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We are still trying to buy a house in Edinburgh. It’s exhausting. Why? Nothing to buy. Like all the other buyers knocking around, we don’t want any of the houses on the market: they’re either not very nice, or they’re commercial buildings tipped for residential conversion that no one can get a mortgage on. And, despite the estate agents’ promises, nothing new is coming on.
The problem, it seems, is that while people want to sell, they refuse to do so at anywhere near today’s price. They call an agent. He tells them what the house is worth. They recoil in horror, point out that in 2007 they could have got £500,000 more for it, and refuse to sell. So the market remains in a tedious stand-off.
Who will blink first? The would-be sellers think it will be the buyers. They’re wrong. We know unemployment is rising, as is underemployment (however you spin the statistics). And we can guess that with public-sector spending cuts on the way, it will rise further and faster than it has so far. We also know that, whether base rates rise or not, mortgage rates aren’t falling further and, in many cases, are rising. Several institutions have hiked their standard variable rates recently and the only good deals on the market are still for those with big deposits.
A developer told me a few months ago that his flats were selling well. The amazing thing, he said, is that almost all his buyers were paying in cash. But that’s not good news – it means non-cash buyers can’t or won’t raise the money to buy. What happens when all the cash buyers have bought? The statistics tell us that house prices have risen fast in London, due to over-the-top bonus payments and foreign buyers waving their overvalued euros around. But outside London we mostly don’t have bonuses or euro buyers to gloss over reality. So the sellers will have to blink in the end.
Finally, a note on our profile this week. We look at the career of Adam Crozier. I’m not too impressed by the idea that any employee is worth what he is to be paid by ITV: he is, as one media banker told The Independent, a “lucky devil” for being offered £15m. But his appointment is also odd in that he hasn’t got a great track record, nor any TV experience, so hiring him could seem to be about little more than hiring a known name of some sort. He may turn out to be good at running ITV (although given the size of the company and the many other influences on its possible success this will be hard to prove either way), but it’s hard to believe that he’ll be much better than another middle-aged manager with some TV experience. We’ve been looking at the debates surrounding the “talent myth” – the probably wrong idea that only a tiny number of people have the special skills to be a good CEO. Join the conversation on our blog.
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Merryn Somerset Webb
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