The following are features which I wrote for the nationally distributed Design Et Al magazine and it’s supplement ‘Northern Homes and Interiors’. The articles were published in the June 2008 issue, they used information and statistics available at the time to interpret the impending property slump (which ultimately evolved into a global recession) in a positive light for home owners:
Every cloud has a silver lining
We all love a good story, and nobody loves one more than the British press. It is therefore unsurprising that sometimes they get a little bit carried away.
For example, just five years ago the papers, in their quest for the most sensational story, grimly declared that the disease ‘SARs’ was about to wipe us all off the face of the planet. In reality only four (yes, four) cases were ever recorded in the UK, and none of these cases proved fatal. However, as a result of the frenzy of media hype, the World Health Organisation was able to put containment strategies into action, ensuring that if a genuine threat ever arises they are more than ready to deal with it.
So what impending disaster will supposedly ruin your life this year? Well, the 2008 media song-and-dance is all about something that occurs on a regular basis and puts everybody on edge, yes, it’s PMS (just to clarify, that’s a Property Market Slump, not Pre-Menstrual Stress), and, just by glancing at today’s headlines, it will no doubt have you sleeping in the street and selling your children on eBay in order to survive.
At this point, one thing that you might be noticing is that here at Design Et Al we’re a bit more realistic about things. So before you lose your head, please take a moment to read the facts on exactly how changes in the property market affect you, or, more crucially, how they don’t affect you.
According to government figures, the average borrower has an outstanding mortgage of 44% of their properties’ value, and in order to put the average mortgage borrower into negative equity, house prices would have to fall by 56%.
So where do we stand right now? Figures taken from the Land Registry of England and Wales state that house prices in the north of England have only fallen a regional average of 4.3% so far this quarter.
Many economists predict that the national house price is only likely to fall by 20% nationally, and while all this talk of falling property value may sound worrying to you as a home owner, there are some important factors that must be considered before being anything more than mildly concerned.
If economists’ predictions are correct, and house prices fall by 20% this would only affect borrowers if their mortgage were over 80% the value of their house. One in 20 (around half a million) people in England are in this position, and of those 500,000 the only people that would actually be directly affected would be the ones that were forced to move home due to sickness, job change, or divorce.
So, if the predictions made by many economists come to fruition, the property market in the north would have to slump a further 15.7% and even then would only affect 5% of the entire population, who could quite easily just stay-put and wait the slump out.
It’s also important to point out that many of the 5% affected are in negative equity through their own choice by opting to take out mortgages worth 100% or more of their home’s value, and even then they are not necessarily trapped, as many lenders allow such borrowers to transfer their existing mortgage to a smaller property. See, it’s not so bad after all is it?
Now that you’re reassured that the change in property prices doesn’t harm you, you would presumably like to know what can you do while the market picks up again? Well, if you’re considering moving to a bigger home, then there is no better time than now. It is important to take into account that wealth is not all about what you have but instead is in many cases, what you can buy with it.
When you are selling your home you are not simply a seller, you are also a buyer. If you are buying a bigger home, you will get a better deal during a property slump as your savings and wages remain equal, the price of the property you are buying falls, and the price drop of the house you are selling is relative to the price drop of the home which you’re buying. This ultimately gives you much better value for money when up scaling.
Also worth considering is the fact that it becomes increasingly difficult to sell large houses during a property market slump, so the price will almost certainly be even lower than it should be. It’s a case of ‘the bigger they are, the harder they fall’, so that larger home you’ve always dreamed about could be much more attainable in the coming months.
If you are not considering moving, then for the time being you can stop thinking about your house as an instant investment, and start concentrating on what it really is; your home.
Property market slumps are the ideal time to improve the home that you already live in. As a homeowner the best thing you could do right now is start planning ahead. Setting yourself achievable targets on a realistic timescale would enable you to quickly and easily construct an action plan to nurture your home so that it can flourish into the place that you always intended it to be. While many people panic unnecessarily, this ‘slump’ should be the time to focus. Now is definitely the time for you get to grips with the house that you live in, and transform it room by room.
Whether it’s getting that new kitchen and bathroom that you’ve been thinking about, or simply redecorating the spare bedroom, 2008 is definitely the time to take action. You will not only gain the satisfaction of maximising your home’s potential, but you will also improve the value of your house, so that when property prices inevitably recover, you will be able to reap the rewards of your home being worth even more than before.
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Much ado about nothing?
Flick through any newspaper this month and you will be confronted by headlines such as “House sales lowest since 1970s” (Daily Mail), eagerly proclaiming the ominous decline of the British property market. However, things may not be as gloomy as they seem.
In this age of media sensationalism, where the paper with the most outrageous headline sells the most copies, could it be possible that the press have over hyped the ‘property problem’? We think yes, it could have.
While this may be a bold statement to make, it’s not without justification. May 4th saw the annual Property Awards take place at Tatton Park, Knutsford. There were three categories, ‘Homes between £350,000 and £750,000’, ‘Homes between £750,000 and £1million’, and ‘Homes worth £1million and over’. While the press were busy nay saying, we sat down and looked at some statistics from the show.
Any guesses which category at the show was the most strongly contested? That’s right, the ‘£1million and over’ category. With the economy apparently on its knees, you would have thought that that new houses worth £1million were few and far between, but it gets even more surprising than that. The average house price for this category stands at a staggering £3.4million. Shocking? Well how about the fact that all properties entered in the category were already sold, and that the developers are all now working on properties worth between four and six million pounds? We’re starting to get the picture that the overzealous press may well have a lot to answer for.
The other categories at the show were equally as unaffected by the supposed slump. Northern Homes and Interiors sponsored the Property Award for homes between £350,000 and £750,000, while Lapicida sponsored the award for homes worth over £750,000 to £1million. Coutts sponsored the award for homes valued at over £1million.
Joanne Beedles, organiser of Tatton Park Design Weekend, and architect Ken Bruce judged the homes that were entered upon; location, value for money, eco-friendliness, technical build specification, interior layout, surroundings, and interior design (including all fittings).
The award for homes worth £350,000 to £750,000 went to the Warmingham Grange development. The development lies in the grounds of a grade two listed manor house, and maintains a suitably rural exterior appearance. On the inside however, the 3 story homes are both visually and functionally stunning, maximising space to maintain a clean-cut and contemporary feel throughout.
August Blake won the award for homes from £750,000 to £1million, for their development ‘The Residence’. Situated in Hale, Cheshire, The Residence provides the perfect commuter-friendly suburban home. Each home within the development features a completely unique layout, and is surrounded by impressively maintained gardens. The kitchens feature Gaggenau appliances, and Sub Zero fittings, which combined, create a kitchen which is incredibly practical without sacrificing style.
The award for homes worth over £1million was won by Hillcrest Homes. The house is situated on a hilltop at the edge of Prestbury golf course. This location provides stunning views of the surrounding areas, and is the perfect setting for a home of this kind. Contemporary outside and in, this house maintains the balance between modern and eco-friendly. The exquisite gardens, for example, are watered via a sprinkler system that reuses rainwater drained from the house roof, while the garage and swimming pool buildings are timber framed to minimise environmental damage sustained by using synthetic building materials. The lighting and heating systems also fully embrace environmentally friendly technology.
The entire house layout is unique from floor to roof, and tackles many new design challenges. The home comes with a two-year care package to ensure that help is always on hand to assist with the many groundbreaking technical systems within the house.
Visitors to the Tatton Park Design Weekend were able to vote for their favourite interior and garden design. Verdi Bathroom Solutions, experts in innovative bathroom design, won the Interior Design Award. The Garden Design Award was won by Space 2 Place, who provide high quality, bespoke garden designs with a focus on sustainability.
The awards were once again an incredible success, not only pushing the benchmark for northern property design to new heights, but also raising a number of very poignant questions about whether the country’s press has its finger on the pulse of society, or just has its head in the clouds.
Joanne Beedles who judges the contest each year said, “Given the current climate we were surprised that we have received most entries from homes in the top category. The standard of entry has been fantastic with many homes valued in excess of £3.5million. It would seem that we are still buying and building domestic properties in the north, which has got to be good news. In the ten years that I have worked on this event, we have never received so much interest from the top of the market”.
So, whether the property market is ‘crashing and burning’ remains to be seen, but next time you read the wild claims made by the paper it may well be worth considering the time that the Millennium Bug caused planes to come ‘crashing and burning’ from the sky… Oh wait, that was all just sensationalist hype.
