Back to basics for homebuyers
Homebuying is about finding a place to live that suits your personal requirements. If speculation or investment considerations are uppermost in your priorities, you immediately give hostages to fortune
It's the survival of the fittest in the property market these days. The best way to buck the trend is to get back to basics and not go chasing Fool's Gold.
Accentuating the positive becomes second nature for anyone who has been in the property game for as long as I have. The eternal optimism of the estate agent inevitably rubs off. But, to quote PG Wodehouse, there are times when nettles must be bitten and facts faced.
Baffled buyers are running scared for fear they may find themselves up to their neck in negative equity before they can say "credit crunch". Bereft builders are scratching their heads wondering how they lost their Midas touch.
The Government has at long last shaken off its torpor by plugging the gaping hole in the national financial dyke. Yet it all reminds me still of the mood prevailing during an international conference I attended at the height of the 1980s economic collapse. The joke doing the rounds was: "What's the difference between property and an anti-social disease? Answer -- you can get rid of property . . . "
Thankfully, we have not quite reached such a pass yet. The big difference then and now was that the banks were lending at 23pc in those days. Tough as things are at present, we have at least been spared such penal rates -- although the cost of jump-starting America's flat economic batteries and bailing out our banks could yet conceivably prove to be a new inflationary spiral.
Next week's Budget will hopefully be a further step towards putting our economy back on track. Any concessions to first time buyers should begin the process of luring buyers back into the marketplace. With banks lending again, property activity should pick up -- for the moment, at least.
But make no mistake, we are far from out of the woods. Any financial decisions you make should bear this in mind.
How long will we have to wait before things get back to some semblance of normality?
International Monetary Fund research has identified 12 financial crises since 1970 where general banking guarantees of the kind made by our Government were introduced. Only three of these involved developed economies -- Sweden, Finland and Japan.
When guarantees have been used before, they were in place for 53 months on average. In the countries above, the timeframe varied from 46 months (Sweden) to 89 months (Japan). In other words, banking guarantees may appear like a "quick fix", but the reality has proven to be very different.
The Irish bank guarantee is for 24 months and this timeframe is deemed about right by financial pundits. Only time will tell.
Yet, no matter how clouded the outlook, there are always silver linings. Paradoxical as it may seem, hard times can ultimately turn out to be negatively positive.
The harsh dose of reality from the global credit crunch may be hard to stomach, but it was long overdue. And we will emerge the better for it at the end of this particular tunnel. It's high time now to get back to basics -- and that's the real good news. In my book, housing has always been first and foremost a factor of accommodation.
Homebuying is about finding a place to live that suits your personal requirements. If speculation or investment considerations are uppermost in your priorities, you immediately give hostages to fortune.
As I've said here before, the markets pulled themselves out of the 1930s collapse, weathered the emigration wave of the 1950s and bounced back from the awful 1980s. They will see their way through the Noughties too.
For their part, prospective homebuyers will have to exercise a much greater degree of caution than heretofore. Leave risk-taking to the professionals.
- Con Power
