This month John Thornley from Fairhurst Estates takes a look at the Property Market and asks:
Has the feel good factor arrived? There are many indications that the ecomony is moving in the right direction –
UK export activity has reached levels not seen since the financial crisis,
according to a report from the British Chamber of Commerce.
UK car output hits 4 year high.
UK recovery to gather pace in 2014.
Some forecasters predict UK economic growth of 1.1% this year, rising to
2.2% next year.
Consumer confidence is returning and the government’s initiatives to
stimulate the housing market bearing fruit, consumers are switching their
attention back from saving to spending.
The number of people out of work fell by 57,000 to 2.51 million; the
unemployment rate now stands at 7.8%.
Aldermore Bank recently stated, “Expansion is being led by the Service
Sector, even manufacturing is seeing the brightest outlook for two
years.”
Markit, the online financial services organisation have said:
“The UK is undergoing a period of solid and increasingly sustainable looking economic growth.”
So how is the Property Market getting on?
Well, the answer to that is probably dependent upon where you live and work.
In London and the South East, the property market, both residential and commercial, seems to be well on the way to recovery. Investment values recently reached a 2 year high. This is reflected by our clients’ business focus on the South East, sometimes this feels like a self-fulfilling prophecy.
The regions have suffered over the last five years and bank lending has continued to be very difficult for all but the safest of investments.
The picture however is now starting to change. As London prices start to overheat, investors are now looking at the regions for acceptable yield growth. Interestingly yields have come on dramatically in recent months. Whereas yields on commercial property were trading 15-20% last year they are now trading 9-10%.
So why after 5 years of economic recession do we feel better?
- The government have at last brought out policies that reinvigorate the housing market and the
‘feel good’ factor starts to return. - Recent announcements on capital expenditure should assist construction activity, especially if consistently applied.
- The Eurozone crisis has ebbed; we are back to where we were in the early Spring of 2011 when the Eurozone crisis with Greece, Portugal, Ireland and Spain (PIGS) stopped us in our tracks.
So, if we can avoid the banana skin of the Eurozone, there seems every chance of ‘UK PLC’ continuing its recovery mode.
Whether you are a fan our Royal family or not, the birth of Prince Goerge of Cambridge looks set to increase tourist revenue and even the sun has been shining on Britain for the longest sustained period since 2006 – all surely adding to the feel good factor and economic confidence.
Have a great summer wherever and whatever you will be doing.
John Thornley is Managing Director of Fairhurst Estates Limited