The price of new properties coming to the market in March increased from February by an average of 1.1 percent, which equates to a rise of £3,447. On an annualised basis, overall average asking prices dropped slightly by 0.1 per cent, yet family homes bucked the trend and saw asking prices increase year on year by an average of 0.7 per cent. It’s unusual for properties coming to the market at this time of year to see a price rise. Usually, as the spring moving season gets under way, more properties for sale means more competition and therefore, vendors generally have to adjust their pricing to attract a buyer. This year though, the pent-up demand in many parts of the UK would appear to be providing some support for values. It seems that many buyers are now bored of the ongoing Brexit imbroglio, and have decided that they just can’t put their moving plans on hold any longer. What’s stopping the market really taking off is that some would-be vendors continue to ‘wait and see’ on an outcome from Westminster, meaning that the usual glut of homes being listed for sale simply hasn’t come to fruition some parts of the UK so far this year.
Fewer properties for sale has, naturally, led to a decrease in the number of sales agreed. This despite the fact that in some parts of the UK, for example the Midlands, Yorkshire and the Humber and Wales, demand in many towns and cities hasn’t been affected by the current political turbulence.
There is, however, one particular sector of the market that appears to be bucking the trend, which is the family homes market. Generally categorised as three and four-bedroom homes, these properties appear to be holding their value better than any other sector with an average 0.7 per cent price year on year price increase.
Not only that, the Rightmove report suggests that family homes are currently more likely to sell, as whilst the overall number of sales agreed has dropped annually by 1.6 per cent, the number of sales agreed in the family homes sector has only dropped by 0.4 per cent on an annual basis.
There are likely to be a couple of reasons for this specific sector performing better than others. Firstly, the data reflects that more family movers are prepared to put their home on the market, with an increase in sellers of 0.7 per cent on the same period last year, compared to the overall drop in the number of new vendors of 1.2 per cent. More choice and availability is, therefore, likely to lead to more sales being agreed.
However, on a more pragmatic level, families are less likely to be able to defer their moving plans indefinitely. Whether they need more room due to their growing offspring or to relocate due to school catchment areas, this demographic are far less likely to be discretionary buyers.
Asking prices: Across the UK, asking prices made a rare increase in Spring
The rise in new seller asking prices reflects growing activity as the market builds momentum, egged on by the arrival of Easter
Miles Shipside, director of Rightmove commented: “The rise in new seller asking prices reflects growing activity as the market builds momentum, egged on by the arrival of Easter. Some sectors of the market and some parts of the country have strong buyer demand and a lack of suitable supply.
“However, on average, properties are still coming to the market at slightly lower prices than a year ago. It’s one of the most price-sensitive markets that we’ve seen for years, with buyers understandably looking for value or for homes with extra quality and appeal that suit their needs.”
Miles continued: “Properties in this middle sector offer the ideal escape route to families looking for more bedrooms, more space and their choice of schools. They may have already delayed for a year or two waiting for Brexit clarity, and understandably their patience is wearing thin.
“While some movers are awaiting the outcome of deal or no deal, many families are keeping on dealing in the housing market.”
Looking forward six months, the EU’s offer of a Brexit ‘flextension’ until October coincides with what is usually the busiest moving season. While it is only a postponement, it just may be enough to potentially relieve some of the short-term uncertainty, and so it arrives at an opportune time for the housing market.
Miles observed: “No doubt there are still a lot of twists and turns to come, but this extension could give hesitating home movers encouragement that there is now a window of relative certainty in uncertain times.
“We are not anticipating an activity surge, but maybe a wave of relief that releases some pent-up demand to take advantage of static property prices and cheap fixed-rate mortgages.”
But not everyone in the industry necessarily shares this positive sentiment. Within the last few days, reports from the Royal Institute of Chartered Surveyors (RICS) suggests that prices will remain static at best in the short-term, with a modest fall in house prices at a UK level expected over the next couple of quarters.
On a more positive note though, the latest RICS data also suggests that the longer-term picture is slightly more positive, with house prices anticipated to rise on average in twelve months’ time.
Simon Rubinsohn, RICS Chief Economist, said: “Brexit remains a major drag on activity in the market with anecdotal evidence pointing to potential buyers being reluctant to commit in the face of the heightened sense of uncertainty.
Asking prices: Families, tired of waiting for Brexit, are driving the increase in house prices
“Whether any deal provides the shift in mood music envisaged by many respondents to the survey remains to be seen but as things stand, there is little encouragement to be drawn from key RICS lead indicators. We expect transactions to decline on this basis.”
Another area for concern in the longer term according to Simon, is that many developers and housebuilders are “continuing to adopt a more cautious stance with the trend in new residential starts now flatlining. Against this backdrop, there is little possibility of delivering the uplift in supply necessary to address the ongoing housing crisis.”
Which would, of course, mean that whist stock levels remain constrained, prices would be likely to remain at their current levels.
Needless to say, should it occur, this scenario wouldn’t be helpful to the thousands of first time buyers currently struggling to get a foot on the property ladder.
That may not necessarily be the case for all of the UK though. London, which has borne the brunt of the Brexit housing market downturn – although it could be argued that prices were so far out of context with average affordability that a correction was long overdue – may yet see further falls.
James Hyman, Head of Residential for estate agent Cluttons argued that although there has been much discussion about the potential for a recovery of the London property market once there’s a resolution to Brexit, there could be a sting in the tail.
James argued that there is effectively three years’ worth of people who’ve not put their homes on the market, which has caused a ‘Brexit bottleneck’ that may lead to a sharp correction once they do decide to sell due to a rush of supply.
He also cautioned that sellers in the current London market, “do need to be realistic about the price; nothing has changed in terms of affordability. Buyers haven’t suddenly got bigger salaries and they still must contend with the tighter lending criteria imposed by the Council of Mortgage Lenders.”
James concluded: “Sellers who are prepared to price their properties sensibly will get offers. For example, we marketed three properties last week at 15 to 20 per cent lower than the original price – within 48 hours we had multiple offers. There’s activity out there but only at the right price.”
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