Latest market data issued by Nationwide’s House Price Index reports a monthly fall of 1% in February, bringing nine months of consecutive growth to an end.
This reported fall in values comes days after the news that Gross Mortgage Lending declined to an estimated £9.1billion in January, a 32% fall from £13.4billion in December and a 21% fall from £11.5billion in January 2009, according to the Council of Mortgage Lenders.
Garrington said it believed the fall could be explained by the spike in market activity in December, which in part was bolstered by purchasers wanting to complete their transactions before the end of the Stamp Duty holiday. A proportion of these transactions would have, under normal circumstances, rolled into January and Garrington said this factor, together with the adverse weather conditions, compounded the loss of momentum in the market in early 2010.
Despite this, the latest Land Registry data released in February (which covers all market transactions) reports that the annual house price movement continued to move in a positive direction standing annually at 5.2% during the reporting period up to the end of January.
The economic landscape remains volatile with inflation hitting a 14-month high last month. Again this can be attributed to a particular set of triggers, which according to Mervyn King, Governor of the Bank of England, were an anomaly ie) VAT reverting back up to 17.5% in January and a weather related rise in fuel and transport costs.
Despite these factors Garrington has received a marked increase in both inquires and new clients so far this year. For many of its clients lifestyle requirements are core triggers for making a move in 2010, with schooling and quality of life being common themes.
In the prime sector, both in Central London and the rest of the UK, Garrington said it was still experiencing a lack of quality stock entering the market. Sales agents were reporting an increase in valuation requests but this was yet to translate into a significant increase in new listings. Accordingly some agents have stated that in the £1million plus bracket they had at least ten potential buyers for every new property coming on the market.
This is borne out by property portal Primelocation, which has reported in its Prime Platinum UK property index (incorporating the top 10% of all UK property by value) an average price of £618,706 in February. This represents an increase of almost 0.1% on January and an annual increase of 6.0%. Clearly it is the top of the market which is leading the property market recovery. According to the portal, the North East is the best monthly performing region for Prime Platinum property prices, recording monthly growth of 0.6% and annual growth of 5.0%. Garrington’s North East team confirm this is reflective of local conditions where they have recently successfully acquired a property for a client that had three competing purchasers chasing the same property.
Garrington said we were not yet out of the woods – and with the Election looming there remained caution in the air. Of central focus moving forward into March was whether the issues highlighted represented a blip or the start of a new trend.
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