The July Housing Market Survey from the National Association of Estate Agents (NAEA) has shown that the number of sales accounted for by first time buyers has risen for the second month in a row to over 17% - reversing the more general downward trend which drove the proportion down to an all-time low of 14% back in May of this year (see graph 1 in Notes to Editors).
While this figure is still below the 2002 average of around 25%, this further improvement is evidence that first time buyer confidence is returning and that sustained recovery in the housing market will be seen over the coming months.
Annual house price inflation, at 8.5%, is broadly the same as last month (8.6%) and supplies further evidence that the sharply declining trend in house price inflation seen since the beginning of the year is over (see graph 2 in notes to editors).
Other evidence that the housing market is strengthening comes from the reduction in the average number of viewings per sale – 15.7 viewings per sale against 27.4 last month. This suggests people are finding their ideal property more quickly.
Also the size of discounts achieved off the asking price has reduced this month. On average, house buyers are only achieving 3.4% discount to the asking price, much reduced from the 5.4% discount being achieved last month. This suggests that vendors are setting prices more realistically and that buyers are finding it more difficult to obtain cut-price deals.
It is now taking an average of seven weeks from the time a property is put on the market to agree a sale, and further nine weeks between sale agreed and exchange of contracts.
Peter Bolton-King, CEO of the NAEA, comments:
“For the second month in a row, the NAEA’s monthly survey has shown that the housing market has shown signs of improvement. Our statistics point to a tightening market where more realistic pricing is enticing more activity – first time buyer numbers are now up two months in a row and there is a noticeable tendency towards fewer viewings before a sale is agreed.”
Melfyn Williams, President of the NAEA, continues:
“As a result of the keener pricing, annual house price inflation is largely unchanged this month. The housing market is looking healthier with agents reporting that both the number of properties for sale and the number of new buyer enquiries are back to similar levels seen during last year’s boom period. With interest rates left unchanged this month at an historic low, the rest of the year should see a steady improvement in both house price and number of transactions.”
