Rightmove House Price Index – Window of opportunity:
Window of opportunity for first-time buyers in new year
- Steady start to 2017 with 0.4% (+£1,086) rise in the price of property coming to market, very similar to the 0.5% rise recorded in January 2016
- Encouraging early signs of home-mover activity, with visits1 to Rightmove since Boxing Day up by 5% even when compared to last year’s buy-to-let surge
- Window of opportunity for first-time buyers this new year with more choice and negotiating power:
- Available stock for sale of two beds or fewer currently up 1.9% versus previous year
- Fewer buy-to-let investors to compete against and sellers more open to lower offers as sales agreed in this sector down 13.2% in December 2016 compared to previous year
Overview
Rightmove data for the turn of the year shows a steady start to 2017’s housing market. The monthly increase in the price of property coming to market at 0.4% (+£1,086) is very similar to the 0.5% rise recorded in the same period 12 months ago. Early indicators of housing demand also appear robust, with Rightmove traffic compared to a year ago up by 5% since Boxing Day, which is traditionally when movers start to search en masse. This increase in search activity is notable given that a year ago market activity was buoyed by the November announcement that second-home stamp duty would apply from April 2016. With this year having no such dynamic there is a new year opportunity for first-time buyers to fill the void left by buy-to-let purchasers.
Miles Shipside, Rightmove director and housing market analyst comments: “The 0.4% monthly and 3.2% year-on-year price increases are indicators of the continued market momentum from the autumn. Demand for a suitable home is such that visits to the Rightmove website are still up by 5% year-on-year, despite being compared to a period that was boosted by high demand from buy-to-let investors rushing to beat the stamp duty deadline. Year-on-year comparisons for transactions in the first quarter of 2017 should also allow for the distortion of last April’s additional stamp duty tax deadline, as transactions were up 40% in the first quarter last year.”
New year opportunity for first-time-buyers with more choice and negotiating power:
With markedly fewer buy-to-let purchasers than this time a year ago, the number of sales agreed in the typical first-time-buyer sector of two bedrooms and fewer was down 13.2% in December compared to the same month in 2015 (sales agreed in this sector are still up 0.8% when compared to December 2014 which was not distorted by the buy-to-let rush). As a result, available stock for sale in this sector is up 1.9% compared to last year, offering more choice for first-time buyers. This contrasts with the same period a year ago, when available stock fell by 18% as active buy-to-let purchasers reduced choice and limited buyers’ ability to negotiate.
Shipside adds: “Those planning to buy their first home in 2017 have more choice of properties and less competition from other buyers than their counterparts a year ago. It’s a possible learning point for aspiring first-time buyers that a year ago buy-to-let purchasers acted more quickly and closed deals at a faster rate, appearing not to take a Christmas break. Admittedly they had the financial incentive of a deadline to motivate them, but first-time buyers still have time to act and currently have the incentive of stronger negotiating power to try and mitigate the upwards trajectory of property prices.”
A restraining force on potential first-time buyer activity is increasingly stretched affordability. Their favoured target sector of two bedrooms or fewer has seen the biggest price rises both month-on-month (+2.6%) and year-on-year (+6.4%) of any sector, partly a legacy from last spring’s buy-to-let surge.
Shipside advises: “Some sellers of first-time-buyer properties may be being over-optimistic with their pricing, giving an opportunity for budget-strapped first-time buyers to negotiate, especially if they act now while there’s still more choice available.”
Agents’ Views
Kevin Shaw, national sales director at estate agency Leaders, says: “It is clear that first-time buyers are outnumbering buy-to-let investors right now. We have seen an increasing number of one-bedroom apartments, which historically would attract first-time buyers and investors in equal numbers, snapped up by the former. This is largely because first-time buyers have had numerous offers accepted over the asking price so are obviously determined and able to secure these properties in the current market. Investors are understandably focused on the price as this drives the yield and generally do not want to get into a bidding war to secure these properties. It is a similar story with modest freehold houses in town centre locations, which would typically attract investors. But in recent months the majority of viewers have been private first-time buyers.”
Mark Manning, Director of Manning Stainton in Leeds, Harrogate, Wetherby and Wakefield said: “As we got off the train onto the 2017 platform it was difficult to know who might be there to greet us. Were we to expect a lonely welcome and a continuation of the subdued market we saw at the end of the year or a swathe of new sellers ready to greet us. Fortunately, the answer appears for now to have been the latter. New seller enquiries are 26% up on the same time last year giving the strongest indication that we may see a slight ease in the lack of supply in the market. Now this will be welcome news amongst first-time buyers who have registered in strong numbers and are waiting for much needed new stock to come to market. Combine this with a comparative reduction in new investors and landlords of 32% over the last quarter compared to the same quarter a year ago and this may well be the year of the first-time buyer.”
Breaking News story by Amy Funston of Rightmove.co.uk
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