We only need to read the financial pages to see various economists predicting their version of events. All of them base their predictions on economic data made available to them, some of which, such as property data, are never that up to date. That aside, the economists’ PR machine has had various maintenance issues since 2005 though the ones that consistently sing the same tune will eventually get heard!
The Guardian recently featured a report on estate agents Foxtons quoting: “Profits at London-focused estate agent Foxtons have plunged by 64%, hurt by slowing demand and increased economic uncertainty. Foxtons said pre-tax profits in the first half of this year dropped to £3.8m from £10.5m in the same period of 2016. Group revenue fell 15% to £58.5m in the period.”
I think we can safely say that in London there has been a slowdown in house price rises and in some areas there has even been a decline. Most of the property developers that I speak to are erring on the side of caution with their figures, such as wiping 10% off the current GDV. Others are taking long holidays until a greater degree of certainty returns to the market. When that will be is anyone’s guess. I also know of some who bought sites on 15% margins and are trying to exit and take a small hit, which has got to be one of the worst positions any developer wants to be in. Not only is it financially debilitating but also the mental stress one is put under must be relentless. Personally, I believe this is the start of a ripple effect, which has already affected the London suburbs such as Surrey and Kent where properties for sale with agents are ‘sticking’.
However, as always this downbeat sentiment creates opportunities where the keen eyed opportunist will benefit. Timing is everything and I for one, am willing to wait and continue as usual but on the proviso that the deals stack up as trading sites. In the meantime we are concentrating on our current projects, four of which are due to complete on sales in the next two weeks. Our Roehampton site has the last remaining flat left to sell which ironically is my favourite - a lovely one bed basement garden flat, so do feel free to give me a call for more information! We are also working tirelessly on our Hoxton project with our JV partners on a new strategy which could potentially add anything from £1–2.5m to our GDV. I will go into more detail when it’s all finalised.
Our stance at the moment is to continue trading, deal with options and subject-to -planning (STP) deals and not build out on anything with projected timelines beyond 12 months. One piece of good news (non-property related) is that we have our third school on board for teaching ‘chess’. For those not aware The Vincit Foundation is working with integrating chess as part of the school curriculum via our partnership with the Chess in Schools charity.
That aside, once the directors holidays are over we are due to have a board meeting to discuss new strategies, potential new markets to venture into and just take stock of where we are and to compare our respective ‘crystal balls’.