Latest News January 2011
Happy New Year to all our clients old & new. With Christmas becoming a distant memory we now look forward to 2011.
Business levels have improved over the last quarter of 2010 and we aim to continue this through the course of 2011. There continues to be good demand for architectural services for extensions/alterations and new construction.
State of the Market
As we begin 2011 there is uncertainty in the market as to how the economy will fare during the course of the year. The increase in VAT to 20% is now upon us and whilst this will have a short term impact, in the longer term final decisions are likely to be unaffected.
Short term higher fuel prices may also affect current householder and business economic decisions. This may ease if the Oil price stabilises over the spring/summer. However, the threat of a further fuel price increase of 5 pence /litre remains a possibility from April 2011 as part of a proposed budget increase.
The property market was fairly flat during the last part of 2010 and moving forward it seems there is little immediate prospect of an upturn. Not until the effects of the Government debt repayment measures have bedded in will this work through to more general property buying/selling decisions.
With inflation levels running at around 3.5% and higher than the Government’s target of 2%, the risk remains that interest rates could rise during 2011 and the market is likely to remain flat, as a result.
For those wishing to invest in property, the relatively low values at present in the locality are beneficial and over a longer period price rises are expected even if short term falls occur. It remains a good time for ‘buy to lets’ and refurbishment investors. There are a good number of repossessions on the market at present.
The biggest issue is lending criteria by lenders. Until they lend to first time buyers or investors the market will remain flat. We do not want a return to 5% p.a.+ (above inflation) price rises, as this will only recreate current difficulties in 10-15 years hence.
For sellers, the stamp duty thresholds remain in creating artificial levels of valuation for properties at the threshold levels. This factor alone may also prevent sellers entering the market where they feel properties that should be valued in excess of the threshold are only likely to receive offers below the threshold.
It is therefore important that the asset of property is adequately maintained to present it in its best condition at the time of a sale. More fundamentally, property in good repair will incur less maintenance cost than one in disrepair.