For the second month in a row, the annual change in property prices was marginal, with prices less than 0.5% higher than they were at the start of the year. Having rejected the rapid rises seen over the last few years with negative monthly price changes throughout the second half of 2004, inflation is now beginning to return to a more manageable level of growth.
The number of first time buyers has doubled over the last month, from a low of 10.1% last month to 22.3% in March. This dramatic return to the healthier proportions last seen in 2002 appears to be an immediate reaction to the Chancellor’s amends to the stamp duty thresholds in his March Budget, as well as first time buyers taking the opportunity to make the most of the current market conditions, which have seen a halt to rising prices and a shift to a buyers’ market.
Estate agents reported mixed reactions to the change in thresholds. Just under 40% reported an increase in the number of buyers since the Budget, with the increase in first time buyers particularly evident in East Anglia, the Midlands, the North East and Scotland. Around a quarter had seen asking prices adjusted as a result of the new £120,000 minimum threshold, with these changes most commonplace in the North, Midlands and South West.
Adding further weight to the scales tipping the market in the favour of buyers, statistics show that the number of houses on the market has almost doubled over the last year, whilst the average number of buyers on the books of estate agents has dropped by 20% over the same period, reducing the ratio of buyers to houses to 5.3 compared to a high of 15 at the start of last year.
These buyers are now finding that they have the negotiating power to achieve an average of around 4.5% from asking prices; a stark contrast to the situation last summer when sellers were able to almost ‘name their price’ in many areas. Similarly, properties are taking longer to sell in the current climate, with an average of 15 viewings taking place over a 9 week period before a sale is agreed, compared to less than 10 viewings over 6 weeks last Spring.
In the lettings sector, agents report fewer properties being sold to buy-to-let landlords than last year, and more previously-let properties returning to the market as many amateur landlords become disillusioned with the buy-to-let arena. However this, combined with an increase in short-term renters in between sale and purchase, is having a knock-on effect with the number of vacant properties at its lowest level ever – an average of just 4.2 per agency compared to 12 six months ago. Rents remain stable with a very slight (0.28%) decrease from the previous month and up 1.13% from the same time last year.
Richard Hair, President of the NAEA, comments: “Estate agents have certainly been a lot busier in March than in previous months with increased numbers of buyers, new applicants and instructions reported across the country. Buyers remain the dominant force and are discovering they often have a wide choice of properties to choose from. However with vendors starting to include realism in their asking prices, sales are back on the up.
“There has been a great deal of ‘wait-and-see’ in the market over recent months, not least in anticipation of the Budget. Although the stamp duty threshold move was not nearly as significant as is truly needed, it was a step in the right direction and has had the desired effect of encouraging many buyers, most significantly those making their first property purchase, back to the market.
“With prices now virtually unchanged for the third consecutive month, a lot could depend on what the Bank of England decides to do with interest rates in the next few months. Despite the anticipated traditional Spring surge and the expectation of a minor boost following the election result, the housing market is in a position that leaves it potentially vulnerable to any upsets and should therefore be handled with care. Its path for the remainder of the year remains uncertain at this stage.”
