This month sees the price of newly-marketed property at a virtual standstill, up by just 0.1%, which equates to just £312 compared to the previous month.
According to Rightmove, this is a stronger price performance than the previous month’s fall of 0.4%, and is also well ahead of the same month a year ago which suffered a fall of 0.9% after the Brexit referendum.
At the half-way point of 2017, the fundamentals of the housing market appear to remain robust a year after the shock referendum result. Interest rates and unemployment remain low, and demand for housing remains high, exacerbated by the shortage of available unsold property for sale. This means prospective buyers in many parts of the country are seeing a lot of sold boards on properties they would like to buy themselves. Indeed, the strength of buyer demand and lack of new build and existing property coming to market have resulted in over 45% of agents’ property stock being sold subject to contract. This is the highest proportion ever recorded by Rightmove since it started tracking it seven years ago.
Miles Shipside, Rightmove director and housing market analyst comments: “Prices are in the summer doldrums. Sellers coming to market at this time of year have to price more keenly as the traditionally bubblier spring selling season is over and prospective buyers are distracted by their own summer holiday plans. A year on from the shock referendum result and subsequent dent in activity levels, the fundamentals remain strong. Low unemployment, low interest rates, strong demand and historic undersupply of homes are mitigating any wobbles in confidence and as a result nearly half the properties on the market, over 45%, have sold signs slapped across them.” Compared to the period around the referendum a year ago, more sellers have come to market and more buyers are buying. The number of sales agreed is up by 4.6% in June 2017 compared to June 2016, and the number of sellers coming to market is also up on the same period a year ago, with a 7.6% increase in fresh choice. The recovery in buyer activity has also meant that sales agreed year-to-date in 2017 are now virtually on a par with the same period in 2016 which was boosted by the rush to beat the April 2016 stamp duty deadline, running at just 0.4% down.”
Shipside observes: “The half way point of 2017 is a useful time to make a comparison with the previous year and the number of sales being agreed by agents is uncannily within fractions of a percent of the number at the same half-way point of last year. This year and last year have had their own shocks and distortions, but these statistics show that the distractions have been short-lived and have now evened themselves out. While the number of existing owners coming to market this month is up in eight out of ten regions compared to a year ago, giving more fresh choice, it has to be kept in mind that the comparison is against a subdued new listing period in 2016 around the time of the referendum.”
However, despite high demand and lack of suitable supply, stretched buyer affordability continues to act as a price brake. Though all regions have seen year-on-year price rises, the national average stands at a relatively subdued +2.8%. Shipside cautions: “Despite the number of sold boards outside people’s properties nearly equalling the number of properties that are still up for sale, especially as you go further north, sellers should note the market remains very price sensitive as some properties are hitting their price ceiling. Buyers, many of whom are sellers too, will struggle to afford to pay much more. Wage growth is muted, there are signs that consumer credit is tightening, and at some point there will be the first rise in mortgage interest rates for a decade or more which will come as a shock to buyers who have either forgotten or have never experienced interest rates going up as well as down. We can see now that price rises are muted despite high housing demand, indicating we have left the stage of the cycle where price rises exceed the rate of inflation. High demand will continue to underpin prices, but we are seeing stretched affordability limiting the pace of rises, especially in the south of the country.”
Patrick McCutcheon, Head of Residential Sales at Dacre, Son & Hartley says: “There has been talk of a national slowdown in supply for a couple of years, yet it is only over the last twelve months or so that this market change has manifested itself in the core Yorkshire area. Indeed, I would argue that this year has seen a modest increase in the number of number of properties for sale that are worth over a million pounds, so the change isn’t uniform across the market.
“There is no question that first time buyers and those in the middle market have been frustrated by a lack of choice. Their dismay no doubt will be compounded by supply issues, leading to price growth in the majority of sectors. It is difficult to be certain what is holding sellers back. Interest rates remain very competitive, stamp duty obligations are softer on the majority than they were, and employment remains healthy. The actuality of Brexit and the fallout from the recent general election are relatively new issues, so it’s hard to pin the blame on them.
“I would imagine moving forward that the supply levels will remain at, or about, the present levels for the foreseeable future. I suspect price growth will ease too due to income drag holding back what borrowers can secure from lenders, so it is hard to see a flood of property becoming available for sale whilst the politicians steer us through the exit from the EU.”