Meanwhile, the number of house buyers on estate agents’ books remained level as purchasers continue to be affected by affordability issues coupled with the increasing cost of moving. The NAEA said the rise in interest rates at the beginning of the month is likely to serve as a further deterrent in the coming months, though it noted sales figures also remained on a level in May.
Housing stock increases dramatically in anticipation of HIPs
Housing stock surged in May. Nationally, the number of properties per agent leapt 16.1% from 62 in April to 72. This is considerably higher than figures seen at the same time last year, when the average number of properties per agent was 66. It is in fact the highest figure recorded by the NAEA survey since December 2005. The increase is likely to be the result of a desire by homeowners to avoid the anticipated HIPs legislation, originally due to launch on 1 June. The latest numbers indicate the aversion of house sellers to the legislation and the lengths they are willing to go to avoid them.
Purchasers hesitant in present buying environment
Despite the dramatic increase in properties on estate agents’ books in May, nationally the number of buyers remained stable in May, with only a marginal decrease from 348 per agent in April to 344, in a fall of 1.1%. When compared with May 2006 figures, however, this is a drop of 9.0% from the 378 buyers per agent last year.
This decrease in the level of buyers compared with last year’s figures demonstrates the affect of today’s turbulent buying environment on the housing market as individuals are not able to commit to property prices due to escalating costs. Factors include continuing interest rate changes, rapidly rising property prices and the general cost of everyday living. A number of homeowners are weighing up the options and instead, if viable, choosing to improve their present home in a bid to increase the value of the property and avoid the associated costs of moving.
Sales remain stable
The number of sales reported per agent remained level with 13 houses being sold per NAEA agent, the same as the previous month. This indicates that the market remains stable despite the uncertainty surrounding new legislation and continuing interest rate changes. However, the figure is still lower then the same time last year, when on average 15 sales per agent were made.
First-time buyers continue to feel the pressure
The percentage share for first-time buyers in the property market dropped from 10.3% in April 2007 to 8.9% in May, falling for the third month in a row. This continuing decrease in market share is concerning and the NAEA urges the government to increase its efforts to assist this fragile sector of the market.
Slight movement for viewings and purchasing times
The number of viewings before a sale dropped from 12 in April to 11 in May 2007. These figures are below those recorded at the same time last year, when it was taking on average 12 viewings before a sale. Meanwhile, the time between instruction and completion rose slightly, from 15.8 weeks in April to 16.5 – a figure that is level with the same time last year.
Gap between asking and selling prices widens
The average difference between asking and selling price rose from an average of 2.7% to 2.9%, bringing it back to levels witnessed at the beginning of the year. In contrast with figures from May 2006, when the average difference was 3.3%, the gap between sellers’ expectations and reality has narrowed over the last 12 months. The slight widening again between April and May this year, however, could be an indication that sellers will need to be more competitive with their pricing in the future as more properties come onto the market.
HIPs effect likely to continue
NAEA president, Stewart Lilly, commented: “As predicted there was a huge surge of properties being placed onto the market in May by sellers who were keen to dodge the HIPs legislation. Even with the announced delay, agents still found that properties were being placed on their books at a fast pace. I feel that this will still be the case throughout June and may continue into July in anticipation of the new, watered down launch date of 1 August.
“I am alarmed that month after month the percentage of first-time buyers in the market is dropping and we are now faced with the worrying figure of just 8.9% of first-time buyers in the marketplace. I continue to urge the government to start making more allowances for this struggling sector and would like to see more initiatives put in place so this figure does not continue to drop.”
