Monthly Market Review - February 2012
The early flurry of activity in the market has continued to build in momentum during February - well ahead of the traditional Spring turning point in the market.
Heightened activity naturally poses the question as to whether this is an unseasonal blip or the long awaited signal of the start of a sustained recovery and confirmation that the worst may be over.
Latest market data from Nationwide’s House Price Index reports a price rise of 0.6% in February, building on the recorded growth seen in January. Price data from Halifax also mirrors this trend, albeit reporting a rise of 0.5% last month. Aligned to price growth has been a rise in Gross Mortgage Lending which, for the last reported month of January, was up 10% against the same period a year ago, equating to new lending of £10.5 billion.
We believe that recent price rises can be explained in part by the market being bolstered by first time purchasers wanting to complete their transactions before the scheduled end of the Stamp Duty holiday in March. A proportion of these transactions would have, under normal circumstances, rolled into the Spring market and Garrington believe that this factor, together with the positive momentum in the market over the Winter months has helped buoy prices. Improved market conditions have not been limited to this sector of the market, with the prime market activity in a number of locations being equally brisk.
Any sustained recovery clearly needs underpinning by clear economic fundamentals. February has seen data announced confirming positive sentiment in both the property and business community.
The RICS has revealed, in the results of its February Housing Market Survey, that the average number of sales per surveyor has risen. Respondents are now predicting price rises for the year ahead – the first such response since May 2010.
Within the wider business community, accountants BDO have revealed that respondents to their Business Optimism Index are predicting growth in their businesses for the next two quarters, and at the highest rate for nine months.
Whilst high levels of activity in London are well documented it has been interesting to see this trend being reflected in other UK micro markets in which Garrington operate. One leading prime sales agent in Harrogate and York has advised us that their sales are up 19% compared to this time last year, dispelling the theory that it is only London and the South East that are showing signs of improving.
UK Property Wealth Map
One interesting press article to which Garrington have recently been asked to contribute, explored whether buyers are compromising on locations, and therefore driving up prices in new locations. In our experience, buyers are undoubtedly more open-minded in today’s market to ensure they secure the very best property in the best location. However, they will still want to select high quality locations which offer excellent schooling facilities, good transport connections and attractive housing stock with proven demand for future resale.
These criteria have formed the foundations for many of the property searches we have been retained to undertake for our clients so far this year.
Of central focus moving forward into March will be whether the issues we have highlighted represent a blip or the start of a new trend. Equally important will be any measures that the Chancellor decides to introduce in the forthcoming Budget which impact the housing market.
Garrington will continue to monitor the market carefully and report its latest findings, as well as its assessment of Budget implications for it, next month.
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