It’s great to see new indices with more information about moving home to come to market, and both OnTheMarket and Reallymoving have come up with very different ways of adding to our understanding of what’s happening. OnTheMarket, which covers the UK, has chosen not to focus on property prices like the rest of the reports, which is refreshing! Instead, their data measures look at how confident buyers and sellers are that they can purchase a home and how fast properties are selling. Their headlines this month show everyone is pretty excited about moving and that sales are, not surprisingly, selling pretty fast versus last year:
- 75.5% of active buyers in the UK were confident that they would purchase a property within the next three months
- 84% of sellers in the UK were confident that they would sell their property within the next three months
- 28.5% of properties were Sold Subject to Contract (SSTC) within 30 days of first being advertised for sale, compared with 8% in June 2020.
However, some of the most interesting data which could help everyone in the market, is the regional data they are producing regarding what buyers think about securing finance for their property – be it cash or mortgage.
No money, no worries?
The data shows that, in the main, most people aren’t that worried they will have a problem. It also shows the huge difference in those buying without a mortgage, which in London, it’s around 16% buying with cash, but in the South West, it’s as high as 47% – nearly half the number of buyers in the area.
What’s great to see is that anything from 27% of buyers in Wales through to 39% in Greater London are securing a mortgage AIP, showing that a good third of buyers are well prepared for the move and making an offer.
However, we all still have work to do when there is anything from 23% in the South West that haven’t thought about financing, through to 39% in Great London.
Having finance in place before making an offer is crucial for a successful purchase and we need to look at how we can improve these figures. Indeed, one thing which would be useful with this data is to compare what percentage of an agents’ buyers have a mortgage AIP while ‘shopping’ for a property – knowing if an agent is ‘above’ or ‘below’ the average could be incredibly useful moving forward.
The other new index is from Reallymoving and I need to be transparent in that I helped them develop this index. One of the things I’m keen to ensure is that ‘average’ property prices don’t mislead people. For example, the average house price in the UK is just over £250,000 according to the Land Registry. However, according to the Reallymoving data, when it comes to ‘affordability’, this really masks how in many areas, the majority of buyers, purchase for less than the prices you see in the Affordability table here.
And, according to Rob Houghton, Chief Executive of Reallymoving “What this data reinforces is the potential hurdles for certain types of buyers in certain areas and how they vary.
“Those planning to move to more affordable areas may have a range of options, but those eager to stay close to family, friends or work in higher cost regions might need to consider alternative locations or property types, or use government schemes to get onto the property ladder.”
Their other data really shows how we shouldn’t be relying on average property price data to let consumers know what’s happening in their market.
Although the ‘average price’ is just over £250,000 (Land Registry), the Reallymoving data for each individual mover group shows how much more and less people are buying for.
Average house price and quarterly growth by buyer type
What this data shows too is the different inflation levels for home movers. So, although many have reported that the rise in property prices year on year has ‘worsened’ first time buyer affordability, it’s clear that the large rises we are seeing are far more likely to be driven by upsizers and downsizers who have the money to compete property prices up due to higher levels of equity in a home than first time buyers.
Better still, this data is being produced on a regional and city basis, helping to show consumers, particularly first-time buyers, that average house prices do not reflect what they are expected to pay for a home. In fact, many can pay an awful lot less, helping to support demand into the future, rather than people ‘not bothering’ to search for a home because the news headlines all say they can’t afford it.
If we could start tracking and working out how we could improve the percentage of buyers understanding their affordability via a mortgage and communicate that properties are, in the main, much more affordable to first time buyers than they are currently being informed, this would go a long way to a more successful home moving market.