Plethora of sold boards restricts choice as buyer demand remains strong
- Newly-marketed property prices at virtual standstill, up by 0.1% (+£312) as we enter quieter holiday season
- Fundamentals remain good mid-year with robust demand, low interest rates and low unemployment:
- Sales agreed numbers remain strong year-to-date in 2017, almost identical to 2016
- Prospective buyers in many parts of the country are seeing the highest proportion of properties marked as sold than at any time in the last seven years
- Even with 7.6% more sellers coming to market this month compared to this time last year, buyer choice is restricted as supply fails to keep pace with strong sales and buyer demand
- Stretched buyer affordability acting as a price brake with national average at a modest +2.8%, with buyers very price sensitive and some properties hitting their price ceiling
Overview
The onset of the summer holiday season generally has a dampening effect on both prices and activity, and this month sees the price of newly-marketed property at a virtual standstill, up by just 0.1% (+£312). To put it into context, this is a stronger price performance than the previous month’s fall of 0.4%, and is also well ahead of the same month a year ago which suffered a fall of 0.9% after the Brexit referendum.
As we reach the half-way point of 2017 the fundamentals of the housing market appear to remain robust a year after the shock referendum result. Interest rates and unemployment remain low, and demand for housing remains high, exacerbated by the shortage of available unsold property for sale. This means prospective buyers in many parts of the country are seeing a lot of sold boards on properties they would like to buy themselves. Indeed, the strength of buyer demand and lack of new build and existing property coming to market have resulted in over 45% of agents’ property stock being sold subject to contract. This is the highest proportion ever recorded by Rightmove since we started tracking it seven years ago.
Miles Shipside, Rightmove director and housing market analyst comments: “Prices are in the summer doldrums. Sellers coming to market at this time of year have to price more keenly as the traditionally bubblier spring selling season is over and prospective buyers are distracted by their own summer holiday plans. A year on from the shock referendum result and subsequent dent in activity levels, the fundamentals remain strong. Low unemployment, low interest rates, strong demand and historic undersupply of homes are mitigating any wobbles in confidence and as a result nearly half the properties on the market, over 45%, have sold signs slapped across them.”
Compared to the period around the referendum a year ago, more sellers have come to market and more buyers are buying. The number of sales agreed is up by 4.6% in June 2017 compared to June 2016, and the number of sellers coming to market is also up on the same period a year ago, with a 7.6% increase in fresh choice. The recovery in buyer activity has also meant that sales agreed year-to-date in 2017 are now virtually on a par with the same period in 2016 which was boosted by the rush to beat the April 2016 stamp duty deadline, running at just 0.4% down.
Shipside observes: “The half way point of 2017 is a useful time to make a comparison with the previous year and the number of sales being agreed by agents is uncannily within fractions of a percent of the number at the same half-way point of last year. This year and last year have had their own shocks and distortions, but these statistics show that the distractions have been short-lived and have now evened themselves out. While the number of existing owners coming to market this month is up in eight out of ten regions compared to a year ago, giving more fresh choice, it has to be kept in mind that the comparison is against a subdued new listing period in 2016 around the time of the referendum.”
However, in spite of high demand and lack of suitable supply, stretched buyer affordability continues to act as a price brake. Though all regions have seen year-on-year price rises, the national average stands at a relatively subdued +2.8%.
Shipside cautions: “Despite the number of sold boards outside people’s properties nearly equalling the number of properties that are still up for sale, especially as you go further north, sellers should note the market remains very price sensitive as some properties are hitting their price ceiling. Buyers, many of whom are sellers too, will struggle to afford to pay much more. Wage growth is muted, there are signs that consumer credit is tightening, and at some point there will be the first rise in mortgage interest rates for a decade or more which will come as a shock to buyers who have either forgotten or have never experienced interest rates going up as well as down. We can see now that price rises are muted despite high housing demand, indicating we have left the stage of the cycle where price rises exceed the rate of inflation. High demand will continue to underpin prices, but we are seeing stretched affordability limiting the pace of rises, especially in the south of the country.”
Agents’ Views
Nick Leeming, Jackson-Stops & Staff Chairman, commented: “Prospective buyers are savvy and know that property market conditions are in their favour. The only way is up for interest rates, and with great mortgage deals available, now is the time to buy. However, the issue that still needs tackling is the lack of housing supply. It is positive to see Rightmove’s data showing stock levels up on last year but much more work needs to be done to get Britain building more high quality, new homes across the country, suitable for a range of demographics and lifestyles. With housing minister Alok Sharma now in the driving seat, it will be interesting to see whether the long awaited Housing White Paper rears its head from its hiatus. I am hopeful a change in housing minister will get the ball rolling again on renewed levels of home building.”
Mark Manning, Director of Manning Stainton in Leeds, Harrogate, Wetherby and Wakefield said: “The market at present is certainly not a one filled with great furore yet demand still persists particularly for good quality family housing at accessible price points. This year so far we have seen a more modest growth in our average sale price across our region with activity on new listings and sales remaining broadly in line with 2016. That being said evidence from our network suggests that certain pockets of the market are becoming a little more testing which may indicate some price resistance creeping in as we enter the summer months. Without doubt the biggest challenge remains in bringing each sale from under offer through to completion with far greater resource being focused on this part of the process than ever before.”
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