Traditionally at this time of year the market enjoys a ‘spring bounce’ in activity, with heightened levels of buyer enquiries and new properties being offered for sale.
Whilst activity during March has been moving in a positive direction, the market still lacks the same level of vibrancy experienced last year. This is due to ongoing uncertainty created by one of the closest fought General Elections in recent history, and the number of key property policies being put forward by different political parties.
After last month’s fall in house prices Halifax has revealed positive growth in average sale values of 0.4% for March and Nationwide a more sedate 0.1%, although the annual change in prices has fallen for the seventh consecutive month to 5.1%. During the first quarter of this year the rate of annual change has consistently slowed in all regions, with the exception of the North of England.
Despite the lower rate of annual sales value increases, property asking prices have again been rising by 1% according to Rightmove data released in March. This rise may seem surprising at first, given that the average time to sell is noticeably higher than in 2014 at 79 days nationally, but in virtually all regional markets stock levels have fallen, meaning less competition between sellers to attract a buyer.
Garrington has seen the consequences of these factors first hand in recent weeks, with increasingly bullish pricing strategies being adopted in the prime country market.
In a reversal of trends seen 12 months ago, London homes are taking 27% longer to sell than this time last year with more stock in the market, and our London team having been able to negotiate significant price reductions for clients in recent weeks on a number of attractive acquisitions.
There were no significant surprises in the Chancellor’s Budget announcements last month, but arguably further good news for first time buyers due to proposed plans for a Help to Buy ISA, which is designed to add a bonus of up to 25% to the amount contributed to the ISA. Prior to the Budget the Council of Mortgage Lenders had released figures in March highlighting that the 19,000 loans to First Time Buyers in January were down 27% from December 2014 and down 14% annually.
Assistance for this sector of the market is not only good news for first time buyers, but support for this part of the market should trigger a positive ripple effect to higher price levels.
Another Budget announcement included confirmation of further government investment in rural broadband and mobile networks. In the long term this is likely to add to the attractiveness of some rural locations, which now offer a viable location to live and work ‘virtually’ with high speed connections.
So far this year over half of the new property searches Garrington has undertaken in the Home Counties have been for clients moving out of London, and with the disparity in regional prices and improving communication connections this trend may well spread into other regions.
Whilst there is no doubting that the property market has come off the boil over the past six to nine months demand is still there and sentiment is improving, with the Halifax Confidence Tracker reporting last month that buying sentiment is up to its highest level since the Tracker was launched in 2011.
Historical research shows that house prices typically increase by 3.2% in the quarter after an Election. Despite the ongoing slowdown in the annual rate of growth we expect both buyer activity to pick up considerably and more property to enter the market in the months after the General Election, especially at the higher end of the market.
This of course all remains highly dependent on the outcome of the Election, which not only has the potential to shape the spring market but also the rest of this year.