June saw the housing market take a slight dip on previous months with a decrease in the number of sales agreed and available property.
Last month, prospective house buyers demonstrated a renewed vigor, increasing by an average of 14 per branch. The increase in the Stamp Duty threshold to £250,000, while doing little to affect the first time buyers market (FTBs), might be considered a factor in aiding the wider buyers market.
The decrease in overall sales might well be attributed to the unclear picture at the start of the month as both buyers and sellers were anticipating a rise in Capital Gains Tax (CGT) which in the end was not as severe as predicted. Both groups might have been waiting for the full facts to become established following the emergency Budget before committing to such a large investment or sale.
Looking forward, July could present a less mixed picture now that the new Government’s first Budget has passed. Mortgage lending will need to be less restricted, in order for the number of sales agreed to rise and meet demand from house hunters registering at NAEA branches.
The number of house-hunters registered per branch increased slightly from 265 in May to 279 in June.
Demand for property increased from May to June. Although fewer sales were agreed, the rise in those registering might suggests that potential homeowners continue to feel that a bargain could be had in property and do not credit speculation that house prices could fall again this year. This demand will need to be met with increased mortgage availability in future, if more house hunters are to be encouraged to enter the market.
The number of sales agreed per branch dropped from an average of 8 in May to 6 in June.
The slight dip in average sales per branch should be viewed within the context of the emergency Budget that took place early in the month, where there was uncertainty as to what proposals for overall cuts would do the housing market. As a result, many buyers and sellers might have decided to hold off until this had taken place and the full facts established.
The average number of properties available for sale per branch dropped from 62 in May to 59 in June.
After four months of consecutive increases in available housing stock, the number of properties available for sale per branch dipped slightly. Confusion ahead of the Budget over proposed changes to Capital Gains Tax (CGT) may have stalled house sellers while people waited for clarification as to what could be expected. The NAEA continues to call for further investment in future housing stock.
The percentage of first time buyers (FTBs) stayed the same as May with 21 in June.
The number of sales made to FTBs continued to remain stable and as with May, this figure is in common with most of the key market indicators. While there was an expectation that there could be a surge in the number of FTBs following the raising of the Stamp Duty Tax level to £250,000, this hasn’t yet been felt among this category.
Mark Bentley, Birmingham Branch There is no doubt that activity levels in the first half of 2010 have been substantially better than the first half of 2009 with a good supply of properties coming onto the market and a reasonable number of sales being agreed and completed. However the property market has been subject to a roller coaster of good weeks/bad weeks, good months, bad months as confidence in the property market and the greater economy ebbs and flows.
Property prices have bounced back since the lows of late 2008 and early 2009 but as a general rule achieved sale price are still some 5% to 10% below where they were in Spring/Summer 2010.
The advice to vendors is simple - NAEA Estate Agents can sell your property this summer but the asking price for the property must be sensible. Estate Agents over valuing this summer to secure instructions will be doing themselves and more importantly their clients a dis-service.
Colin Girling, Suffolk Branch The picture across Suffolk is quite varied. There have been some agents selling well, while others have had a quiet month. Buyers are being fussy and coming in with very low offers and some buyers are not prepared to negotiate at all. Instructions are steady. Furthermore, over priced properties on the web are being ignored.
The last two weeks have been quieter mainly due to the Budget, football and weather. The rentals market is still doing well, but there seems to be plenty of flats and not enough houses. The general outlook is optimistic though.
James Wyatt, Surrey Branch Reports from around the Surrey region paint a mixed picture, but the Budget does appear to have increased the number of new instructions across the board. Pockets of the county are reporting brisk business at the more expensive end of the market, whilst first time buyers seem thin on the ground, due to the ongoing requirement for large deposits.
The lettings market continues to perform strongly, although the shift in Capital Gain Tax from 18% to 28% is clearly giving many landlords (and agents) cause for concern.
There is a shortage of one and two bedroom flats which has lead to prices firming up. In the corporate market, there are more overseas Tenants this year than last, which is good news for those agents who suffered last year.
Surrey doesn't have a large number of agents involved in International sales, which is probably just as well, as those who are involved are reporting very low levels of activity.
We congratulate Surrey member Guy Charrison who has been elevated to Vice Chairman of NAVA.
He reports that there is still an appetite for correctly priced lots up to £200,000. But funding is still difficult and the success rate in the auction room is below the historical average of 70%.
Steve Goddard, West Sussex Most agents have been reporting a shortage of fresh instructions as many clients remain sitting on the fence. First it was the election, then the Budget, and everyone seems to be waiting for something. The Cancellation of HIPs was very welcome but there is no sign that this will make any great difference, despite what the papers say.
Viewings have been stronger over the last two weeks which has given some encouragement and sensibly priced property is catching the eye. We need a strong run through the summer to set us up for a busy autumn.
Colin Shairp, Solent Branch It has certainly been an interesting time and by that I mean over the past two or three months we have had lots of ups and downs.
In March it appeared that the market was picking up with more properties, more buyers and more sales being agreed throughout the area. By mid-April, things had slowed down, with what appeared to be due to, volcanic eruptions, a General Election and generally a lack of confidence, from both buyers and sellers. May carried on the same basis with few sales being agreed in comparison with that of March. This was highlighted by the Council of Mortgage Lenders, which confirmed a drop in mortgage lending in April and May in their recent report.
With the suspension of the HIP we all anticipated a positive response with buyers coming into the market and sellers’ deciding it was now time to put their toe into the water. What we have seen is an increase in the number of properties on the market during June, but sales still at low ebb. However in saying that, the right property at the right price will always sell. Sadly, agents are back to their old tricks with desperation for instructions leading to reduced fees being quoted. Sellers in turn believe the market has picked up substantially and now want their houses sold immediately, which we all know is not as simple as it sounds. The conveyancing procedure still seems to be delaying transactions and as soon as this can be reviewed the better.
Ian Harris, Norfolk Branch The market in Norfolk seems to have weathered elections, world cups and the Budget, with only little "wait-and-see" dips in activity. However, there are enough buyers and sellers who seem willing and able to shrug off the uncertainties of the moment, to proceed with a purchase.
The scrapping of HIPs has been important, mainly encouraging people who were not certain enough about a forthcoming move to speculate £300-400 upfront without any guarantee of success, but are willing to have a go at moving with the agent bearing the out-of-pocket marketing expenses.
The great news is that most of these new sellers are also buyers, giving the prospect of much better levels of market activity. "Movers" who have been established in homeownership for some time look likely to feature prominently. They have benefitted most from re-mortgaging on to what now prove to be extremely well priced tracker lending products in recent years.
Both city and market town areas have been busy and there has been a noticeable improvement in the demand for bungalows. Properties requiring improvement are in high demand when priced at the correct level, allowing buyers to enter the market at lower purchase price and refurbish a property in their own style and taste.
The only concern in the market is the effect of job losses in the public sector but it is hoped that this will be more than compensated for in general market activity.
Chris Bolton King, Berks, Bucks, Oxon Branch June seems to have been a mixed bag for members across the three counties, with some saying that since the ending of HIPs and the Budget they have seen an increase in applicants and the number of properties coming to the market, which is brilliant. However, despite the increase in properties, some are reporting that there has been little evidence of an increase in their applicant numbers, with the same level as before registering but are now seeing more properties on each outing.
Since the Budget, a few of those NAEA members that also work in lettings have voiced concerns as to how capital gains tax is going to affect the buying mood of their short term investors and how the VAT increase will affect the industry come January.
Des Rowson, Essex Branch Quality applicants registering with agents in some areas are down by 35%. Due to the change in Capital Gains, we have seen vendors changing their minds on selling and have now withdrawn from the market with others considering withdrawing. The reason for this being that they have raised an additional mortgage to purchase and were going to rent out their existing property with a view to selling later on - All are taking advice from their accountants regarding this.
Since HIPs were suspended, some agents have seen a slight increase in instructions, however, vendors have decided to put the properties on at a much higher price than recommended, in some cases more than 12% above, plus the quality of some instructions are very poor. Viewings are down by approximately 33% and sales are also down by approx 18%.
A lot of agents are saying that the market could have a downturn because of the new Budget implications. The lettings market is very buoyant but agents desperately need more properties to let – flats are not so popular and tenants are getting very fussy about condition of décor and carpets – a lot of DHSS tenants are looking for properties. Perhaps the Government should now be looking at restoring the system of paying the landlord direct instead of to the tenant.
About the National Association of Estate Agents
The National Association of Estate Agents (NAEA) is the UK’s leading professional body for estate agency personnel, representing the interests of around 10,000 members who practice across all aspects of property services both in the UK and overseas. These include residential and commercial sales and lettings, property management, business transfer, auctioneering and land. The NAEA is a sister organisation to the Association of Residential Letting Agents (ARLA).
The NAEA is dedicated to the goal of professionalism within all aspects of property, estate agency and land. Its aim is to reassure the general public that by appointing an NAEA member to represent them they will receive in return the highest level of integrity and service in both sales and lettings, for all property matters. Both NAEA and ARLA members are bound by a vigorously enforced Code of Practice and adhere to professional Rules of Conduct. Failure to do so can result in heavy financial penalties and possible expulsion from the Associations.
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