News
In the Loop - May 08
Spicerhaart Purchase Tesco Property Market
19 May 2008
Spicerhaart are in the process of purchasing the Tesco Property Market (TPM) website, less than a year after its failed launch. According to reports, the agency owner is paying a bargain basement price for the site. After the legal furore surrounding the launch of TPM, many in the industry have been unsure whether the supermarket giant would re-launch or cut its losses and sell. The latter seems to have happened.
Robin King, movewithus founding director, commented: “When Tesco announced their foray into property at the end of 2007, we didn’t know what to expect. It soon became apparent that they had been uncharacteristically unorganised in their approach, contravening the 1979 Estate Agency Act and bringing a subsequent order of closure from the Office of Fair Trading. Many will have seen this as an embarrassing U-turn but, in the current conditions, it may be a case of admitting that the kitchen is too hot and getting out sharpish.”
‘Nice Decade’ Over, says Mervyn King
Indeed, the past week has seen yet more cautionary rhetoric from the Government and the Bank of England over the tough times we should expect. Last week, Mervyn King said that the ‘nice decade’ was over and consumers should brace themselves for a bumpy road ahead. He warned that the Consumer Price Index Inflation rate was at 3 per cent in April and likely to rise in line with soaring energy prices.
Robin King, movewithus founding director, commented: “Essentially, people’s income is getting squeezed, meaning more conservative spending and fewer home owners with the funds to move. We’ve all heard how most estate agents are seeing declines but developers are feeling the heat too.”
According to Government statistics, home builders began work on fewer new homes in the first quarter of the year than at any time for the past twelve years. Stewart Baseley, chairman of the Homebuilders Federation, blames unaffordable mortgages for the decline in movers, which has led to home builder cut backs.
Robin King said: “The mortgage crisis is a major factor. We’re still seeing high numbers of valuation requests, which would suggest that people still have a desire to move but they simply can’t get the funding. Many of our agents and developers have been telling us stories of how they’ve expended weeks of staff resources with clients, only to find that they don’t qualify for a mortgage. That’s why we’re making a concerted effort to work with our agent and developer partners to make sure customers are qualified as early as possible in the moving process.”
Some of the worst hit customers over the past six months have been first time buyers. With 100% mortgages nigh on impossible to obtain and the huge deposits asked for by lenders unaffordable, a whole generation of homebuyers seems to be being priced out of the market.
First time buyers get a foothold
In an attempt to alleviate this pressure, the Government has launched its Open Market Homebuy plan, enabling first time buyers earning under £60,000 to buy half of a property, with a low interest Government loan funding the other half. The scheme, which is an extension of a previous initiative only open to 'key workers' such as nurses and social workers, is good news for the property industry, with more buyers able to get a foothold on the property ladder.
Robin King remarked: “The Open Market Homebuy scheme is all well and good but it’s just a drop in the ocean. What we need is the Government to take measures to free up lending so consumers have the confidence to spend again – not just for the sake of the property industry, but the entire economy. As an industry, we’ve got to get back to traditional practices. For too long, we’ve been resting on our laurels, our inefficiencies hidden by a buoyant market. Mervyn King’s right – the 'nice decade' is over. We need to make sure that we don’t overprice, don’t waste time with unmotivated buyers and sellers and treat every ‘hot’ buyer or seller like they’re our last.”
