New sellers increase asking prices
This is according to Rightmove’s House Price Index for February. With lenders stating that they expect mortgage lending to remain static at around 2010 levels throughout 2011, and new seller numbers practically unchanged year-on-year what might have been seen as a passing phase of low transaction levels in the housing market now looks set to be the norm for the foreseeable future, according to Rightmove.
Commenting, Miles Shipside, director of Rightmove, said: “Any hopes that transaction volumes may be on the springboard preparing to return to historic norms will have been dashed by lenders’ predictions that 2011 lending volumes will match 2010’s dire levels.
“The current subdued market volumes are set to be the new norm unless the seemingly never ending discussions between Government and mortgage lenders find some way of increasing ‘Mr Average’s’ access to lower deposit mortgages without pricing them out of the market .”
There appears to be a three tier market, according to Rightmove, with the more ‘elitist’ tier being courted by lenders attracted by low loan-to-values that help them build a more profitable and lower risk mortgage book. This supports an active but low volume market in the country’s desirable locations, with a natural bias towards top end buyers and the more affluent south.
“Movers closer to the capital have the capital to move,” said Shipside. “The middle tier, traditionally the mass-market that includes ‘Mr Average’, is suffering from paralysis due to a lack of mortgage finance and insufficient equity to trade up. 530,000 mortgages were taken out in 2010, while Rightmove recorded circa 1.3 million properties coming to market over the same period.
“While not every property coming to market sells and not every buyer requires a mortgage, these figures show the clear imbalance between property supply and lenders’ willingness or ability to fund the traditional volume market.”
Rightmove’s traffic statistics show home-hunters are setting new search activity records, but are likely to discard the less attractively priced and presented stock in favour of keenly priced bargains.
Shipside commented: “Some ‘average’ sellers of yesteryear are now trading up by letting out their own home and renting the next rung up the ladder as they cannot get a suitable mortgage to sell-up and buy a more spacious house.
“Meanwhile, professional investors are being funded by lenders to buy starter homes, condemning many of those who would have been first-time buyers in the past to be permanent residents of the rented sector.”
The number of new properties coming to market remains subdued, according to Rightmove. Average unsold stock levels per agency branch have now declined for five consecutive months, falling from a peak of 78 properties to the current level of 69. The main exception to muted new seller numbers is London, which is up 21% on the same period last year.