Market Report: On your marks… get set…
Joe Arnold (pictured) is managing director of Arnold & Baldwin
September has historically been a time when the housing market picks up after the summer slumber and, while this year could get off to a slower start under the shadow of Brexit negotiations and a reported reduction in appraisals by valuers, there are signs of movement.
According to the Rightmove Price Index, ‘Back to school’ season offers greater choice for buyers, with 16% more stock coming to market in the first week of September compared to the average of the final summer weeks.
The NAEA says the number of house hunters registered per branch fell in July to 303, which is the lowest number since December 2017, when it was 268. For the last three years, while demand has dipped in June and July, there has been more choice for those looking to buy and the level of stock per agent branch increased for the third consecutive month in July to 41, marking a 17% increase on the same month last year.
First-time buyers took full advantage of these conditions with 30% of all sales made to new homeowners. This is an increase of 1% from June and 7% from July 2017.
Mark Hayward, chief executive, NAEA said: “July was typical of summer when house hunters put plans on hold as the holiday season takes priority, demand dips as a result but we don’t usually see first-time buyers taking advantage of this environment. In September, buyers typically storm the market in a bid to complete in time for Christmas.”
Indeed, first-time buyers have been success story of the year so far, according to Halifax. Numbers have more than doubled since a record low of 72,700 in the first half of 2009 and are now just 8% lower than the 2006 peak of 190,900. First-time buyers now account for more than half of all mortgage financed house purchases, up from 38% in 2008.
Prices are still subdued, and the commentary is of the London market weighing down the rest of the country. The Savills UK Housing Market Update says the greatest price falls in the year to June were in London, with Kensington & Chelsea and Westminster showing annual drops of -8.5% and -6.8% respectively.
However, Knight Frank says that, despite the headline decline, recent data shows prices have risen in around half of the outer boroughs, some by up over 5% in the past 12 months. And the ratio of prospective buyers to new listings rose to 9.2 in July, which is the highest for more than two and a half years – indicating an upwards pressure on pricing.
But this positive sentiment continues to be tempered by the spectre of Brexit. A Bank of England report into a worst-case scenario for house prices said that prices could potentially fall by up to 35%. This was a stress test of the worst case scenario and it naturally made its way to the front pages, with the subsequent wave of hysteria unfortunately drowning out some of the more positive noises from the market.
If the coming months bring more clarity around a future beyond Brexit, or even a review of the UK’s decision to leave the EU, there is indication that without political distraction the market is getting in shape to move forward again.