myi: What do you believe the future holds for the valuation industry?
Since the 90’s the residential valuation industry has in large part been dependent on mortgage valuation instructions generated by lenders as its bread and butter work. Its therefore not surprising that since 2007, the sector has suffered considerable contraction in line with mortgage volumes.
Many firms have gone under as a consequence of much lower demand and higher PI premiums. Failures of this kind remain a fundamental issue for the industry. As a consequence of both these points, lenders have reduced active panels and I anticipate that this trend will not reverse in 2011.
Lenders are looking for financially robust firms who can contribute positively to their own risk management strategy. The PI arrangements currently in place are arguably not fit for purpose in all instances and if lenders are to have confidence restored, I would like to see some innovation in this area to allow more firms to trade meaningfully.
Difficult times also inevitably represent opportunities for those in a position to take calculated risk and I anticipate more consolidation by larger firms such as e.surv.
Finally, partly as a consequence of lower demand, the sector is increasingly turning its attention to the provision of private surveys which fill in the gap left by the mortgage valuation. This is turn will generate opportunities for distribution and income generation for other professionals in the property buying process such as intermediaries, agents and solicitors.
myi: What's your future strategy for your parent group, LSL Property Services?
Strategy for LSL plc is of course set by the main board, led by our Chief Executive Simon Embley and I am pleased to be a part of the management team supporting the board.
If you review our Group strategy since creation in 2004, there is a very clear policy of growing both organically and through targeted acquisitions of assets in our main areas of interest, namely Agency, Valuations, Financial Services and Asset Management.
There should be no surprise to see a continuation of this approach, if opportunities arise. Demonstrably the Group has turned around several acquisitions from red to black and increased efficiency through interdepartmental support across Group.
Naturally, each acquisition carries some degree of risk- however the Group believes that the best opportunities come if you can take a longer view than just immediate short term benefit.
We will continue to scrutinise potential opportunities and are mindful to avoid management stretch-we are certainly not complacent in this regard-but I also think it’s fair to say we’ve done that pretty well thus far.
myi: What are your predictions for the Housing Market?
Housing predictions are notoriously volatile and increasingly fuzzy the further ahead one looks- personally I don’t set any real store by forecasts longer than 6 months- the current approx average time it is taking to sell a property.
To predict the future, a sound understanding of the past is also extremely helpful- to this end we produce the LSL Acadametrics House Price Index- which also takes account of the myriad of other indices that exist.
On a national basis, we believe that house prices will continue to cool slightly for the next 6 months, perhaps 0.5% per month. However, as always, underlying this headline figure, there will be significant regional variations.
London and the South East are in fact looking reasonably healthy, but all other regions are falling back and will continue to do so. Northern Ireland in particular looks challenging- and the return of low level social unrest in the province will not help its cause.
The market will see perhaps 600,000 sales in 2011, against a long term average of circa 1.2m- so realistically significantly depressed in terms of sales. Whilst we have seen the proportion of cash buyers rise significantly (up to 50% in some areas), this is a response to the lack of availability of finance.
When mortgage funding begins to recover meaningfully, I anticipate a knock on effect for housing. At the moment, investors are taking the place of the important first time buyers and sustaining markets which otherwise would be very quiet. We are also increasingly seeing offshore ‘property funds’ showing interest in UK assets- the activity of these last two groups suggests they are calling the market as at or close to its low.
With property supply fundamentally in shortage, over any timescale, property remains a strong investment- people should just not expect to double their money every year- that’s partly how we got into our current circumstances!
myi: What trends do you see for repossessions and lending in future years?
LSL are a leading provider of Asset Management Services for lenders and monitor repossession levels very closely. Repossessions in 2010 and 2011 to date have been lower than expected, fundamentally suppressed by all time low interest rates.
Whilst this is good news, the fact that there are still individuals who cannot pay their mortgage with base rate at 0.5% should be a cause for concern. Lenders have also genuinely been doing all they can to support householders in difficulties.
However, they are sometimes between a rock and a hard place- leaving a customer in a property to run up a debt co
