Between 2002 and 2009 the average monthly increase in March was 1.3%; in contrast this March’s rise of just 0.1% is the lowest Rightmove has ever recorded at this time of year. Unsurprisingly, it coincides with a return of sellers, with 34% more properties coming to market compared to March 2009, meaning more competition and less opportunity to increase asking prices.
Miles Shipside, commercial director of Rightmove comments: “As usual we’ve seen a winter price lull followed by a New Year bounce, though at a national level it’s never previously fizzled out before spring has really sprung. Observers of the market should note that new sellers are up by over a third on March last year and by 17.5% on last month, so in some areas more restrained pricing is required as a direct consequence of buyers having more choice. We still forecast some further rises in the first half of this year when buyers have picked over the newly marketed stock, though the small increase in March shows how much more unpredictable the market has become”
The previous lowest rise seen in March, in both 2003 and 2005, was 0.6%. This month’s virtual standstill is a little less surprising given the large 3.2% national upswing in February, when the shortage of new stock was exacerbated by people coping with the snow rather than getting their homes on the market.
With the post-credit-crunch market already operating on thin seller volumes, a further restriction on property supply resulted in some over-ambitious pricing, leading to a degree of correction this month.
More amenable weather conditions have allowed those who were delayed their sale to now bring their properties to market, contributing to the 105,784 measured this month. This is up by 15,769 on the number who came to market last month, an increase of 17.5%. However, new stock remains subdued compared to historic norms, still down 26% on the average pre-credit-crunch levels of 2005 to 2008.
This shows that supply remains constrained, helping prevent swamping of the market at a time of more muted buyer demand. However, average unsold stock per estate agency branch has increased slightly from 63 to 65 properties, and this important statistic should be monitored closely as it will be a leading indicator of future trends in asking prices.
Also of note this month is a sharp fall in time on the market, down from an average of 84 to 63 days.
While this is the lowest we have ever measured at this time of year, it is a culmination of months of low new supply coming to market rather than property flying off the shelves. Agents’ post-snow report is that competitively priced property in popular areas is now selling, though securing finance and holding sales together is a significant challenge. However, less new stock means fewer stale properties to push up the average time on the market, which has also been brought down by this month’s upturn in fresh stock numbers. It again highlights the opportunity this spring for a quicker sale in areas where
competition is more limited than usual and agents report that the right properties are still selling briskly.
Shipside adds: “Snowbound sellers postponed their 2010 moving plans until the thaw, leading to the highest weekly average of properties coming to market since before the collapse of Lehman Brothers inSeptember 2008. It has taken the intervention of nature to give us a reminder of what new property supply levels used to look like before major financial market disruption rewrote the rulebook that had remained broadly unchallenged for a quarter of a century”.
In periods of greater volatility, it is worth noting regional year-on-year asking price movements, rather than single months in isolation. This shows that the stock shortages have had a levelling effect, with annual increases tightly grouped across the country. Sellers have upped their initial marketing prices most in the North West (8.7%) followed by the South East and South West (both at 7.4%). The spread of top to bottom is only 5.3%, with the East Midlands and Yorkshire and Humberside being the worst performers at 3.6% and 3.4% respectively. The annual rate of increase has reduced from the 6.1% recorded in February, to currently stand at 5.3%.
Shipside predicts: “The majority of property price indices will show some further rises this spring, as they reflect the recovery from the weather-induced dampener on turn-of-the-year sales and subsequent mortgage activity. This appears to have bucked up a few lenders’ ideas too. More havedecided to get competitive in the 10% deposit arena, which powers the all-important first-time buyer market.”
Mortgage lending figures stalled in January. However, we are now seeing an increase in products available for would-be first-time buyers and the tentative reopening of the markets for mortgage securitization. The more credit-worthy applicants are the target of lenders who must seek a greater share of the good margins currently available in the market to rebuild their balance sheets and profitability. However, that still leaves the majority of aspiring first-time buyers out of financial favour.
In the recent Rightmove Consumer Confidence Survey, 61% of those in rented accommodation stated
they would like to buy but could not currently afford to do so.
The Government’s Homebuy assisted purchase scheme for new-build properties could reduce this frustration, but additional research by Rightmove has uncovered a lack of awareness in the scheme among those whom it is intended to help. Only 22% of the 3,463 potential first-time buyers surveyed stated they were aware of the scheme, with another 34% saying they had heard the name but were unaware of the details. A further 44% had never heard of it. The initiative allows aspiring home-owners to purchase a share in a house while renting the rest – giving them an opportunity to get on the housing ladder earlier and buy the remainder of their home as and when their finances allow.
Shipside concludes: “We’ve waited two years for significant relaxation of mortgage lending criteria, and whilst it is giving the market a welcome nudge in the right direction, many aspiring buyers are still finding themselves left out in the cold. They could find the requirements of the Homebuy scheme more suited to their circumstances and a possible housing lifeline if they only knew more about it.”
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