The abrupt change in market sentiment reported last month has continued throughout most of August. However, towards the end of the month and into September we have seen a resurgence of buyers and property entering the market, possibly as a result of the latent demand which has been building over the summer months.
A more balanced market
Whilst price movements and transactional activity have slowed over the summer, the overall result is undeniably a calmer, more balanced market.
Data aside, Hometrack believe the pendulum has swung dramatically and that we have now entered a buyers’ market. They report that nationally, properties are taking longer to sell at an average of 6.3 weeks – the third consecutive month this figure has increased. In London, the time taken is lower at 4.9 weeks, but has increased dramatically from the mere 2.7 weeks seen in February when market conditions were exceptionally brisk.
Across our operating regions, Garrington is frequently achieving healthy discounts off asking prices, although in isolated cases ‘best of breed’ homes in certain hotspots have continued to create fierce competition amongst buyers.
Recorded sale price movements have remained subdued in August, with national indices reporting modest monthly increases ranging from 0.1% to 0.8%. Whilst this rate of growth is significantly lower than that seen earlier this year, Nationwide highlight that this is the 16th consecutive month of price rises.
As seen from the graph below, demand for housing has increased by 23% this year. However, unlike last year when a similar trend was observed and sustained, purchaser demand has been falling over the summer months.
The NAEA report that nationally, two-thirds of properties are now being sold under their asking price. In London the figure rises to 80% of sales according to LonRes. The NAEA also record that the supply of property entering the market nationally has increased by 11%, whilst in London, Rightmove suggest stock levels have risen 20% compared to this time last year. These trends, combined with weaker buyer demand, are rapidly balancing the market.
One of the inevitable consequences of greater competition amongst sellers and fewer buyers is the need for sellers to price at realistic levels, aligned to prevailing market conditions. Six months ago postcodes spanning over half of the UK market were posting price increases, by August this figure had fallen to just 20%.
Sellers do therefore seem to be taking note. Rightmove released data last month showing their highest fall on record in asking prices for stock entering the market. Nationally asking prices fell for the third consecutive month, by 2.9%, whilst London’s advertised asking prices have fallen 5.9%.
Garrington believes that such a shift in asking prices is good news for the autumn market, which was in serious risk of stagnating, as the gap further widened in value expectations between buyers and sellers.
According to research, 20% of English country homes valued at £2 million and above are sold to footballers. In contrast with many other purchasers, this unique group of buyers has been one of the most active over the summer months.
This year’s August transfer window exceeded all past records, with English clubs spending £835 million on new players.
Garrington has been selected as the Official Property Finding Partner to the PFA (Professional Footballers’ Association). Our London and North of England offices have been particularly busy with enquiries from clubs and players over recent weeks as transfers have been confirmed and a new wave of player earnings enter local micro-markets in key locations.
The final third of the year is likely to see quieter market conditions than witnessed at the start of the year, but nonetheless will remain active when contrasted with recent years.
Significant political and media interest has focused purely on a housing bubble or crash of late, but in reality what we are witnessing so far this year is neither; it is arguably part of a much deeper market recovery after a significant credit crisis, recession and market correction.
UK economic fundamentals remain strong as we approach the autumn market and the recent ‘pause for thought’, alongside the recalibration of asking prices amongst sellers, bodes well for well-informed buyers seeking value and new purchasing opportunities.