A good start to the property market year for 2013 – but will it last?

publication date: Mar 7, 2013
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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A good start to the property market year for 2013 – but will it last?

We track over eight monthly reports on property prices produced on a monthly basis. This report summarises what these reports say about the market and Kate Faulkner comments on what this means for the industry, the market and general public.

Report Headlines:-

Rightmove xxx “Sprightly start to 2013 but ‘old hands’ support the market”
Nationwide “While activity in the housing market remains muted by historic standards, there have been
tentative signs of a pick-up in activity in recent months”
Hometrack “Prices flat in January but 79% of agents optimistic about spring market. Volumes expected
to grow rather than prices.”
RICS "Activity levels edge up national price balance indicates stable picture, newly agreed sales
rise and price outlook more positive for 2013”
Acadametrics “House prices climb £7,000 in 12 months as mortgage rates fall
Land Registry “January house prices up 1.0 per cent since December”
Smart New Homes New homes market sees annual growth of 1.1% in 2012”

Kate Faulkner comments:

“According to most of the reports, the market does seem to show signs of, dare we say it, ‘green shoots’. However, the first half of the year has traditionally been buoyant since the credit crunch and then been subdued for the rest of the year. It also appears, the uplift is just based on new builds for first time buyers and older, cash buyers/sellers at the other end of the market, so the uplift isn’t necessarily across the whole housing market.”

New Home Property Prices

Smart New Homes xxx “The average price of a new home in December was £229,571, down 0.8% over the month.
Annual growth ended the year in positive territory despite falling back from 3.2% in
November to 1.1% in December. This means the average new home now costs £2,473 more
than at the end of last year. Prices in the new homes market remained relatively flat in the
final quarter of the year while the wider market saw more substantial price falls. The
premium for a new home is now just £582. Seven out of the 11 regions recorded positive
annual price growth in 2012. Greater London saw the largest annual price increase of +6.1%.
This was closely followed by the commuter belt regions of the South East where prices were
up 5.0% However, in the North West prices fell -4.7% over 12 months but stabilised in the
last quarter, with growth of +0.3%.”

Kate Faulkner comments:

“The new build market has been pretty static since 2009, both from a volume and price perspective, although London seems very much to have pulled through the doldrums and moved into positive growth territory. New builds are supported this year by the government and lenders with the new First Buy scheme, and although this and other new initiatives have caused some confusion as to what is the right scheme, the First Time Buyer Show organised by First Time Buyer Magazine, certainly suggests there is renewed interest in the market. What’s even more encouraging is the number of First Time Buyers attending the show who, despite low salaries had worked hard to save a decent deposit, proving if First Time Buyers really want to save for a deposit, they can!”

Regional Property Price Differences

Rightmove xxx “Whilst all regions have recorded a rise this month, some of the more dramatic increases
reported in the northern regions are effectively ‘rebounds’ from substantial falls measured
on the low levels of new listings in November and December”
Hometrack “The survey results show a greater realism over pricing by sellers. Compared to this time
last year, the percentage of asking price achieved indicator is up across all regions bar two –
the East Midlands and North West. Fewer postcodes (16.2%) registered price falls in January
compared to December 2012 (27.4%)”
RICS “At the regional level, the divergence in price balances continues, with London recording its
highest reading since May 2010. In addition, the South East and Wales were the other two
regions showing positive net balances. The West Midlands and Yorkshire & Humberside are
seeing the most severe price falls. Outside of England & Wales, surveyors in Scotland and
Northern Ireland continue to record falling prices.”
Acadametrics         “Greater London continues to dominate the housing market in terms of annual price change,
with house price inflation almost three times higher than in any other region of England &
Wales. The month has seen a slight decline in prices, with five regions having lower price
inflation this month than last, compared to only two last month. On a similar note there are
six regions with house price growth above zero this month, which is two less than last month:
all of which suggests that outside of Greater London, prices are beginning to falter. The range
of price movements in the regions from -1.3% in Wales to +9.4% in Greater London dispels
the assertion that house prices are generally stable: this is only valid when looking at prices
from a national perspective.
Land Registry “In January 2013, the region with the most significant annual price increase is London with a
movement of 7.1 per cent. The region with the greatest annual price fall is the North West
with a movement of -4.2 per cent. Merthyr Tydfil experienced the greatest annual price change
in January with a movement of 21.0 per cent. North East Lincolnshire saw the greatest annual
price fall with a movement of -9.5 per cent.

Kate Faulkner comments:

“So for Londoners, the credit crunch crisis, in the main, seems to be over, so now is the time to buy and if selling, hold on for a year or two and it suggests you will be able to get a decent price for your property once more. For those outside London, it’s vital to talk to your local estate agent about the market. For some, it’s only great news if buying, as prices continue to fall where supply outstrips demand, and for others, now is the time to buy and sell and move on as prices are rising, or just stagnant, suggesting potential rises in the future. It’s all about what property on a street in which postcode you want to buy or sell.”

Demand for Property

Rightmove xxx “There are also encouraging signs of life among home-movers too as the Rightmove website
recorded its busiest ever month in January. However, Rightmove research indicates that those
most likely to buy and sell in 2013 are the ‘old hands’ with greater access to equity and
finance, who have the confidence and the will to move.”
RICS “The bad weather depressed new buyer enquiries and new instructions in January, with both
recording slight falls”
 
Acadametrics         “In an average year housing transactions in January fall by a typical 28% from December
levels, a consequence of the Christmas holidays dampening house purchasing activity in the
latter half of December: this has a knock-on effect in housing completions during the month
of January. 2013 is no exception to this rule, although the reduction in transactions took
place both during December 2012 and January 2013, rather than over just the single month
of January as is more usual. We anticipate that housing transactions in January 2013 in
England & Wales will total 47,500 properties, an increase of 7.5% on the January 2012 total
of 44,245 sales. 2013 is likely to get off to a good start with an extra 3,250 sales over
January 2012.
Land Registry “The number of property transactions has decreased over the last year. From August to
November 2011 there was an average of 61,595 sales per month. In the same months a
year later, the figure was 58,947. The South East tops the table of regional applications with
251,121 in January 2013. The most up-to-date figures available show that during November
2012, the number of completed house sales in England and Wales increased by 1 per cent to
61,091 compared with 60,369 in November 2011.”
NAEA “NAEA agents noted a rise in the number of ‘browsing’ house hunters during December,
looking at properties with a view to making a firm purchase in the New Year. Compared with
year-on-year figures, the level of interest in property is down (December 2011; 294).”

Kate Faulkner comments:

“Rather conflicting messages on demand from the reports. Overall though, it does appear there are a few more people not just looking to buy a home, but actually going ahead with the deal. The amounts of a few thousand here and there though, is nothing compared to the tens of thousands of homes which would normally be  sold and we need to reach much higher levels to return to anything like those achieved prior to 2007.”

Supply of Property

Rightmove xxx “Rightmove research indicates that those with access to equity and finance will be the
main ‘movers and shakers’ in 2013: Seven out of ten (71%) who intend to sell are aged
over 45; half of those who intend to buy (49%) will be doing so for at least the third time;
‘downsizing’ is the number one reason for selling in nine out of ten regions in the UK.”
Hometrack “Agents are reporting sellers seeking valuations but waiting until the outlook becomes
clearer before putting their home on the market. Five years into the downturn and with
sales of homes still running at less than one million a year, there is a steady accumulation
of pent-up demand to move. The spring housing market will be a key test of whether UK
households are willing to act upon a slowly improving sense of optimism.”
RICS “The average stock on surveyor books (per branch) edged up slightly from 62.9 in December
to 63 in January 2013.”
NAEA “Housing supply across the country decreased to its lowest level in nearly three years
(February 2010; 56). Although regional variation remains, anecdotal evidence from NAEA
agents suggests low seller confidence in the market is encouraging homeowners to hold off
from putting their homes onto the market until economic conditions improve.”
Smart New Homes “Using a three month rolling average, the number of new homes added to the market grew
by 52% annually in December, which shows a significant improvement in supply compared
to the same time in 2011. January is expected to bring a further boost as many house
builders opted to delay the launch of new phases and developments until the New Year
.”

Kate Faulkner comments:

“Apart from the new build sector, there isn’t a vast jump in the number of properties for sale, despite many people really needing to sell as we move into our sixth year since the credit crunch. People’s confidence still isn’t high and for many, not being able to sell their property for a ‘profit’ makes it difficult to move up the ladder. As such, most sellers continue to be those who have probably lived in their property for nearly 20 years. This adds additional pressure on agents and legal companies though, as many have no idea of the changes to buying and selling a home, and therefore don’t understand they really need to get their legals started at the same time as putting their home up for sale, to save a lot of hassle and time delays down the line which increases the risk of sales falling through.”

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