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Housing market treading water

Designs on Property tracks and summarises the monthly property indices. Kate Faulkner says, “There’s mixed feedback from the industry as Brexit fears discourage movers.”

Kate Faulkner

Kate Faulkner imageRightmove’s sales prices have edged up a little and are almost back to July’s pre- Brexit vote average, while Nationwide and Halifax mortgaged property prices have remained pretty steady over the summer months.

Properties imageAt the moment it appears that the homemover market is doing well, while the buyto- let market is still giving mixed signals with some saying, such as the RICS, that numbers are down while other agents, especially in cheaper areas are reporting ‘no problem’, suggesting many are ignoring the pending tax changes.

LSL figures show that sales volumes for the first 8 months of 2016 total 574,442, which is 0.5% lower than the same period of 2015.

However, we’ll have to wait to see what happens at the Autumn Statement on the 23rd November to see if this Cabinet considers individual buy-to-let investors as part of the housing problem – or can work out how they can be part of the solution!

UK COUNTRIES

The regional data suggests that Welsh average prices should recover in the next six to twelve months to pre-credit crunch levels, meaning it will have taken 10 years for prices to have recovered in this region. Of course, this ignores the fact that anyone owning a property outright will actually have still lost ‘real value’ on their property as inflation over this period has been 25 per cent. This poses a serious question as to whether owning property with cash is wise, especially for investors.

Scotland has pretty much recovered, but this is just on average and different areas perform at different rates, with Aberdeen suffering just now when the recession didn’t really touch them due to their oil dependent economy. Northern Ireland however, still remains ‘cracking value’ or ‘a nightmare’ for those in negative equity.

NORTH AND SOUTH

The ‘southern power house’ of property prices continues to drive prices up in double figures, year on year, and is pretty consistent with the likes of Brighton and Hove and Reading regularly appearing in the top five for both short term and long term high growth rates. Meanwhile, it’s a surprise to see Edinburgh not doing so well just now year on year, while Glasgow remains a poor performer price wise both year on year and long term.

The ‘northern powerhouse’ may be an aim for business, but property-wise still has some way to go to see prices really take off and anyone investing here needs to look to gearing to make investment work as cash investment is unlikely to stack up versus inflation with such low growth rates in the short and long term.

TRANSACTIONS, DEMAND AND SUPPLY

Sales have been remarkably static over the summer months with the NAEA showing average sales of eight properties per branch since May – that’s the first time it hasn’t really been up and down like a yo-yo for a while. Overall though, it appears from the LSL figures that “sales volumes in England & Wales for the first eight months of 2016 currently total 574,442, which is 0.5 per cent lower than the first eight months of 2015.”

They estimate that sales for the rest of the year will be similar to 2013, so from an agent’s perspective, it’s worth looking to see what transactions you were doing then to help you forecast performance over the coming months.

NEW BUILDS

During June 2016 – August 2016, the number of NHBC new home registrations was 36,869, compared to 40,123 in the same period last year.

28,129 were registered in the private sector, compared to 30,097 in the same period last year.

8,740 were registered in the public sector, compared to 10,026 in the same period last year.

“While overall rolling quarter numbers are down 8 per cent, this came during an unprecedented period of uncertainty immediately after the EU Referendum. Despite this, over half of the UK regions experienced growth in registrations compared to the same three month period last year.”

REGIONAL PROPERTY PRICES

Comparison of regional property price changes year on year by each index, see chart above.

What’s happening to property prices for individual buyers in the property market?

The data below gives an indication of which type of buyer pays what average price for a property. Currently in England, first-time buyers pay the least; an average of £195,484. But don’t forget this is completely skewed by London, and in Wales, for example, they are paying an average of £125,245.

Cash buyers are typically paying £218,331 while new build buyers pay the most at £295,039.

However, they don’t typically 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

The latest data from Agency Express and gives an indication over a three -month period of what’s happening to supply (new listings) and demand (properties sold over time).

The data shows “new listings ‘For Sale’ falling by -6.1 per cent and properties ‘Sold’ by -1.3 per cent, supporting other indices that show that 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 aff ordability. (UK)
  • Halifax Measures mortgaged prices and produces individual research, ie seaside towns. (UK)
  • NAEA Tracks first-time buyer sales and provides supply/demand figures 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 financing. (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 Tracks sold property price data, good for accurate information, but doesn’t reflect 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 

 

November 21, 2016

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