David Gilman is partner in charge of Blacks Connect
This market relies incredibly on historical hard data to formulate and hypothesise on what has happened and what might be coming over the horizon. Which is all well and good but there tends to be a reason why those formulating the data try to get it to market in as short a space as possible. It’s because things can happen in the housing and mortgage market’s incredibly quickly; what appeared to be a market norm just a few months ago can seem old hat when you compared it to today’s situation.
Take for instance, the many house price iterations that are released each month; now regardless of how quick you can get your data to market it’s always pretty historical but which holds the most cache? As we stand in June, would the media (and the general public for that matter) be more inclined to view data from March as ‘up to date’ or would they be much keener to get a view on May, regardless of the quality? I’m pretty sure that it’s the data that’s most up to date which tends to punch with the most weight, especially when the market you are currently experiencing seems to be much changed from what the historical data is telling you.
This was pretty much my feeling when looking at the latest conveyancing transaction data for quarter one this year, which from the vantage point of near the end of quarter two seemed slightly removed from today’s marketplace. The quarter-on-quarter stats show a 16% drop in transactions from the last three months of 2014 with a year-on-year fall of 5% in activity volumes. Now I don’t dispute those statistics at all, but what do they tell us about today’s marketplace and what might be coming during the rest of 2015?
I suspect very little because the truth of the matter is that much has changed since the end of March, not least the fact that we had a decisive result from a General Election which undoubtedly held back significant numbers of people prior to its result being known. This makes the market of May, June (and I suspect) July and onwards very different from what was happening in the first three months of the year when, for instance, a Mansion Tax for homes over £2m seemed a very distinct possibility, along with the anticipated introduction of a range of new housing and letting market measures.
This latter point is certainly worth dwelling on – we have all seen how the growth in buy-to-let lending has developed over the last 18 months however I believe many landlords, who would ordinarily have added to their portfolios during the first four months of the year, will have been more inclined to sit on their hands during this period in 2015. Now, however, they might feel that the shackles are off and with new lenders coming to market in that space with highly competitive offerings, they might well feel the time is right to take advantage of the market and make those transactions.
Anecdotally at least, it seems that the housing market gained a significant boost from the election result and, particularly in areas like the prime London market, there appears to have been much greater activity than in the months’ previous to it. It would not be surprising to see this extrapolated out into the wider UK marketplace – certainly lenders appear to be making up for lost time (and perhaps lost volume) with a series of eye-catching deals across many LTV ranges and product areas.
The likelihood is that quarter one data for this year tells us specifically about that moment in time but is not likely to be indicative of 2015 as a whole. My anticipation is that quarter two will have kicked on from these numbers and the outlook for the rest of the year, in terms of transactions, seems upbeat and positive. I hope advisers’ are seeing the benefits of political certainty, strong lender appetite, and growing demand feeding into a busy period for all.
