Editor’s note: This is the first part of an occasional series. Inman News Publisher Brad Inman is chronicling his real estate observations in Europe as he meets up with real estate industry officials abroad. His travels will take him to Amsterdam, Berlin and Paris, among other destinations. See Part 2, "Online listings battle sweeps U.K."; and Part 3, "Dutch toughen up for downturn."
LONDON — The European housing markets are turning as bitter as vinegar on chips as property sales and prices come tumbling down.
Property values fell to their lowest level in 30 years in September, according to the Royal Institution of Chartered Surveyors.
Prices have fallen 15 percent in the last year with some local experts predicting a 50 percent drop before the bottom is reached. As many as 60,000 homeowners are dipping into "negative equity" per month. The U.S. market began to fall in late 2005. The U.K. market stayed strong until last year, but now it is falling fast.
The property section of The Times of London last Friday led with an article headlined "It’s Chic to Rent: Why being a tenant is suddenly back in fashion." Just nine months ago, buying property was as much a habit as young men going to the pub.
The newspapers are filled with doom and gloom, and blame is slewed around everywhere. A Scottish leader has grown fond of calling Prime Minister Gordon Brown, the "sub-prime minister."
The English seem to be confronting the realities of the market downturn without the denial and Pollyanna mood that was prevalent when the U.S. market went bad, and the industry here is bracing itself for a very cold winter.
In part, what is missing from the U.K. market is the sound of a million cheerleaders (Realtors) that characterizes the U.S. market. Real estate here is organized around unglamorous "estate agents" who handle both sides of the transaction for a 3 percent commission, all in, and carry a very low profile in the market. Instead, the big estate offices control the leads and drive the market activity. There is no personality, or celebrity top producers, in the more humble English property scene.
Estate agents, unlike the U.S., do not have their pictures on their business cards and do not market themselves or their properties like the go-go Realtors in America.
Economic woes loom large in the U.K., with 300,000 layoffs announced last week. This past weekend the newspapers were filled with stories about the economic disaster. A slew of articles focused on how to survive the downturn, with tips such as fixing your old shoes instead of splurging on new ones.
London is filled with "Let" signs, our equivalent of "For Rent," both residential but even more telling for commercial and retail space, suggesting that layoffs and deeper economic woes loom on the horizon.
"Eighteen months ago, estate agents barely bothered with ‘For sale’ boards in the more desirable areas: they could sell a property before the details had even been printed," according to an article in the Sunday Telegraph. "Now their signs are the ultimate expression of hope over expectation, many changing to ‘To let’ or vanishing after a few weeks of zero interest."
Many articles on the economy debated the term "recession" vs. "depression", and in the English style both humorously and linguistically described the meanings and origins of the words. The home section of the Financial Times of London on Sunday headlined: "Where to buy a home to raise livestock and live off the land." This trumpeted a theme of survival that was echoed in other media throughout the City.
In the next segment: The market does not deter real estate technology innovators in the U.K. who build new models and tools around listings and Web 2.0.
Bradley Inman is founder and publisher of Inman News.
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