A new year jump in Rightmove traffic is an early indicator of increased confidence that both prices and transaction numbers will see a modest rise in 2013, the firm said.
And said that this month’s average asking price of £229,429 is only 0.4% (or £999) below the highest January figure ever recorded at £230,428 in January 2008.
But there is a regional divide. In London asking prices are up 3.6%, they are up 3% in the South East, 2.6% in the South West and 2.2% in the West Midlands. But this is offset by falls of 3.5% in Wales, 2.5% in East Anglia, 1.8% in the North West and 0.1% in the North. In the north of the country only Yorkshire and Humberside bucked the downward trend with an increase of 0.1% in asking prices.
‘Those coming to market this month have taken a pragmatic pricing approach and kept their asking prices pretty much the same as sellers in December. Sensible pricing will help buyer affordability, one of the factors needed to help warm up the market and encourage a recovery from the credit crunch freeze in transaction volumes,’ said Miles Shipside, director and housing market analyst at Rightmove.
‘The thaw will also be helped by growing confidence that prices are more likely to go up than down. There is an increasing body of evidence suggesting genuine green shoots of recovery after a prolonged period of the housing market bumping along the bottom,’ he added.
The data also shows that weekly run rate of new property listings is 11,153 this month, up 22% on the 9,108 recorded over the same period a year ago. While still down 37% on five years ago, before the full impact of the credit crunch, it is the highest level recorded at the beginning of a new year since 2008. Rightmove’s traffic in the first two weeks of 2013 was also up by 27% compared to the same period a year ago.
‘While the number of sellers financially fit enough to come to market is still well down on pre credit crunch levels, there appears to be an increased willingness among those that can to give it a go. With Rightmove breaking traffic records, the chances of selling are on the up for sellers whose properties match the price, location and finish requirements of the greater numbers who are searching for a property to buy,’ explained Shipside.
‘Agents in many parts of the country report that the market remains patchy depending on where you live and what type of property you are selling. However, they are all consistent in noting that it is the best finished properties that are the most in-demand, especially as buyers do not have the spare cash to improve their new home so are hunting for the finished article,’ he added.
One of the reasons for muted transaction volumes has been sellers putting their move on hold. But Rightmove’s latest research into those intending to put a property on the market in the next 12 months shows that seven in 10 are motivated by discretionary factors rather than forced sale drivers such as the three Ds of death, debt and divorce.
Shipside also pointed out that the slow recovery in prices over the past four years will be welcome news to many of those who bought at the peak and whose equity was undermined. ‘This will help those with the requisite deposit to think about trading up or moving on, especially in better performing southern regions. Building chains from the bottom up helps create greater volumes and fluidity, and is key to a broader market recovery. After five years of putting their lives and moves on hold with their spare space shrinking around them, it looks like some of the pent up demand to move is breaking out. Perhaps more are becoming immune to the relentless flow of bad news stories, financial armageddon seems to have been averted and people are choosing to get on with their lives,’ he said.
There is evidence of greater mortgage lending to support an increase in transaction volumes, albeit modest. The Bank of England’s latest mortgage approvals statistics show a 3% increase from November 2011 to November 2012. This is the highest number of mortgage approvals in November since 2007, as the Funding for Lending Scheme begins to feed through to the market.
‘Those on the wrong side of the minimum deposit borderline are still marginalised, but those that have the funds and earning capacity to trade up will find some lenders offering fixed rate deals at their most attractive ever levels. Lenders are also courting buy to let investors as some areas offer a low risk combination of historically cheap purchase prices and attractive rental income. Rightmove research of professional landlords shows that 74% of those surveyed intend to buy and increase their portfolios within the next 12 months,’ Shipside explained further.
‘A further sign of market recovery is when investors look to property to achieve good returns. The majority of professional property investors appear to have spotted that now is the time to increase their investment, and they are obviously confident that prices are not going to get cheaper,’ he added.
However, Nick Hopkinson, director of property company, PPR Estates, does not agree with the upbeat assessment. ‘Seller numbers, whilst up on last year, are still around half the numbers needed in a functioning market with an average of only 64 properties per agent in December 2012,’ he said.
‘As we all know, instructing an estate agent is free and is often little more than a testing of the water to underpin dinner party bragging rights about house prices with instructions going to the most gung ho agent. There are also still over one million homeowners struggling with their current mortgages and on the brink of having to sell to avoid the horror of repossession and bankruptcy if inflation continues to squeeze them or their mortgage costs increase,’ he pointed out.
‘Buyers still require huge deposits going into 2013. Typically they still average 20% according to the latest industry data and, of course, a perfect credit score remains essential for any borrowing. Also, potential buyers are not so easily excited about house prices and actual buying prices remain slightly down at best, excluding the London bubble, when you look at the most recent completion statistics,’ he added.
He also pointed out that overall economic confidence amongst households remains low with train costs and fuel bills soaring while incomes remain static. ‘The Government Funding For Lending scheme appears to be simply helping banks increase their margins again, not what it was targeted at. Estate agent enthusiasm alone cannot drive the UK housing market. It looks like 2013 is going to be the same as last year for house prices with continued downside risk from the national and global economy,’ he added.
