Will the independent kitchen and bathroom market benefit from a ‘boom’ in the housing market? Probably not it would seem…
I guess the first question to ask is how real is the so-called housing boom? Lest we forget, we are just a few months away from a general election and that, in my experience, means you should stock up on pinching salt to see you through to May 2015.
There is a real confusion of statistics around property prices at the moment. A few weeks ago, the business sections of ‘serious’ newspapers were telling us that the ‘smart money’ was fleeing the capital as investors sought better returns from emerging markets such as China. (I didn’t read it myself, but I’d be prepared to bet the Daily Mail blamed hordes of immigrants for the property problem.)
According to London Central Portfolio Limited (LCP), specialist residential investment advisors, prices in England and Wales reached £177,299 – increasing 7.2% over the same month last year and 5.4% up year on year. Despite this positive annual performance, prices are disappointing for England and Wales still being 2% below the credit crunch high in 2008.
In fact, says LCP, these figures exaggerate the recovery as Greater London provides an artificial boost to the England and Wales statistics. Removing Greater London, average prices stand at only £133,537, based on average transactions for the year to date. This is just above the threshold where 1% stamp duty becomes payable and 16% lower than in 2008. Rolling annual price growth runs at just 3.1%.
So, not only is the ‘housing boom’ not really a boom, there could be worse to come. Mortgage approvals have fallen to a 16-month low, according to Catherine Neilan writing in City A.M., adding further weight to the argument that the housing market is slowing down.
Lenders approved just 61, 267 mortgages in September, according to figures published by the Bank of England, continuing the decline from a peak at the start of this year. In total, banks approved 20 per cent fewer mortgages in September than they did in January.
There is always the ‘silver lining’ of the thousands and thousands of ‘affordable homes’ that our political masters have promised to deliver, should they be elected in May 2015. Entering the realms of fantasy just for a minute and assume this promise is delivered, who will that benefit in KBBland? I can think of a few specialist contract kitchens and bathrooms suppliers getting very excited at the prospect of 100,000 new properties being built, but what are the chances that generous PC sums will be attached to homes deemed as ‘affordable’? Slim to none is my guess.
But, I hear you cry (or possibly sob), more property means more people will move and want to ‘do up’ their home to sell it and/or improve the home the move into. Oh really? If you were going to sell your home, would you put in the best kitchen and bathroom you could afford, or the least expensive you could get away with?
As for major home improvements from those that have moved – dream on. The days of ripping out tatty kitchens and bathrooms to replace them with quality alternatives from their local specialist probably went south along with self-certified, 120% mortgages that underwrote that home improvement ‘boom’.
Okay, let’s assume I’m wrong; and as readers of my blog will be all too aware it wouldn’t be the first time. Let’s say that Jo Public and her friends are out and about looking for a new kitchen or bathroom. If the feature on pages 36-37 in the October issue of kbbreview that provides an analysis of one consumer’s kitchen adventure with a £15k budget to spend is anything to go by, it’s the likes of Wickes that stand a better than evens chance of winning most of the orders in the next home improvement ‘boom’.