power) to take a risk.

Thursday, April 2, 2009