We have been here before. Last week Property Week editor Liz Hamson wrote about it, and without apology we return to the topic again: the top of the market.
I am doing so because, for me, the evidence claiming we are approaching or have hit the peak of the UK property market is beginning to look overwhelming. So, politely, I hope you don’t mind if I disagree with you, the Property Week readers.
Last week we ran a poll, asking you when we will hit the market peak. We provided just four options - 2015, 2016, 2017 or 2018 - and it was 2016 that came out on top with a third of all the votes, followed closely by 2018. I suspect the 31.5% of you who voted for 2018 would have voted for 2050 had we put it as an option. After all, you are an optimistic lot and for many of you it is your job to talk up the market.
However, I am with the 9.5% of you who said 2015 has seen the top of the market. Sure, there are some sectors and regions around the UK where growth is still possible, but if we take the market as a whole, I am with those who claim we are already there.
Let’s start with the housebuilders. Countrywide issued a profit warning this week as the rebound in sales it expected following the election did not materialise, and Foxtons pointed to a 22.5% drop in posh house sales in London.
When the nation’s biggest estate agency and London’s posh home seller is issuing bad news, then that is pretty good evidence we have hit the top.
And what of the commercial property market? Well, I am with Dr Karen Sieracki of Kaspar Associates on this one. In some of the most considered research on the market I have read in recent times, conducted by Sieracki on behalf of Property Archive, she does not hold back, arguing that the market peaked in the second quarter of 2015 and now it is time to be “defensive”.
And, finally, to Mike Prew, managing director and head of real estate at Jefferies. Prew, you will remember, caused something of a stir when he called the top of the market over the summer. He has not changed his mind.
Writing in this magazine, he says: “We now forecast the IPD all-property capital index to fall -1% in 2016, which is down from our previous estimate of +6%, and we think under-yielding and over-costed shopping centres and retail parks will fare worst.”
So while I appreciate many of you, especially the investment agents with great big buildings to sell, will not want to agree with me, I urge you to listen to the inner voice in your head and admit we are there. We are at the top.
However, this doesn’t mean we are going to see the collapse in values as we have after previous peaks. On that I am with Toby Courtauld, chief executive of Great Portland Estates. He is expecting a gentle correction, not a trough; more of a smooth dip. So enjoy the slide.
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