The improving health of the market since the beginning of autumn has continued in October, supported by clear evidence of sustained growth in the UK economy. Britain’s economy is growing at its fastest pace for many years according to a recent report. However, the release during the month of a range of conflicting data between asking prices and sale values caused a level of confusion in the property market.
Values continue to grow
The focus in October has been very much on the growth in values, but the real picture isn’t always as clear-cut as it may seem from headline statistics. Whilst activity levels have remained strong, there is still a disconnect between the perceptions of buyers and sellers. Garrington has seen the unseasonally early appearance of a proportion of next year’s new stock carrying fairly full price tags, as sellers ‘dip a toe’ in the autumn market.
Once again, the overall trend of price growth is reflected across the main market indices. These range from 0.5% monthly growth published by Hometrack, to 1.5% from the Land Registry. It is unusual to see the Land Registry demonstrating the highest growth, which is perhaps indicative of the ‘transactional lag’ we have referred to in the past. Nationwide indicate a 5.8% growth figure from the same period last year which, they say, now puts UK values at only 7% below their 2007 peak.
Changing market dynamics
Wider quantitative research released in October serves to underpin the fact that the UK property market is now in a clear transitional stage of a sustained recovery.
Transaction volumes are up 17% across the market compared with the same period as last year, with the robust prime market (£1m+) recording a 34% rise in transactions in England and Wales, according to the Land Registry. Rightmove’s October data shows that asking prices have risen 2.8% in the month and 13.8% annually. However, they also point out that monthly values fell in 2 regions, 5 others were still lower on an annual basis, and that 7 were rising but behind the rate of inflation.
Despite concerns over the national house price to earnings ratio, Halifax highlights that mortgages are more affordable than they have been since 1999. Current average monthly payments now constitute 27% of disposable monthly income.
Property is selling more quickly having been viewed by more buyers according to Hometrack. The time a property remains on the market has fallen by 0.4 weeks in October and the number of viewings per property rose from 9.8 to 10.2.
During October Garrington received its highest number of monthly new client enquiries for any month this year – this was a national trend and across price sectors. Buyers are increasingly seeing the value of being represented in price negotiations, wanting objective advice on true market conditions and are frustrated by the shortage of attractive buying opportunities.
London’s strength continues to shine
Whilst prices have undoubtedly been flying in London once again, the anecdotal evidence doesn’t necessarily paint a clear and conclusive picture. Garrington has seen buyers and investors who are increasingly wary of ‘overpaying’ in what some now consider to be a ‘frothy’ market, which is being distorted by long-term and foreign investment.
Basic laws of supply and demand are driving the London market forward, with 46% of London sales agents reporting an increase in buyer demand over the last quarter, and a fall of 23% in new stock entering the market over the same period, according to Lonres.
Land Registry figures show growth in London at 9.3% for the year, with areas such as Hackney seeing enormous leaps over the past 2 months and Wandsworth borough up over 10% over the year.
Rightmove’s London data for October indicates that asking prices have risen 10.2% over the last month. As this is real time data from live property listings on the property portal, this is misleading as it shows what a seller hopes for, which is significantly out of line with Land Registry actual sales growth figures available showing price rises closer to 1.9%.
Whilst Prime Central London has long been the focus of market commentary, research from the Garrington London team reveals the price differential between north and south of the River Thames is down almost 10% over the past 12 months, as the southern boroughs outperformed many of their northern counterparts.
An eye on the winter slow-down
Values and transaction volumes are up, interest rates are low, unemployment is falling and there are fiscal policies in place to support and regulate market growth. As we approach winter, yet again the scale and momentum of the recovery will be tested as we approach a traditionally quieter period.
However, given activity levels over recent months it will be interesting to observe the resolve and commitment of savvy buyers and sellers wanting to seize an early advantage, before what many are predicting is likely to be a busy 2014.
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