Perfect time to buy - 3 June 2008

Posted by Paul Collins 1 comment

Part of the life of a property editor, in fact of an editor in any field, is to go through reams and reams of press releases on a daily basis. In some cases this a purely an exercise in research to make sure that I know what is going on in all parts of the industry, in other cases it is to find specific information, or even inspiration for a story.

This morning I was struck by the tone, and even the headlines, of some of the releases that landed in my inbox – so much so that it has driven me to write this blog. Looking down a list of the releases that I received today, there are three that share virtually the same headline: Now is the perfect time to buy. On the same day, I received another two press releases about the fantastic deals that some developers are offering to first time buyers in the current market conditions. This, to me, seems to sum up the position that we find ourselves in with the somewhat parlous state of the economy.

Firstly, let’s deal with the finance issue. Today’s announcement of the losses suffered by Bradford & Bingley show how difficult it is for lenders at the moment – even with their apparent greed and lack of caution in planning for the future why they were raking in the profits during the latest property boom. A more prudent attitude would have seen both B&B and Northern Rock in far healthier positions now, but disregarding this we see a tough market where fewer people are prepared to move at all.

The result of the lenders’ woes is that is it is incredibly difficult to get a mortgage at all at the present time. Lenders are over-exposed in the market, and new research from moneyfacts.co.uk shows that on average, mortgage deals are offered for around 11 working days. This means that the shelf-life for the mortgage deals currently on offer is less than the shelf-life of a pint of milk, which is between eight and 15 days.

So it’s hard to get money, and why does that make it the perfect time to buy? In many ways, it is precisely because the market is so closed off to the ordinary buyer that it is the best time to buy. Not only will those lucky people with finance have a virtually clear run at the best properties out there, without prices being driven up by competition, they will have sellers almost falling over themselves to get them interested in their property.

That is, unless the developers don’t get to them first. Developers need to sell units in order to release funding to enable them to survive. If you are looking for the best deals on a new property at the moment, look out for developments that have just a few units left to sell and make a cheeky offer – you never know how you’ll get on and the results could be surprising. Also, if you reach an impasse over price, try negotiating to get furnishings and other items thrown in.

I digress. The point remains the same – this is possibly the perfect time to buy a property, but the number of people who are both willing to do so, and able to get the finances in place are dwindling. Surely something has to give. Will it be the government offering real incentives for first time buyers to get into the market; the banks relaxing their lending criteria just a little to bring mortgages within reach for mere mortals; or will it be the economy itself that cracks, plunging the country into open recession?

Only time will tell (but my money is on the banks…).

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