End September 2015
It would seem that I spoke too soon in my last update when I talked about continuing demand with little or no let up. Looking back it was only a blip, but it definitely felt that the first two or three weeks of September were very slow. Things are very much back to normal now however, and we have just had our second best month ever in terms of exchanges.
Quarter 4 is the time where agents are focussing on their year end figures (most agents still have a January – December budget year) and October is definitely make or break. I’m delighted to say that we actually hit our target at the start of September so the pressure is off, however there is no such thing as ‘enough’.
The market is in a slightly funny place at the moment, our monthly research shows some interesting statistics locally:
Whilst these figures are just for properties between the commons, this area is pretty representative of the area as a whole, so do give us a barometer of what’s really happening. It’s clear that there are more properties on the market than there were a month ago (no surprise there) however the real shock is the number of two bedroom flats available. These numbers have really taken off, and are clearly pushing prices in terms of £/sqft. Looking at our own database there has been a slight rise in the number of buyers registering, but these numbers are certainly not increasing at the same level as properties becoming available. Time on the market between starting on the market and going under offer (NOT exchanging contracts as I’m often asked!!) is slightly better, but it still averages around 8 weeks which is a country mile away from vendors expectations. Please note that these are figures for the whole of the market, not just Hamptons properties.
Overall things are pretty brisk. For the last month or so we have seen lots of viewings but surprisingly few offers, which indicates that buyers are probably a little spoilt for choice. Our neighbouring offices have been reporting increasing activity over the last couple of weeks however, and in this week alone we have received more offers on properties than in the whole of September. Clearly activity is building again.
The price of houses has definitely come down from their peak last summer, however flats are fairly much the same. The question is whether, with so many flats on the market, buyers will hold out in the hope that flat sellers reduce their prices, or buy now whilst there is plenty of choice. In reality it is likely that the buyers will have to blink first, as the sellers will simply hold out until prices come up to their level. That being said, I did have one client who, having been on the market for a couple of months for £850,000, reduced his price to £800,000 and found a buyer at the full asking price in less than a week.
In national news, our research department announced this week that average house prices in England and Wales are expected to end the year up 5 per cent, with growth slowing to 4.5 per cent in 2016. In our updated forecast we feel that against an improving economic background, house prices will continue to grow but that the pace of growth over the next two years will remain subdued. Affordability constraints, together with a moderating of price expectations for both buyers and sellers mean that house price growth is likely to remain in single digits over the coming two years.
London’s house price growth is expected to slow, but remain positive, with prices outside of the prime central markets slightly stronger than inside. Beyond London and the South, the North West of England stands out as a region that is expected to outperform its neighbours as confidence in its local economy and future prospects grow.
Further research shows that despite the change in stamp duty, housing market activity over the year has been disappointing. There were 15 per cent fewer homes for sale in the first half of 2015 than the same period in 2014 as sellers were reluctant to come to market. Some of you will have seen the news earlier this week that stamp duty revenue from London passed £3bn in the last year, with Wandsworth alone contributing a whopping £180m, the third highest in the country. Whilst the reforms were certainly welcome, the knock on effect, especially in the £2m+ market is still definitely being felt. This said, despite there being more properties available this month, the lack of housing stock overall continues to act as a support to prices. Looking ahead to 2016, interest rates continue to be the big unknown. It seems most likely that rates won’t move until Q2 2016 and that when they do rise they will settle at a new level of around 2.5 to 3 per cent.