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May 17, 2022
Jeremy McGivern
Posted in: Negotiation advice and techniques, What’s happening in the market?

What do these experts show about negotiations?

“London set to lead house price crash as bills soar”

This is the headline from a newspaper article that was echoed by several other newspapers.

It is based on analysis by Capital Economics who have said that “London will bear the brunt of the decline with a 10 percent drop by 2024, while prices fall by five percent in the rest of the UK.”

But how does this help you? What information does this really give you?

As ever, the economist’s prediction is far too general to be of any use whatsoever, because every situation and area is different.

For example, imagine you are on holiday trying to relax but it’s impossible. Yes, you’ve made the fatal blunder of taking your children with you and once again they are asking for money – to buy an ice cream, go on a jet ski or purchase a unicorn… Depending on one’s mood the negotiation will be handled in a certain way.

Then consider you are on holiday, walking down a street when two people pull up on a moped also asking for money, this time brandishing a large knife or gun. Does this negotiation hold any resemblance to the one you have with your children?

Unless your family is astonishingly dysfunctional, I expect not!

Same topic – different situation.

What the blazes does this have to do with London property crashes, McGivern?

Well every situation is different:

Capital Economics seems to assume that the world is going to implode for everyone when interest rates rise to 3%, but this is nonsense. Of course, the rise in fuel and food prices is exceptionally bad news for an awful lot of people, so what I am about to suggest will sound callous and unkind but the truth often is:

If you are deciding on a negotiation strategy you must only look at the facts pertaining to the area in which you are negotiating. By that I mean, you need to consider who your competition is and what is happening and is likely to happen in your target market.

Here is a fact for you:

In Kensington and Chelsea 48 per cent were cash buyers.” (Source: Savills)

How many of these people do you think are affected by the cost of a bread and heating? And the 48% statistic doesn’t tell the whole story because an awful lot of the 52% who take a mortgage don’t need it. I have several clients who use mortgages for inheritance tax purposes or because they can use the cash more productively than the cost of the mortgage.

So, how likely is it that Kensington & Chelsea prices will fall because of the “higher cost of living”? I would suggest that it is rather low. The same will be true for a surprisingly large percentage of the UK (there are several factors outside of interest rates that Capital Economics seem to have ignored. If you would like more information on this, please email dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK)).

Whatever you do, would it be a bad idea to pay more attention to the facts in your target area rather than generalisations in the press which are misleading? Otherwise you will make a horrible mistake.

About the author, Jeremy McGivern

My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.

Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade.

My advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.

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