Property Slump Close to an End?
August 20th, 2009
Jon Hunt, the Foxtons estate agency founder who picked the top of the housing boom in 2007, says he believes the 18-month property slump is close to an end.
Mr Hunt, who sold Foxtons for about £370m on what turned out to be the eve of the credit crisis in the summer of 2007, said he was starting to see buying opportunities in some areas again.
“Housing I think is probably there,” he said of the London market, which he believes has already dropped 20-25 per cent and is unlikely to go down any further.
He said he was not calling the bottom of the entire property market, because weaknesses could still emerge in some areas, but it was nevertheless clear that a turning point was being reached. “I have been waiting for this all my life,” he said. “At the moment, it is the property man’s dream, having cash in the pocket and a distressed market.”
Mr Hunt, 55, is still sitting on more than £300m from the sale of the fiercely competitive Foxtons chain, which he sold to the BC Partners private equity group.
He dismissed speculation that he might return to the estate agency business, or Foxtons itself, but said he was planning a new serviced apartments operation in central London.
His comments come in a week when a range of data showed slight signs of improvement in the property market.
However, Mr Hunt warned that the poor economic outlook meant the market would not bounce back quickly and could take 10 years before recovering to near its peak again.
“I have never known a recovery where the market just bounced,” he said. “The past two downturns, the market just trawled along the bottom and we have to go through that stage first.”
IHS Global Insight, an economic consultancy, reinforced the point this week: “Given still very tight credit conditions, poor economic fundamentals and the fact that affordability ratios are moving back up now, we suspect that house prices are highly likely to suffer relapses over the coming months.”
Other industry players say that although confidence is returning, plummeting supply is creating an artificial floor to the market.
However, John Hitchcox, founder of property company Yoo, who has been investing in property for more than 30 years, said he also believed the bottom of the market was nearing. “The sword is now close to the ground. It is all about getting on the train at the right stop. We can’t be exactly sure where but [it is] close enough,” he said.
Story from FT.com
