Grenville shares the Countrywide story including surviving the Global Financial Crisis (GFC) through debt restructuring.
“More enduring wealth is created during times of market stress than at other times.”
The UK market is similar to the Australian market in that population growth is driven by overseas migration. Before 2007 the UK market was thriving with 100 billion pounds in the property market. When the GFC hit that amount dropped to 30 billion. This was a dramatic crash and resulted in a cautious approach from lenders, including the loss of first home buyers in the market and no loans with a loan to value ratio (LVR) above 75 per cent.
The UK housing market began to recover slowly with price growth predominantly led by London.
During this time Countrywide, like everyone else, began to feel the pressure and for the first time would finish the year in debt. Countrywide had over 1300 high street businesses and over 10,000 staff who were all employees (not franchisees). They specialised in acquiring businesses but kept their old names and residence.
With the GFC hitting hard, the business was almost a billion pounds in debt and needed to look at new ways to recover.
Countrywide began to acquire other businesses in the real estate industry including insurance and conveyancing. For every pound they make from buying a house – Countrywide will make 60 pence from cross sales.
The business was eventually brought the business back to market value through offering integrated services to residential or commercial consumers, invest in businesses, land and new homes, and by understanding the fundamental rule of keeping the cost cutting measures that were pertinent during the GFC.
Remain in control of the destiny
2013 saw the start of recovery in UK market. This meant successful initial public offering (IPO), and growth in revenue and profitability across the divisions. London is considered a safe haven for investors where 45 per cent of people now rent privately. The cost of buying and owning a property is still relatively low compared to other major cities.
Australia is luck in that we haven’t suffered the succession like the rest of the world has seen and the broker market is now at 50 per cent.
“The mortgage market drives the property market, not the other way round.”
Providing the quality service and funds to clients drives the property market.
Granville’s closed with a final tip for surviving in tough times:
“The biggest mistake is not learning from those mistakes”.