FTBs bounce back - 28 November 2008

Posted by Paul Collins No comments

Going cheap?

As the economic crisis deepens and even stalwarts of the High Street like Woolworths and MFI are talking a battering, there are some signs that the property market may be ready to think about bouncing back in the near future.

Now, before we get carried away with things, I’m not about to predict the great resurrection of the property boom in the next six months, but reports are beginning to point to, bear with me here, a beginning of a slowing in the rate of property price falls. I know, as profound statements of the positive go, this doesn’t give you much.

Numerous websites and blogs have been reporting that there are more first-time buyers in the market now than has been the case for many months. Granted, most of these reports will have been generated from the same piece of research, but the reports are out there, nonetheless. It appears that many of those looking to make their first step into the property market are now starting to feel bolder about being able to afford a home.

While I’m not in a position to be able to disagree with this, I’m interested to know how they are able to do this. There are a couple of methods I think FTBs can employ to get great deals on property at the moment. The first is to take the plunge at a property auction – with repossessions reaching record levels as overstretched buyers default on mortgage payments, banks are taking possession of their properties. The thing is, the banks need all of the liquidity they can lay their hands on in the current climate, so are more likely to put repossessed properties up for auction quickly, and probably with a lower reserve than they might have done 12 months ago. No longer are auctions just places to find run-down properties to be renovated, converted, or to feature on Property Ladder.

The second way to get a great deal on buying a new property is one which may only be available for a couple more months. Buying new-build might seem like one of the worst ways to get a great value property, but with the pressure on developers at the moment, if you walk into a sales office with no chain, a mortgage offer and make a cheeky offer, you are unlikely to be escorted off the premises. Even if your offer is not accepted, no housebuilder can afford to turn away someone who is standing in their office saying they want to buy one of their properties, so at worst there may be a counter-offer.

The reason FTBs may only be able to get this kind of deal for a few more weeks is simple – housebuilders are coming to their year-end and have to make their figures stack up as much as possible. When sales targets for this financial year were set 12 months ago, the outlook for the property market was somewhat rosier than it is today, and most developers will be significantly below their target sales figures. Up until this financial year is done, housebuilders will be trying to shift as many units as they can to get as close as possible to their targets. Once this financial year is over, targets for next year will be much lower, set as they are in the current economic climate. Developers have laid off large parts of their workforces, mothballed new development sites and have stopped buying up new plots for future projects – all of which means they should have less trouble attaining their modest targets, and therefore won’t need to offer the same kind of discounts they are at the moment.

If you are a first-time buyer looking for a new-build, and you are lucky enough to be able to get mortgage finance, get you skates on!

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