One of the greatest influences on the property market is CONFIDENCE. If people feel optimistic about the future then they make plans and take action.
With the current security situation and the possibility that interest rates will eventually rise it is therefore encouraging to note that according to a recent survey by Rightmove 85% of homeowners expect their financial situation to either get better (41%) or stay the same (44%) over the coming year.
Indeed, the number of properties for sale increased by about 16% over last month, so buyers have a greater choice of homes and sellers have a greater number of buyers, so transaction volumes rise; in fact they were 4% up on the last quarter. This is good news for a stock-starved market, and although buyer enquiries are down nationally by about 2% this is negligible for this time of year. We’re certainly expecting to see demand increasing strongly in the new year.
This apparent confidence is supported by the fact that the usual pre-Christmas price dip from anxious sellers is at its lowest since 2011, at just 1.3%. Additionally, according to the NAEA, the number of sales made to first time buyers is at it highest for six years and represents about third of all purchases. This might have been prompted by continued uptake of the Help to Buy scheme, a reduction in the number of rental properties available or possibly buyers wanting to get their foot on the property ladder with a fixed interest rate before rates rise as they inevitably will. When this will be is highly contentious although any initial rise is unlikely to be more than a token quarter of one percent, adding an extra £35 a month to a typical £170,000 mortgage.
In terms of current house prices, according to the Halifax annual house price growth is running at a whopping 9.7% nationally. Rightmove suggests that asking prices of new to market properties are up 6.2% annually but down 1.2% on last month. HM Land Registry tells us that the average selling price is 0.4% up on last month and 5.6% up on the year. But with all these figures there are massive regional variations, so don’t read too much into the data and rather look to the current economic stimuli than the past for inspiration in predicting the future of the market during 2016.
Neil Newstead FARLA, MNAEA
CEO – Oakfield Estate Agents