Wednesday, 13 September 2006HOUSING MARKET ABSORBS INTEREST RATE RISE AND REMAINS BOUYANT
AVERAGE ASKING PRICE AUGUST 2006 £216,014
AVERAGE ASKING PRICE JULY 2006 £207,011
PERCENTAGE CHANGE 4.34%
The monthly housing market survey conducted by the National Association of Estate Agents (NAEA) has revealed a confident housing market in August with estate agents reporting a significant increase in sales, housing stock and the number of buyers registered. The strong, steady market reported consistently over the past few months by the NAEA has proved itself resistant to the quarter per cent interest rate rise by the Bank of England at the start of August. However NAEA branch chairmen across the country warn that further rises will significantly impact the current upward trend.
First time buyers reclaimed a greater share of the market, presenting a steady month on month improvement and a dramatic increase from August last year, providing further proof of a healthy and robust housing market.
Sales up by 36% from August 2005
Sales per agent increased in August by 7% with agents reporting an average of 15 sales for the month in comparison to 14 in July. This is a 36% increase on the same time last year, when an average of just 11 sales for the month was seen. This upward motion during a month where the Bank of England increased interest rates by a quarter of a per cent demonstrates a robust market capable of absorbing the rise.
Figure 1 – The average number of sales agreed per agent
Asking prices rise by 4.34%
The average asking price of property rose again in August from £207,011 in July to £216,014. This increase is not necessarily a reflection of an increase in value, but demonstrates an indication of sellers’ optimism and belief in the housing market.
Housing stock replenishes but demand continues to outstrip supply
The number of buyers registered with estate agents’ increased again in August by 3% to an average of 398 per agent from 387. This is the highest figure reported since October 2004. Equally encouraging is the increase in properties for sale with an average of 70 properties per agent during August, a boost of 6% from July, putting housing stock at the highest level seen in 2006.
Figure 2 – number of properties on estate agents books
First time buyers at highest level for 12 months
First time buyers built on their stake of the market claiming a 13.4% share, up from 11.3% in July, the highest seen in over a year. During the same period last year the foundation level of the market were only able to command a 7.7% share. The return of first time buyers is a strong sign of a buoyant and robust market. However if interest rates are raised further as they are expected to, it would undoubtedly affect this upward trend and further hinder this essential sector of the market.
Figure 3 – The percentage of first time buyers
Time to sell
The time taken to sell remained at a level of 16.9 weeks from instruction to exchange of contracts during August and July. This leveling is a further indication of a stable market. In August 2005 this figure was at 19.5 weeks. It is positive to see such a firm increase in pace.
Figure 4 – The time taken to sell in weeks during 2006.
Increase in vacant properties whilst rents continue to rise
Agents reported that rents rose this month by 1.95%. Rents have increased at a similar pace since April this year when HMO licensing came into effect. The expensive process of licensing and adjusting properties in order to meet licensing criteria may be leading to tenants ultimately paying more.
Figure 5 – Percentage of rent rises
Stability reigns
NAEA President, Charles Smailes, comments: “As we predicted the underlying strength in the property market has enabled it to cope with the interest rate rise seen at the beginning of the month. This is extremely encouraging; the stability the market is currently demonstrating is exactly what we would hope for.
“It is good news to see housing stock rise at a faster pace than the number of buyers, however stock is still in short supply, and I hope to see the increase in stock continue. It is great that this rise is accompanied by an increase in sales and that activity on the whole has increased.
“It is always encouraging to see an increase in the first time buyers’ involvement in the market. At the bottom of the chain they free up the market and enable it flow contributing to keeping the time to sell at a reasonable level.
“I am surprised to see such a dramatic increase in asking prices, this is not a trend I would expect to continue. I advise sellers to listen to their agent’s advice regarding pricing and to not over value their property.”
- Ends –
Editor Notes:
About the survey
The NAEA housing market survey uses figures gathered from the Association’s members on average asking prices. The figures are adjusted to ensure the average price accurately reflects the market.
*Average asking prices per property
July 06: Flat – £133,578
Terraced - £167,324
Semi detached – £212,098
Detached – £315,045 Aug 06: Flat – £140,572
Terraced - £176,155
Semi detached – £220,691
Detached – £326,641
Regional Summaries from Branch Chairmen and Officials
Name - NAEA Branch Comment
Richard Turell – Kent “Instructions are slow and good quality stock is very hard to come by.
“Three bed semis are like gold dust and ones with a garage on the side that offer scope to extend is even harder to find.”
Michael A'Bear - Surrey “Whilst most agents in the area are still very short of instructions, there are a few more available than a month or two ago. There are also more valuations taking place, which should mean a reasonable Autumn market.
“Lettings are continuing to be steady with the usual time busy time during July and August.”
Martin Long - Scotland “Sales slowed in July but have started to pick up again in August. There are still a good number of purchasers who are looking with serious intent. The Autumn market is traditionally quite strong with purchasers hoping to be in by Christmas. This year is seen as no exception and it is felt that the current buoyant market will continue.”
Philip Bullman
Chairman South London Region
“After a relatively quiet early August the market showed signs of a brisk uptake towards its close. A shortage of property for sale still exists so most agents will be looking at the volume of new instructions during September as an indicator as to how the market will pick up as we run towards the year end.
“Worthy of note is that a number of Landlords have decided to cash in and move areas to take advantage of lower prices in cheaper areas.”
Colin Girling - Suffolk “I have received comments from my colleagues across Suffolk and some had a reasonable month while others had a lousy month.
“It appears that there is still a shortage of properties to sell, anything that comes on the market at a sensible price sells very quickly.
“Some agents are having problems with solicitors who are slow and this is likely to cause the fall through rate to increase. Most of us had a good month for completions and we are looking forward to a pick up in instructions and sales once the children return to school.
“On the rentals front I am told it was one of the best months of the year.”
Nick Davies – South Wales “August was a surprisingly busy month on sales particularly towards the lower end of the market, the top end was quieter.
“Instruction levels were slightly down, this is probably because of the holiday month and also because of the interest rate increase. Vendors are now commenting on interest rates, as being a factor in their decision to buy and sell and it is clear another increase would be disastrous.”
Brian Taylor – Leicestershire “August for us was the strongest of the summer months with sales up 25% on July and up 24% on last august. Listing was up on last year and remained constant with July. But both new applicants registered and viewings were up on July.
“All in all a very good month and if the market can resist the temptation to increase values to quickly we are looking forward to a positive and busy autumn.”
Andrew Stock - North Lancashire & Cumbria Branch “The level of activity overall in the residential market was quieter than anticipated, even though it is traditionally slower because of the holiday period. Residential lettings business remained stable.”
Simon Dunn - Yorkshire Branch
“The residential property market in North Yorkshire did not ‘go on holiday’ in August, with Estate Agents generally reporting a good level of sales and new instructions.
“The recent rise in interest rates does not seem to have made any impact on the decision to move house but clearly any further rises could affect the market.
“The outlook for the autumn market looks good with continued optimism amongst Estate Agents in the area. Good selling prices are still being achieved but realistic asking prices are still important to attract a good level of interest.”
Gavin Catlow-Hawkins - Gloucestershire “A good month by and large with a few serious buyers searching for a bargain and a few families using the holiday period to sort out their house move. There was a steady stream of new instructions and a promising amount of advance bookings for valuations for the beginning of September.
“The strength of the housing market locally is causing a good deal of price inflation, who knows where it will stop!”
About the NAEA
The National Association of Estate Agents (NAEA) is the UK’s leading professional body for estate agency personnel, representing the interests of approximately 10,000 members who practice across all aspects of property services both in the UK and overseas. These include residential and commercial sales and lettings, property management, business transfer and auctioneering.
The National Association of Estate Agents is dedicated to the goal of professionalism within high street estate agency. Its aim is to reassure the general public that by appointing an NAEA member to represent them they will receive in return the highest level of integrity and service in both sales and lettings. Each NAEA member is bound by a vigorously enforced Code of Practice and adheres to professional Rules of Conduct. Failure to do so can result in heavy financial penalties and possible expulsion from the Association.http://www.naea.co.uk/news |