The NAEA’s monthly survey of almost 10,000 agents across the country also revealed that new applicant enquiries fell 24.1% over the last three months, as homebuyers demonstrate an unwillingness to enter a housing market with an uncertain future. However activity in the market is still strong, as the number of sales agreed rose 1.5% on the previous month and 10.7% annually.
No slowdown for price increases
Earlier this week the Governor of the Bank of England Mervyn King said that falls in house prices are more likely now than for some time, due to the unstainable rises seen over the past twelve months. The NAEA figures show that prices continued to soar last month, up 2.25% on April 2004. Property prices are currently 12.55% higher than this time last year – the highest price increase since March 2003 – as the typical property price hit an average of £206,343.
First timers struggling
The continued acceleration in prices hit the bottom end of the market as the percentage of first time buyers fell to only 13% of total sales, down from 14.1% the previous month. Those struggling to get on to the property ladder have been further hampered by two rises in interest rates in the last two months, bringing mortage rates close to 5%.
Over 75% of the estate agents surveyed believed that further interest rate rises, as hinted at by the Bank of England chief, would cause the housing market to plateau. Only 14% believed that it would cause a crash or more severe slowdown.
Richard Hair, President of the National Association of Estate Agents, commented:
“The Governor’s [Mervyn King] comments are reflecting the current story in the housing market. We are seeing a definite wariness amongst the public to commit to a market which they fear may be slowing. Nevertheless, the figures also show that sales and viewings are still strong, and futher price increases indicate that homebuyers are still willing to pay close to the asking price for the property they want. The Governor may be threatening a crash, but here at the frontline we are merely expecting a natural levelling out.”
For more information or to find an estate agent who is a member of the NAEA, please visit www.naea.co.uk or email [email protected].
