Market Comment August 2017

It’s obvious by now that all the banks have reduced their appetite for lending. This is being manifested in different ways – changing loan to value ratios, and being more difficult are just two of these.

Some banks are flat out saying no to new business – irrespective of the quality of the deal.

In general terms we don’t see this as being a major impediment to the market. Businesses that are doing well will still be able to borrow, and investors with a track record and sufficient equity won’t be shut out.

But where we do see a possible pull back is in the number of properties going to auction. We have voiced our view that often agents are doing their clients a dis-service by promoting auctions. We know the trite chestnuts that are trotted out as compelling reasons to take properties to auction:

• Creates urgency to buy and competition among informed buyers
• All due diligence and  inspections are performed prior to sale
• Assurance that property will be sold at true market value.

And we know one of the main real reasons for promoting auctions is that it ensures a sole agency.

But what many vendors will now need to recognize that with banks changing their collective attitudes, there will inevitably be fewer cashed up buyers in the auction room ready to put their hand up.

And I believe we are seeing that already.