Having said that, I remain convinced that the outlook on prices is negative. Again, unlike some, I don’t believe there will be a collapse. Rather a slow decline circa of 5% per year for at least the next few years. Allowing for inflation of say 2.5% per year this will equate to properties falling by 25% or so in real terms over that period. If something calamitous happens, such as the Euro collapsing, then of course a severe decline could indeed be on the cards.
I wouldn’t disagree with that either, but there will be a balance probably of stock that eventually is released to the market at a 50%+ decrease, that is the stock that it appears nobody needs or wants and is in some tragic areas, which will have an impact on bringing down prices overall into the zones you are talking about.
Yet we haven’t really seen any of this actually appear in our market yet, and our understanding is, that regardless, it is not what people want to buy. Then there is the A grade stock, that few people are selling, because they simply refuse to do so at this time, which when it comes to the market is the stock that all we agents fight for and that only reduces say 10 -20% in value.
Believe it or not, our pizza discussion in the office today was about how few vendors there actually are out there. The stats for vendor enquiries are at the lowest they have ever been in 12 years. People are just not selling unless they have a real imperative to do so. With such low interest rates and banks bending over backwards to convert to interest free or any scenario that stops a default, most people are just not interested in selling. If they don’t have to sell, they simply won’t sell.
As bizarre as it sounds this creates a real problem of supply to demand for the A grade stock.