What The Property Market Doesn’t Need Is Hype, Just Steady Growth
We track most of the monthly reports on property prices produced on a monthly basis. This report summarises what’s being said about the market and includes Kate Faulkner’s comments on what this means primarily for the general public, but also for the industry, market and economy.
Rightmove -“New sellers ask over £250,000 for first time as South East ‘lifts off'”
Home.co.uk -“Buyers compete as supply shrinks further”
RICS -“Housing market gathering momentum”
Acadametrics -“House prices rise to highest on record in May”
Savills -“Many first-time buyers will continue to rent as house prices remain out of reach despite the introduction of government initiatives”
Kate Faulkner comments on Report Headlines:
“The momentum of property prices from an asking price perspective shows a confidence from sellers in the market, which we need to be sure translates into real property price growth when it comes to sales.”
New Home Property Prices
Savills – Help to Buy – Effect of prices:”Critics have expressed concerns that the scheme may yet prove self-defeating by stoking up house prices and pushing them even further out of reach of first-time buyers. We believe Help to Buy will stimulate values, boost transactions and encourage more private house building. Assuming a successful take up of the scheme, we could see house prices rise by 15.3% over the next five years, rather than 11.5% previously forecast. However, we do not expect it will cause a house price bubble. Help to Buy is unlikely to transform the market and reverse the demand in rental homes. (Q2 13)”
Kate Faulkner comments on New Home Prices:
“It’s interesting that a figure of house price rises of 15% over the next five years sounds high, however, the big news is if this were to happen, it would be the first time since in the last six years that house price growth has kept pace with inflation.”
Regional Property Price Differences
Rightmove -“While London sets another new record of £515,243, continuing its upward trajectory, the biggest winner is the South East which sees a record price of £329,968 as a result of a whopping 14.8%increase over the first six months of 2013. There is also early evidence of a wider recovery as asking prices in the north (North, North West, Yorkshire & Humber, East Midlands, West Midlands, and Wales) rose by 9.2% , almost keeping pace with the 10.6% seen in the south (Greater London, South East, South West and East Anglia) over the first half of the year.”
Home.co.uk -“Looking at price trends around the country, the recovery is only clearly apparent in the South. Average prices across the northern regions of England are essentially static (slightly negative in the case of the North West) in stark contrast with the South which has recorded monthly increases of 0.8%. In terms of annual prices, Greater London, the South East and the South West recorded the highest rises of 7.9%, 4.4% and 3.9% respectively.”
RICS -“There remains considerable regional variation, with prices over the next year expected to increase by 4.1% in London compared to 0.2% in Yorkshire and Humberside. Nevertheless, given that many parts of the UK are still experiencing house price falls in year on year terms, it is noteworthy that respondents across all of the survey’s regions are now expecting positive price growth over the next 12 months, including Northern Ireland at 0.6%.”
Acadametrics -“It is only in Greater London that average prices have reached a new record level, with all the other regions still having prices below their previous peaks, ranging from a shortfall of 11.3% in the North to 0.5% in the South East. Nevertheless, the impact of the Greater London region means that the average house price in England & Wales as a whole has also reached a new peak.”
Kate Faulkner comments on Regional Price Differences:
“The regional picture continues to show that average house prices, however calculated, are pretty meaningless for anyone buying, selling, building, renovating or looking to invest. The views of your local estate agent on the market place have never been needed so much to help know whether now is a good time to carry out your property project.”
Demand for Property
RICS -“The activity picture has improved markedly, with the newly agreed sales balance increasing from 21 to 30 and the new buyer enquiries balance rising from 27 to 30. Both indicators have reached 2009 levels.”
CML -“House purchase activity was little changed in April, and like the underlying components – first-time buyer and home mover activity – the number of loans advanced edged down slightly. While there was no change in the value of house purchase lending, the number of loans advanced dipped compared to March. A total of 42,600 house purchase loans (worth £6.3 billion) were advanced in April, compared to 43,000 loans in March. As with first-time buyers, comparisons with a year earlier are distorted by the end of the stamp duty concession, but if we compare the first four months of this year with the same period last year there was a 1% increase in house purchase activity.”
Kate Faulkner comments on Demand for Property:
“Despite talk of more activity in the market, this has yet to translate into an increased number of transactions and mortgages. We will have to wait for summer mortgage figures to see if people really are
buying more homes than last year.”
Supply of Property
Home.co.uk -“Active buyers are chasing ever fewer properties as supply continues to fall. The volume of new stock on the market has now fallen for six consecutive months and, in May 2013, the number of
properties was down 8% on May 2012. In addition, a reduction in the typical marketing time for unsold property (currently 104 days, five days less than June last year) has further reduced the total volume of on-market properties, which is down 14% in the last 12 months.”
RICS -“The pick-up in buyer interest over the last three months or so appears to be enticing more homeowners to test the market, with the new vendor instructions balance reaching 15, up from 8. In spite of the increase in new instructions, average stock levels (per branch) actually fell on the month, which allied to a rise in average sales levels, pushed up the sales to stock ratio to 27.5%.”
Acadametrics -“With housing supply still far too low relative to demand, there is a risk we will see effective demand rise and with it house prices.”
Kate Faulkner comments on Supply of Property:
“Property prices have always been driven by the availability of credit, and supply and demand typically driven mostly by confidence. With renewed ‘good news’ about the property market, more people are looking to buy while sellers, even if they are keen to move, seem to be more cautious. A rise in demand this year without a rise in supply could cause a mini spike in prices, but it’s not likely to last long.”
What to do next?
Don’t carry out a property project, especially buying and selling without taking independent, up to date, advice. On average 30% of property sales fall through after offers are accepted – this can cost you thousands of pounds, let alone the stress of losing a property you wanted to buy.
About Kate Faulkner
Kate carries out over 50 speaking engagements every year, highlighting property market issues to the industry and consumers. She has written six property books including four for Which?, is a featured property expert on the 4Homes website, regularly presents market issues for BBC Radio Nottingham and has a column in the Nottingham Evening Post and is currently the Telegraph’s property club Q&A person.
She has appeared on BBC Breakfast News, Daybreak, ‘Your Money’, Radio 4’s You and Yours, Radio 5 Live, ITV/ITN News and The Big Questions.
For more information contact Kate Faulkner directly on 07974 750562 or firstname.lastname@example.org