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SERVING A VOLATILE MARKET

26th August 1999, Page 32
26th August 1999
Page 32
Page 32, 26th August 1999 — SERVING A VOLATILE MARKET
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Which of the following most accurately describes the problem?

• There can be few sectors of the road haulage industry as cyclical as the removals business. Not only does the property market, which drives the industry, appear to follow a 10-year cycle of boom and bust, but also each year sees demand peak during the school summer holidays and then fall away to almost nothing after Christmas.

Being at the mercy of the property market is no fun. Buying and selling houses is the one really big-value business transaction undertaken by complete amateurs—the public—and it is ruled more by emotion than by business acumen. And, as we all know, property values can soar and plummet with breathtaking speed.

According to the latest figures from the Nationwide building society, property prices have risen on average by 6.9% in the 12 months to July1999.

But this masks a pattern of regional variations, says David Parry, divisional director of planning for the Nationwide. "Annual price rises range from 1.2% in the North-East to 12.6% in London. This variation is also present at the regional level." The majority of house-moves are essentially local, so these regional variations in property values can mean that some removals firms fare better than others, even in a rising market.

Of course it is the number of property transactions that most affects the removals industry's workload, and this is directly linked to the price fluctuations. In 1997, the number of house sales hit its highest level for 10 years, with 1,440,000 transactions. In 1989, the historical peak, some 1,621,00 properties were sold and this fell to a low point of 1,093,000 in 1992.

The upward trend continues, with 679,000 transactions in the first half of this year, up from 654,000 in the same period last year.

Perhaps one of the big ironies for the removals industry is that while the huge hikes in property values inflate the value of the property industry, operators are unable to raise their rates proportionally.

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People: David Parry
Locations: London

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