This comes despite reportedly high stock levels, indicating that the crisis within the global financial markets is having a profound knock on effect.
Higher than usual stock levels for one and two bedroom properties have yet to be matched with enough keen buyers and this is causing problems for some regional markets. At the other end of the scale, after a bout of new instructions prior to the second stage launch of Home Information Packs (HIPs) in September, there is now a shortage of new three and four bedroom properties coming onto the market and this is again causing problems.
A number of factors have combined recently to affect the market over what is traditionally a busier time for estate agency. Interest rate rises, the international ‘credit crunch’ and election indecision have all been cited alongside HIPs as contributors to the current lull.
Although a number of areas have been affected, agents report that London and the South East still remain more active. With the current excess of smaller properties on the market, there is potentially good news for first time buyers as well, who stand to gain from the increased supply over the coming months.
The number of sales agreed per agent was down in September from both the previous month and the same time last year according to the NAEA survey. On average 11 sales were agreed per agent in September 2007, compared with 12 in August 2007 and 14 in September 2006. This year’s September figure is closer to levels usually reported over the quieter summer and festive periods. With considerable uncertainty surrounding the market at the moment, it is perhaps unsurprising that home buyers and sellers have been reluctant to commit to a sale.
On top of the reduced sales agreed figures, the percentage of sales which fell through remained at a high of 10.7% in September for a second month running.
Meanwhile, the percentage difference between asking price and sales price widened in September to 3.9 per cent, up on the previous month’s figure of 3.5 per cent and September 2006’s figure of 3.1 per cent. With a lack of buyers and higher than usual stock levels characterising many regional markets at the moment, the NAEA is warning sellers to be realistic about property pricing if they want to achieve a quick sale.
Home buyers were holding back this summer as figures for the number of purchasers on estate agents’ books were at their lowest since the NAEA survey began. Moving into September the trend seems to have continued as the number of buyers on books remained at 326 per agent for the second month running.
This figure is the third lowest recorded since the survey began, only to be beaten by June and July of this year when buyer levels were at 322 and 314 per agent respectively.
With so much uncertainty facing the market, prospective purchasers have been holding back, preferring to employ a ‘wait and see’ strategy rather than jump in too fast.
Those that have entered the market have shown careful consideration before reaching a decision as the average number of viewings before a sale remained at 12 – slightly up from last September’s 11. Meanwhile, the time taken to sell increased from 18.2 weeks in August to 19.1 in September. This is compared with an average of 16.5 weeks in September 2006.
The number of properties on agents’ books remained on a level in September at 80 properties per agent compared with 81 in August. This is considerably up on figures seen at the same time last year when agents had on average 61 available properties on their books, and is in fact one of the highest figures recorded by the NAEA survey since 2002. The September 10th launch of HIPs is likely to be one contributor to this as homeowners rushed to enter the market to avoid paying for a Pack. Following this date, sellers of larger properties have been hanging back. Feedback revealed an undersupply of new three or more bedroom properties, while the number of one and two bedroom homes on the market has increased.
Hope for first time buyers
First time buyers reduced their share of the market in September for the second month running, down to 8.8 per cent compared with 9.7 per cent in August and 11.1 per cent in September 2006.
With buyers at all levels currently demonstrating caution, first timers proved to be no exception this September. Inflated house prices combined with the rising cost of moving continues to be a barrier to entry for many. Meanwhile confidence in the mortgage market has also been shaken and the NAEA has recently urged the Bank of England to help improve the situation by maintaining or dropping interest rates for the remainder of 2007.
The good news for first time buyers is that with the current oversupply of one and two bedroom properties there is more choice at the lower end of the market, which can potentially be taken advantage of over the coming months.
Quieter times but no ‘crash’ in sight
NAEA president, Stewart Lilly, comments: “The survey this month has been characterised by extremes, from unusually high stock levels to unusually low buyer levels. The market has certainly been considerably quieter than one might expect moving into Autumn. When you consider the major events that it has had to withstand recently, from the ‘credit crunch’ to the home information pack launch, this is not so surprising. We all need to be prepared for a more difficult sales environment over the coming months. There are certainly no signs of a market crash, as is being suggested by some, however.
“In this competitive market, homeowners are strongly advised to heed the advice given to them by their estate agent on matters such as valuation and property presentation. This will greatly increase chances of a successful sale.”
