During April we have seen a resurgence of positive house price headlines with quotes such as “House Prices Soar 10%”; whilst this may help newspaper sales it serves no useful purpose in providing clarity as to the true picture in the market.
April has undoubtedly been a month of positive change and we have seen an overall improvement in market conditions. According to Nationwide’s House Price Index prices rose 1% for the month, which takes the year on year increase to 10.5% compared with April 2009. By contrast, the Land Registry reported that prices fell 0.6% for March, but this still gives an annual price change of 7.5%.
For the second consecutive month HMRC figures (for residential transactions in excess of £40,000) show an increase in the volume of recorded transactions taking place in the market, with a monthly increase of 22% and an annual change of 24.1%. Land Registry figures also reveal that the prime sector of the market (£1 Million plus) has outperformed the rest of the market in terms of transaction volumes. As reported last month Garrington has seen an increase in the number of properties entering the market. Many pundits had suggested that the market would remain subdued during the run up to the election, but from what we have seen across our operating regions this has not been the case, with considerable activity amongst buyers and sellers alike.
Sales agents are reporting a noticeable jump in viewing levels, albeit that only a core of committed purchasers seem ready to take action with offers. This in some areas means that the finest homes in the best locations are selling in a matter of weeks rather than months, and some after competitive bidding.
Garrington has also seen a marked increase in the number of enquiries from people thinking about acquiring property for investment purposes. With continued volatility in the financial markets, political uncertainty, the potential implications of the Greek/Euro crisis and signs that a low interest economy may prevail for years rather than months, property for many could be an attractive asset class again. Restricted availability to credit at the lower end of the market is also helping to support tenant demand.
The UK market is undoubtedly at an interesting crossroads. The coming weeks will be key in providing clarity for onward 2010 forecasting and for assessing the endurance of recent positive activity.
The possibility of a hung parliament is currently looking very real and would carry implications for the whole economy. A further fall in sterling may rally international interest in the UK property market. Equally a coalition government introducing any form of “mansion tax” could have significant implications for the prime market – a policy that many experts had previously disregarded as unlikely to happen and irrelevant.
With the above in mind Garrington will continue to closely monitor the market and assess what impact the results of the election are starting to have next month.
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