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What goes down should go up - Stewart Andersen

What goes down should go up...

Back in the early 1990s, the property industry went through a similar, if smaller, recession. For those of us that were around in those days, the earlier spasm certainly had some links to the first Gulf War, as fewer people decided it wasn’t the best of times for travelling abroad.

Many of those who had taken out mortgages on their dream home abroad, (Florida at that point was a prime example) assumed that all their costs, including overheads such as electricity, pool maintenance and taxes would all be covered by lovely, big, fat, juicy rentals for at least 42 weeks a year.

The foreign property industry immediately ran for the hills and tried to ride out the storm. The agents and developers who survived the initial financial weeding out would mutter through gritted teeth, if you met them in the street, “So far, so good.” And you knew for many, it wasn’t. Some survived, some didn’t.

Run for the hills

It does seem that as a nation we are absolutely brilliant at talking ourselves into a crisis. The minute that there’s a hint of trouble, the media cries, “Quick, run for the hills boys,” while our political masters react as though the Four Horsemen of the Apocalypse are upon them.

Now, some 17 years later we’re going through the same process with property as the early 1990s. Punters disregarded the words that property journalists have been asking them to heed for years about not over-extending, not investing more than they could afford, only buying properties that had proper legal title and that didn’t have enormous debts hanging like millstones around their necks.

Now we have a situation where, both in the UK and abroad, the dreaded word ‘repossession’ stalks the land once again and auctions are flogging properties like mushrooms off a market stall. Mind you, the icy hand of repossession may well knock on the front door of 10 Downing Street in the next 12 months and who knows where we’ll all be by then.

Some forecasters have suggested that rather than the current recession being U-shaped (where we’ve just reach the bottom of the curve and we’re starting back on our way up) that actually it is W shaped and that we’re climbing up the first, or left-hand side of the middle bit.

Cyclical by nature

The UK government set a target of just under 250,000 new homes each year for the next 11 years. It looks as though they’ll miss it in 2009 by about 180,000. Why? Simple! Lots of people would dearly love to buy a new home but they simply haven’t got the cash.

Are things really as bad as all that? Values rise and fall like a ship riding the waves and property, whether residential, commercial, domestic or overseas, is cyclical by nature. If homeowners can just cling on for long enough, things usually do start to improve. Logically, if you do need to sell and can get a reasonable price for your property, then go ahead. If not, sit on your hands and wait. Things will improve. It may not happen as quickly as you would like but do everything to keep a roof over your head.

Stewart Andersen

Stewart has worked on a variety of magazines for more than 20 years as a journalist and editor, usually specialising on property and travel, both in the UK and overseas. His first book ‘Wild Thyme in Ibiza’ was published recently and this year he launched Stewart Andersen’s Property & Travel Blog

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