|
If your New Year’s resolution is to move home, you should note that the first house price statistics relating to activity in 2010 show increases in both seller confidence and buyer interest.
The optimism of sellers who have come to market so far in January has resulted in a 0.4% rise, causing a big turnaround in figures that were on course for a third consecutive monthly fall. This coincides with potential home-mover activity hitting new record highs, with the Rightmove website recording its busiest ever week. Miles Shipside, commercial director of Rightmove comments: “This rise in asking prices is an early indicator that new sellers in 2010 have the confidence to try for a higher price, as the index was lined up for a fall until the turn of the year. We were expecting a drop of about 1%, as the majority of this month’s index falls in December, but the optimism of those early January sellers flipped it around. With home-movers setting new search records on Rightmove and a lack of property for sale, the decision of post New Year sellers to ask for a higher price could be a shrewd move. In spite of problems brewing for later in the year, there are definitely some of the ingredients for a buoyant spring, and a window of opportunity that sellers may wish to take advantage of”. Last month Rightmove predicted a burst of activity and asking price gains in early spring, continuing the heightened level of activity seen during 2009. The early signs are that the factors that led to the unexpected buoyancy in 2009 are continuing. In addition, the impending election, a traditional dampener of market activity, is perhaps having less of a negative effect than usual on home-movers’ intentions. Early findings from the latest Rightmove Consumer Confidence Survey (to be released on January 22nd) would seem to support this. Gathering the views of more than 30,000 home-movers, the survey reveals that about 70% of those who intend to move in the coming year do not believe that the election will affect their plans. While their opinions may change when the details of any future government’s austerity package become clearer, at present there are favourable circumstances which appear to be over-riding such longer term concerns. In particular for those who have so far held off selling, the early spring may be the best opportunity to take advantage of the benign conditions that started to emerge during 2009 in spite of the ongoing recession. These factors are still present and indeed show evidence of strengthening in sellers’ favour in the short term. The number of available properties per estate agency branch is now 63, its lowest level since January 2008. However, with many estate agency branches having closed, this figure is buoyed by the smaller number of branches sharing the available stock. We have also compared advertised stock levels with our historic market penetration, and we estimate the number of properties currently available for sale is the lowest since we started monitoring the housing market in 2000. This month’s index records 50,624 properties coming to market, and whilst a 15% increase on last year, this is still massively down on the 89,000 average of the same period in 2006 and 2007. Lack of supply has been driven by reduced access to mortgage funds, economic uncertainty and a low level of forced sales. There are also drastically fewer new-build properties coming to market, as many developments were mothballed or cancelled in late 2008 and early 2009, with developers now either unwilling or unable to rebuild their pipelines. Shipside adds: “We estimate that we are now seeing the lowest number of properties on the market this century. Low stock levels are normally associated with house price booms and prices would have fallen considerably further but for the unique combination of circumstances that has kept stock off the market. Buyers have little choice in popular areas, and while this continues sellers have a window of opportunity to obtain a higher price and a speedier sale. At present the limited supply of sellers is being outstripped by buyer demand but we predict there will be more forced selling later in the year.” One of the first signs of the 2009 recovery was record January traffic on Rightmove, indicating pent up buyer interest. Rightmove has again recorded its busiest ever week, with 157,402,812 pages viewed between the 4th and 10th of January, up 26% on the first working week of 2009. Shipside observes: “This is the busiest ever start to a new year on Rightmove. As ever, this time of year sees potential buyers starting to search for their dream home. Those who held off from selling during 2009 are now researching what competition they face in their local area and assessing which agents might be best placed to sell their property”. With the economy starting to recover, the next move for base rates is expected to be up, although not in the short term. While lenders are keen to cherry-pick sound borrowers, there are signs of increased competition within the mortgage market and a slight relaxation of lending criteria. Shipside comments: “If you have the deposit and track record, then there are some historically cheap deals to be had that cannot last when base rates start to increase. For those that can get it, money looks cheap for the moment”. With employment levels holding up, and the country appearing to be on the cusp of coming out of recession, potential home-movers are also feeling more confident about the outlook for the property market. Shipside says: “Preliminary findings from the latest Rightmove Consumer Confidence Survey show that around two thirds of respondents believe that now is a good time to buy, with only circa 1 in 5 feeling it will be a worse time to buy in 12 months. It will be interesting to see if this confidence remains over the course of the next two quarterly surveys that are likely to straddle the election.” While we forecast that 2010 will continue the recovery from current low transaction volumes, the factors restricting a return to the 1.2 million sales recorded in both 2006 and 2007 remain firmly in place. We also forecast that after the election the housing market will enter a more challenging period, with the asking price gains seen in the first half of the year drawing back in the second half, leading to an average price standstill of 0% in 2010. Local and regional volatility in monthly figures will remain a feature, due to smaller volumes exaggerating seasonal swings and local market variation. Shipside summarises: “Within the shrunken housing market that has become the current norm, there are very active market segments where buyers and sellers who are able to proceed are getting together and are striking deals. While there are political and economic clouds on the horizon, there are signs that we are in for an active spring before the storm breaks later in the year.”
|
