241: This week could be the best time to buy in the UK for 25 years
12-08-2008
PropertyInvesting.net team
As our regular visitors will have picked up over the years, we believe the best time to buy in the 
is the first week of December – why?
- Miserable weather – dark, cold, rainy, short days, long nights
- Miserable feeling in the air – lack of New Year optimism
- People focused on Christmas shopping, Christmas parties, finishing work late to enable a Christmas and New Year’s holiday
- Kids still at school – everyone busy working, shopping or partying
- Buyers are disparately trying to get an offer before Christmas – to allow them to have a stress free Christmas
- City bonus money has not arrived (bulk of bonus money is paid January to March)
- Not much City bonus money this year
Hence very little competition and very motivated sellers.
Added to this, these exceptional circumstances that mean less competition:
- No first time buyers
- Not many normal buyers
- Only a few bottom feeding investors around
- Lack of mortgage funds available
Added to these, some fear factors:
- Fear of falling prices due to stock market crash and unemployment
- Fear of major recession and worsening economic outlook
- Increase in repossessions – very quiet auctions and empty properties
- Fire sales from developers of new build flats and houses
- Stock market crash of October and November 2008
Added to these positive factors:
- Drastically reducing interest rates
- Big fiscal stimuli
- Oil price crashing from $147/bbl to $40/bbl
- Some very early signs of a recovery developing
- Correlation with maximum fear = best time to buy
- Inflation falling fast allowing further interest rate cuts
- Mortgage companies beginning to drop rates and unfreeze loaning
- Price to earnings rates have dropped from 5.8 to 4.5 – with long term average of 4
Thence one might form the view that this week is the best time in 25 years for investors to buy property - at bargain basement prices.
The Doubting Thomas’s will say – prices are forecast to drop another 10 to 15% or more. To which we say – when was a forecast ever correct? Who forecast a recession in the
Okay – if you buy property now you, it might be that property prices slide a further 10% by end 2009 or more. But if you buy property now, you may be able to pick up a distressed sale that could knock up to 25% off the sale price – particularly if you buy at auction or you buy cash and can close within a few weeks.
Are we buying now? No – because we haven’t got enough liquid cash to take advantage unfortunately. We’d rather reduce our risks by waiting a bit longer – seeing a clear bottom then jumping in again. But we fear that by the time we’ve seen the bottom, it will be too late and everyone will be jumping back in and the competition will have hot up!
It’s just we have this feeling that with interest rates at 2%, as soon as banks start lending again, their could be a lot of pent up demand after about 1½ years of the market being in the doldrums – there is definitely a scenario that a very fast recovery could occur. No – this is not mainstream. Since when did mainstream make money anyway?
In
- Olympics 2012 not far away
- Crossrail
- Infra-structure spending to prevent recession
- Dockland Light Railway Extensions
- Croydon Regeneration
- No stamp duty on properties below £150,000
Plus, the lower Pound Sterling value should start driving growth in a few months time as exports increase, 
Or at least prevent a major prolonged recession. Do not be surprized to see the beginning of a recovery in February 2009 - with 1% interest rates, $50/bbl oil, inflation at 1% and stock markets recovering.
And don't forget, if you are the only investor active in town, why would you take the risk of further house price falls next year - the only reason would be your offer is 25% below asking price - hence reduces your risks to a minimum. And yes - property prices have been over-inflated from easy loans - times have changed.
So we encourage you to challenge yourselves as to why you would not buy when it looks particularly bleak – just as one should be considering selling when euphoria takes over. Buy when there is the maximum depression around – and we can’t think of a better time than just before the Christmas parties start and everyone is looking forward to a major recession and unemployment. And the miserable cold weather helps even more – can you imagine bumping into competition on a rainy dark windy 4pm afternoon walking the streets looking for a bargain?
Happy Hunting