September 19, 2007 at 9:46 pm #53357
I was going through some old posts I made on another board and noticed this one from october 2005. Funny old world really………..
The market on the CDS has changed, of that we are in no doubt. There are 3 or 4 large companies who are not really Estate Agents, they are sales machines. These guys don’t tend to deal with re-sales, only new builds. Their classic line to any enquiry you make (I have 200k for a house, I want a renovation project, I’d like a finca..) is to push you into off-plan. I’ve seen the sales scripts and know how they work and its all off plan because that’s easy for them. They get paid around 15-20% commissions and the deal flow is less complicated. Its worth remembering that the people that head these firms are all ex timeshare, that gives you a clue as to how they run the business.
The smaller agents will act as true Estate Agents. Yes they do some off plan but also look at the whole market, and normally will listen and try and accommodate what you are looking for. Commissions by UK standards are still high, around 5%, and it’s not unknown for some to just add money to the asking price instead of charging the vendor.
The market and where it’s heading, that’s different. We have seen construction on a massive scale, and its still ongoing. How the demand is going to continue for the 75sq meter 2 bed 2 bath apartments they are building is anyone’s guess. IMHO a lot of people, buyers and developers, will get burnt. I heard for the first time today an advert for a zero deposit deal, so that might be a clue.
There is no question a lot of people have tried to “invest” in an off-plan, and are now coming unstuck when trying to re-sell. Developers are still selling some units alongside new owners and the only way to be in the front of the queue is to drop the price.
Quality developments are still attractive, but those are few and far between these days. I think if you understand the mind-set of the construction people on the CDS, their attitude is very much if we throw it up, and get a good marketing firm on it, we will sell it.
So, in conclusion; yes the market is overpriced. Yes, you would probably be better waiting until next year for that holiday home and yes, as an investment the CDS is right at the top of the curve. Will it crash, apartments quite possibly. Small houses, not so much as they are in demand still. Villas, well perhaps a little and some of the more “optimistic” vendors might have to wake up a little.
One thing though, if you are going to buy (even off plan) then get yourself on a plane and check out the location. There are some wonderful places being built, with stunning views, moments from the beach that you can see very nicely from the motorway, you can even probably stop on the hard shoulder and reach into your lounge 🙂
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