The average asking price of property coming to market fell by 2.4% (-£6,181) in November, in line with the usual pre-Christmas slowdown according to the latest Rightmove House Price Index.
This compares with an average November fall over the last three years of 3%, so while this year’s drop is slightly more muted, it still reflects a reduction in the number of good quality higher-priced properties coming to market as the festive season approaches.
However, the underlying recovery of the housing market continues. With traffic on Rightmove up and available property down, there are indications that momentum is building for 2014 as we await any tangible impacts of Help to Buy Phase Two.
Miles Shipside, Rightmove director and housing market analyst said:
“The excitement about Help to Buy’s early launch failed to buck the seasonal trend of a fall in new sellers’ average asking prices. At this time of year it’s mainly those with a more pressing need to sell that come to market, driving average asking prices down. It takes a lot to throw people off course from marketing after rather than before Christmas, and in spite of the most positive selling environment since the start of the credit-crunch in 2007, it seems potential sellers will not scratch their seven-year home-moving itch early and will be waiting until at least 2014.”
Despite the hype following the Prime Minister’s decision in September to bring forward Phase Two of Help to Buy, it is still too early to assess its impact. Estate agents report that it has definitely contributed to the growing mood of optimism, but research by Rightmove amongst over 40,000 potential home-movers indicates that the challenges, limitations and benefits are yet to be fully understood.
Rightmove’s latest Consumer Confidence survey reveals confusion over its extension to existing properties and a lack of awareness of the scheme as a whole among some home-movers. Potential first-time buyers and potential first-time sellers, both very important target audiences, have similar misapprehensions.
Shipside notes: “There is no doubt that Help to Buy has helped raise frustrated movers’ spirits. However, our survey shows widespread confusion among those who stand to benefit most from Help to Buy. There is more work to be done by Government and industry if one in four people currently hunting for property risk missing out on a leg-up onto the ladder or a welcome shove up to their second home.”
Mortgage lenders are implementing the recommendations of the Financial Conduct Authority’s recent Mortgage Market Review, ensuring that they do not return to the poor practices that became prevalent pre-2007, and that they apply tighter rules when assessing borrowers’ ability to repay.
Shipside observes: “Those fearing a return to a credit-fuelled bubble will be reassured by the teeth of the new rules and how they are clamping down on the aspirations of some of the early applicants into the Help to Buy mortgage arena. Some agents report very few approvals, and one of the active Help to Buy lenders has so far approved only 169 mortgages out of 1,075 applications. While there is a processing time-lag, and we need time for both the Help to Buy scheme and the mortgage market to settle down, the feedback from agents seems to be that you have to be squeaky-clean and the chances of being approved are better with at least a 6% rather than 5% deposit. Ironically, those predicting a bubble may be talking the market up and creating the very price momentum that they fear. With only two lenders currently in the game and agents saying that more applications are being turned down than approved, the current hype looks to be over-done given the tighter rules now in force.”
New seller numbers declined this month as we run up to the Christmas break, though flats and terraces, the typical choices of first-time buyers, have fallen more slowly (-2% and -10% respectively) than detached (-12%) and semi-detached (-11%).
Shipside adds: “It is very early days but, given first-time buyer demand is expected to be the big winner from Help to Buy, it is encouraging that the decline in property coming to the lower end of the market is less marked, especially for flats. More supply of properties means more choice for buyers and less upwards price pressure.”
The underlying market recovery continues to build momentum for a more buoyant 2014. The 4% annual growth of new seller asking prices is the highest seen in November since 2007. This is a result of demand eating away at some of the available supply, with stock per estate agency branch dropping from 71 properties a year ago to 67. Rightmove traffic since the Help to Buy September announcement is up by 30% on the same period in 2012, indicating a possible release of pent-up demand to move.
Shipside comments: “Estate agents expect a more buoyant 2014 as they pick up early signs of an increase in buyer interest and demand, so this side of Christmas could be the time for eager buyers to hunt out keen sellers and do a deal. However, agents’ challenges differ wildly depending on local market conditions. While some are really concerned about future sales because of a lack of fresh sellers, others report some sellers getting too brave too early on their asking price aspirations in less active parts of the country, potentially stifling a recovery before it has got going.”
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