It’s not easy to be optimistic about the sales market at the moment but this being the first post on our new blog I thought should try. Amongst all the gloom and doom there has been some evidence of a pick up in activity since the turn of the year so maybe we can start to look forward to better days ahead.
At the root of much of the malaise that has overwhelmed the market for the last 18 months is the shortage of available credit. The credit problems have to ease before any sustained recovery can take place and there are signs that may be starting, just last week The Bank of England announced that the number of loans approved for house purchase in February rose to 37,937, up from 31,791 in January and well above the six-month average of 31,500. Although this is still well below the long term average it is heading in the right direction. With the Government increasing the pressure on the part nationalised banks to step up their lending the barriers to credit for first time buyers look to be slowly lifting.
There has also been a noticeable increase in the number of viewings and offers – we know from our own experience that prospective purchasers have been returning to the market since the turn if the year. They are still being hampered by the large deposits currently being demanded by lenders but the appetite is certainly there. This anecdotal evidence was supported by the latest survey from the RICS which showed that buyer inquiries increased for the fourth consecutive month, with the strongest increases seen here in London.
Another barrier to a more marked pick up in activity is the disparity between asking prices and what prospective purchasers are willing to pay. It is interesting to compare the actual change in London property prices over the last year with the change in asking prices – while those properties that did sell are showing a 15.6% fall (Land Registry) the reduction in asking prices is a mere 1.8% (Rightmove Survey). The result is that the difference between what sellers expect and buyers are willing to pay has increased significantly; making deals harder to come by.
It is difficult for the seller of a local 3 bed semi that was put on the market just 6 months ago at £400,000 to accept that it must now be reduced to £370,000 if it is to attract the attention of buyers, or possibly more if they want a quick sale.
I’m deliberately ignoring this week’s headline news from Nationwide that houses prices increased by 0.9% in March as I’m sure this will turn out to be an anomaly – the same survey confirmed that prices here is London fell by 5.3% between January and March this year. These blips only encourage sellers to keep their asking prices high and hinder their chances of finding a buyer.
While there are some tangible signs of a recovery we would expect the market to remain in convalesance for the remainder of this year as the banks continue to clean up their books and sellers come to terms with conceding their long held power to the buyers.
Before finishing, a few words about what we will be covering here on the blog in the coming months. The first thing to say is that it won’t be all about sales – lettings is an equally important part of our business and we’ll be highlighting trends in the rental market and passing on advice that we hope will be useful to both Landlords and tenants.
Our office history buff, Caroline, will be digging in to the history of the local area – kicking off with series of posts on the most popular styles of local period properties.
And then there’s my own specialty; surveying. While not seen as the most riveting of subjects I’ll be doing my best to change that view by focusing on the more practical aspects of the profession.
We’re all looking forward to seeing how the market develops over the coming months