Monthly Market Review – January 2010

For many the New Year usually signals the start of turning moving plans into action. This year heavy snowfall over most of the UK caused somewhat of a false start for the first two weeks of January, with many people unable to leave their existing homes let alone viewing somebody else’s.

This appeared not to dampen interest in the market though, which was supported by portals such as Rightmove reporting search activity on their website hitting a record high in the first full week of the year with 157.4 million pages viewed – 26% higher on the same period a year ago. The site also stated that on a non-seasonally adjusted month-on-month basis, prices rose 0.4%, reversing part of the 2.2% decline in December.  Rightmove figures are based on asking prices as properties come on to the market.  The Land Registry recorded a rise of 0.1% using data based on all residential housing transactions.

As January progressed the market has seen a noticeable increase in new property entering the market in the sub £1.5 Million bracket and across its operating areas Garrington’s search consultants have been advised of a number of prime properties that are being prepared for Spring launches.  The acid test for new stock entering the market will be whether this supply is matched by equal or greater purchaser demand in the first half of the year. If new instruction activity does not lead to an increase in transaction activity then we could start to see downward pressure on prices by the Spring.

Opinions remain divided about the outlook for 2010 with press commentary from various pundits delivering stark contrasts and with property market predictions ranging from a 10% fall to increases of 10%. The wide range in predictions is due to the numerous variables in employment trends, inflation forecasts, the threat of higher interest rates and government spending cutbacks later in the year which could affect the market’s upward momentum.

While the bank bonus culture is less profound, London is still home to a significant number of financial institutions that continue to pay bonuses. This will provide an injection of cash into the economy and is likely to have a positive effect at the top end of the market.

Garrington feels there is now an acceptance in the mindset of buyers that the worst of the financial crisis may be over, and this was endorsed by official confirmation in January that Britain has clawed its way out of recession albeit by a frail 0.1%.  The road to recovery will be long but, as the graph by the National Institute for Economic & Social Research (NIESR) shows, signs are looking encouraging for the UK’s recovery after the largest annual contraction since 1921.

Further evidence of recovery comes from HM Revenue and Customs who collate whole of market data based on recorded completions and have reported 104,000 transactions completing in December 2009.  This is the first time since December 2007 that the number has risen above the 100,000 level.

Garrington expects to see more segmentation in the market in 2010 with individual homes in the best locations likely to continue to attract significant demand.  This demand should underpin values in this sector and therefore it is likely we will see a year of competitive buying activity and modest price growth.

The early signs for 2010 appear to be that property is back on many people’s agenda, albeit tentatively at this stage. Sentiment does however appear to be strengthening which bodes well for stronger market conditions for the year ahead.