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House prices and sales hold steady

Designs on Property tracks and summarises the monthly property indices. Kate Faulkner says, “It’s time for agents to be the ones that inform and educate on local property markets.”

The Negotiator

Kate Faulkner imageFor the national market, the LSL Acadata HPI is probably the most interesting read this month. One of the key things is that average property prices, according to their indices, were £291,103 in January; rose to £297,205 in February but since May they have hardly moved and hovered around the £292,000 level.

New home key imageAnd having started the year 6 per cent up, house price inflation is now down to 4.3 per cent – although that’s not bad considering the Brexit vote!

RICS calms the market’s nerves over the vote, saying ‘House price inflation regains some momentum’; ‘Sales hold steady over the month’ and ‘Buyer enquiries and sales instructions continue to slip, albeit at a greatly reduced pace.’ So all in all, considering we’ve had a pretty big shock to our system and, to some extent, evidence of the economy slowing, the impact on the property market of the Brexit vote so far seems pretty minimal. At the end of the day, life goes on and people need a roof over their heads!

UK COUNTRIES

Halifax’s data for Quarter Two this year concentrates on the phenomenal differences from one region to the other, especially since the credit crunch. The regional picture from all the indices just shows how dangerous communicating ‘averages’ are now to the public. Telling people prices are up by four to five per cent year on year, when for some, such as in the North, Wales and especially Northern Ireland, property prices are still substantially down compared to what they were worth pre-credit crunch, is not helpful.

The impact on the property market of the Brexit vote – so far – seems pretty minimal. At the end of the day, life goes on and people need a roof over their heads!

The key task for agents now – before attending instructions – is to make sure they know what someone paid for a property. Looking at property price reports helps us understand what a buyer and seller might think is happening in the market place, but it’s sold property price data that will tell us about their ‘individual property market’ performance which, if people bought around 2005-2007 could mean their property is still worth less than they paid for it, nearly a decade on.

I highlighted this in a report prepared with the BBC on Peterborough which showed some property prices were up, some down and some had stayed the same in the last 10 years: https://www.youtube. com/watch?v=0PDHF4Q0fb8

This is the kind of analysis every agent should be doing – and advising local people of – on their area. It’s time for agents to be the ones that inform and educate on local property markets.

CITIES AND MAJOR TOWNS

Double digit growth is now starting to reach areas outside London and the LSL Acadata HPI shows that it’s not just strong economic towns such as Milton Keynes and Bristol that are doing well, but highlights that more affordable areas around London such as Luton, Slough and Thurrock are all doing well, seeing growth of 14-16 per cent. Meanwhile, savvy buyers in the prime markets seem to have pushed down house prices, probably through tough negotiation on the back of the Brexit vote. These falls though, coupled with the fall in sterling, may well end up causing a revival in the prime markets, unless the high taxation brought in over the last few years makes other international property hotspots more attractive.

TRANSACTIONS, DEMAND AND SUPPLY

Transactions certainly did reasonably well in August and overall, bearing in mind the massive sales experienced in March, volumes are marginally up year on year. The RICS asked an interesting question – where was demand coming from? They are picking up a fall in buy-to-let (no surprise as many tried to beat the stamp duty hikes) while first-time buyers and existing owners are still continuing to buy, albeit at slightly lower levels than before.

However, I think this depends on where you are in the country as other agents are telling me much of their business is still from buy-to-let investors. Other useful information is provided by Rightmove who say that how quickly you secure a sale depends on your property size. Four-bed homes are taking up to 74 days to secure an offer, whereas smaller two and three-beds, are being snapped up substantially quicker – in just 58 days – by first-time buyers and second steppers. Again, though, this is likely to be very different depending on the local market, so it’s these kind of statistics and reporting at a local level by agents that can be incredibly helpful, especially if you can secure support from local radio stations, newspapers and the many digital versions. Some of these such as West Bridgford Wire on Twitter and Lincolnite can massively help drive traffic to your website.

AVERAGE PRICES

Currently in England, first-time buyers pay the least; an average of £192,987. But don’t forget this is completely skewed by London and in Wales, for example, where they are paying an average of £125,590.

Cash buyers in England are typically paying £215,534, 8.7 per cent up on last year, while in Wales the average is £142,348. Finally, new build buyers in England pay the most at £268,703, up by 9.2 per cent from last year, while in Wales the average is £178,598. However, wherever they are, they don’t tend to carry out any renovation and would expect to have lower maintenance costs versus buying a second home, and potentially lower running costs if the energy efficiency is greater.

DEMAND AND SUPPLY

RICS reports show that July had a bit of a wobble in the run up to and immediately after the European referendum. While latest data very much suggests that although buyer and seller numbers are down, the housing market appears to have settled down following the Brexit vote. And, with economic indicators suggesting we are not all doomed, as predicted – it’s likely that, although at a slower pace, we will still see more buyers than sellers and, as a result, prices will remain up year on year.

Agency Express data gives an indication over a three -month period of what’s happening to supply (new listings) and demand (properties sold over time). This data shows “new listings ‘For Sale’ falling by -3.2 per cent and properties ‘Sold’ by -3.8 per cent,” supporting other indices that show we are seeing both a fall in stock for sale and the number of sales going through.

KATE’S GUIDE TO THE INDICES
  • Rightmove Useful to measure average time to sell and sellers’ sentiment. (E & W)
  • Nationwide Measures mortgaged property prices and affordability. (UK)
  • Halifax Measures mortgaged prices and produces individual research, ie seaside towns. (UK)
  • NAEA Tracks first-time buyer sales and provides supply/demand fi gures from agents. (UK)
  • RICS Excellent for supply/demand analysis and on forecasting the market. (UK)
  • BBA Provides a huge amount of data on the economy/prices/transactions and fi nancing. (UK)
  • Agency Express Analyses for sale/sold boards, good for ‘current’ market trends. (E,W & S)
  • Hometrack City analysis across the UK and compares current prices annually and quarterly. (E,W & S)
  • LSL Acadata HPI Analyses Land Registry figures, separates out London, good analysis on transactions. (E & W)
  • Land Registry figures, separates out London, good analysis on transactions. (E & W) Land Registry Tracks sold property price data, good for accurate information, but doesn’t refl ect current market conditions. (E,W,S & NI)

Kate Faulkner, Property Market Analyst and Commentator www.propertychecklists.co.uk Email: kate@designsonproperty.co.uk Telephone: 01652 641722 

October 4, 2016

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