Interestingly what I haven't read or heard so much about is the potential impact that such a climate might have on the wealthy which in itself is an interesting point. The question begs will the so-called credit crunch really affect the financially stable segment of society?
In the case of the property market, arguably there are several different property markets to consider. We all hear the sweeping statements time and time again warning us about the decline in the property market – house prices are falling, nobody is buying property and in turn, people can't sell them either. The assumption is that the property climate is a big problem which has negative connotations for everyone. This is simply not true. For example how can you compare a terrace house in Manchester or a new build flat in Sheffield with a property in the centre of Mayfair? The fact is they are completely different property markets, all of which perform and behave very differently. They also attract completely disparate buyers and as such will inspire different reactions in terms of the overall desirability and potential sale of the property and this has an emotional knock-on effect.
My suggestion is that certain high-end properties in wealthy areas of central London such as Mayfair or Belgravia are unlikely to suffer in the same way from the property decline, far from it. In prime locations where there is no physical space and little opportunity to develop new similar properties, existing establishments will always be desirable from a buyer's point of view and the wealthy will always want a first-rate property in a prime location and are likely to pay a premium for the privilege.
For the majority of home buyers, obtaining a mortgage in the current climate is proving a problem and is hindering purchases. That said, the wealthy who are asset rich are unlikely to be effected as much, having other options open for securing finance, such as short term loans secured on the value of their investment.
It is true that one man's crisis is another's opportunity and the astute know that it is precisely when markets suffer from negative headlines and fragile confidence that the best buys are to be obtained. It matters little if property in the area loses a couple of per cent over the next few months if you have in any case bought extremely well and know that the fundamentals of supply and demand dictate that it will inevitably appreciate. The ability to move quickly is usually the key to securing the bargain.
Roy Winston
Chairman
Credit & Mercantile
