Rightmove’s March House Price Index shows average time on the market falling from 98 to 89 days.
In addition, unsold properties per branch increased by an average of just one, indicating that the pace of sales agreed has picked up to nearly cancel out the spring sellers who normally increase agents’ stock levels at this time of year.
Miles Shipside, director of Rightmove comments:
“The falling time on the market and stable spring stock levels would normally point to a healthy housing market. However, this year’s celebrations will be severely muted by the knots the market has found itself tied up in.
"This month’s number of sellers, still handcuffed by a lack of equity, has managed to limp just ahead of the number of deposit-shackled buyers, but the market is still restrained by low transaction volumes and restricted liquidity.”
The dearth of new listings and increased sales activity have helped to restrict buyer choice in certain segments of the market. Unsold stock per estate agency branch has risen by an average of just one property, from 69 to 70, when we would normally expect to see a larger increase at this time of year.
Search activity on Rightmove broke previous records in three out of the four weeks of February, and this increase in market activity no doubt influenced estate agents to raise new sellers’ average asking prices by a further 0.8% to £231,790.
The increase is likely to have been driven by the continuing scarcity of new sellers who can afford to trade up.
In spite of the costs of marketing being reduced by the suspension of Home Information Packs, property coming to market is up by just 5% on the same period last year, and is still down by 26% on 2007’s pre-credit-crunch level.
The average weekly listing figure is 27,815, and whilst a little higher than the 26,446 of a year ago, it is still well down on the March 2007 weekly average of 37,667.
The restricted level of new listings indicates a lack of both forced sellers and traditional mass market sellers who are currently unable or unwilling to come to market.
Shipside adds:
“The spring bounce in buyer interest and slight pick-up in supply of fresh stock suggest that renewed activity in some sectors of the property market is managing to outweigh the impact of economic uncertainty and lack of mortgage funding.
"Some buyers and sellers still have the winning formula to satisfy their housing needs, though with the prerequisites for a successful move being severely limited for a fourth successive year, this protracted lack of market liquidity is building up a legacy of longer-term problems.”
Positive national figures mask the detail of a very patchy market, highly dependent on the socioeconomic make-up of an area.
Differences between regions play second fiddle to wealth demographics within regions, though the greater average prosperity of those living in the south does give a somewhat misleading impression of a ‘north-south divide’.
Rightmove’s analysis of new property supply by property type, of price movements within those groups, and of prospective buyers’ intentions gives early signals of longer-term problems ahead:
Trouble on the terraces.
Agents report that the tightening of lending criteria has hit prospective buyers of terraced properties hardest, as they are least able to save the necessary deposits. According to Rightmove’s latest Consumer Confidence Survey, over half of those in rented accommodation cite mortgage availability and affordability as their main barriers about buying.
In response to fewer buyers for this type of property, new stock of terraced houses has fallen by 31% on 2007.
Shipside notes:
“Terraces’ target audience of would-be first-time buyers are stuck in rented accommodation, with 30% of them in our recent survey expecting to stay there for 3 years or more. Yield-hungry buy-to-let investors or buyers with gifted deposits are the main hopes for a terrace seller.”
Volume of new build developments will not meet future housing needs.
The provision of new build properties to meet forecast increases in household numbers was previously helped by higher-density development.
However, lower-density townhouses, semis and detached houses are where demand remains stronger from buyers who still have access to finance, and so those are the types of properties now entering builders’ pipelines.
In 2009 the mix ratio of new build flats and house styles advertised on Rightmove was circa 50:50; today it is 70:30 in favour of houses.
Shipside notes:
“The hope that a market pick-up would lead to a proportionate increase in new build units will not be realised. Having been stuck with too many flats by planning authority pressure, developers now need to build what the lenders will lend on and buyers want to buy.
"Any government plans to ease planning restrictions on new housing are to be welcomed.”
Detached housing dodges the downturn.
If you are in an area with a preponderance of detached dwellings, then there is definite evidence of a more active market. Average asking prices for detached property coming to market have held up best, up by 3.1% year-on-year.
Shipside notes:
“Price falls and standstills have reversed or hindered the equity growth of flat and terrace owners, restricting their ability to move, compared to their better-heeled detached neighbours.”
