English: The Parliament Square in London, on the left side the building of the Royal Institution of Chartered Surveyors; London, UK Deutsch: Der Parliament Square in London, auf der linken Seite das Gebäude der Royal Institution of Chartered Surveyors; London, Vereinigtes Königreich (Photo credit: Wikipedia)
Well if ever there was confirmation of the recovery in the UK’s residential property market it is the first data covering 2014 which suggest this year will be a strong one. The first index of the year from Rightmove shows asking prices increased by 1% this month.
This might not immediately sound too impressive, but when you realise that they increased just 0.2% in January 2013 and have fallen 0.2% on average in the month of January over the last decade, then it is indeed pretty impressive.
The good news goes further as the number of properties coming to market and activity across Rightmove’s websites is also up as both agents and sellers seem confident going into a new year.
And year on year asking prices are up 6.3%, the highest annual rate of increase since November 2007, which was before the credit crunch started to bite. Put together it all points To a very strong start in both the price of property coming to market and the number of people looking at what’s on the market.
It must be remembered that price expectations, from both sellers and agents, are a lead indicator of optimism, and should see actual sale prices ticking upwards in the coming months.
As Rightmove points out, the sums have to stack up for most property owners before they will consider a sale. Some will have to achieve a higher sales price to fund a move while others will have a figure in their heads that they’re not prepared to go below. With buyer demand on the up and price levels having hardened, the likelihood of finding a buyer at an acceptable price will be a potential boost to new seller numbers, especially for those trading up and needing a decent deposit to access more competitive mortgage rates.
Alongside this we have the second phase of the government’s flagship Help to Buy scheme which was launched three months early after initially due to have been launched this month.
It is proving hugely popular and more lenders are joining meaning there are more choices for buyers.
Also, activity on Rightmove is a dependable barometer of demand with intending buyers and sellers sussing out their local market. As well as a significant increase in activity on the Rightmove website, the growth of home hunting from mobile devices is increasing. There has been a 40% rise in leads to agents from phones and tablets. People seem to have an increased urgency for information about property, and are using whatever device is closest to hand, according to Rightmove.
Then when you realise that the current stock of property for sale is at a seven year low at a time when there is more mortgage choice, you can see that the impetus in the market looks well grounded.
The latest survey from the Intermediary Mortgage Lenders Association shows that 69% of brokers see current growth as just the beginning of a fuller recovery while another 12% feel this could be on the cards. Lenders are slightly more cautious as 43% expect a fuller recovery while 50% feel this may occur.
The report explains that confidence has been transformed among mortgage brokers in the last year. Some 90% feel market conditions are currently improving, compared with just 37% in January 2013. Just 2% saw improvements as significant 12 months ago, yet 36% now take this view.
Lenders remain unanimous that the market is improving, as was the case in July. A growing number, 67%, see current improvements as significant, compared with 63% in July 2013.
Indeed the Council of Mortgage Lenders expects mortgage growth to continue in 2014.
At the same time sales are strong. Just last week the latest report from the Royal Institution of Chartered Surveyors showed that house sales in the UK have hit their highest point in almost six years. And figures from the Office of National Statistics show that price growth is across the UK, not just in London and the south of the country. Prices have increased year on year by 5.6% in England, by 5.4% in Wales, by 2.5% in Scotland and by 3.3% in Northern Ireland.
While home owners have been unable or unwilling to come to market during the economic downturn, there are very early signs of greater supply of existing homes being a feature of 2014. The Rightmove figures shows that both the first week of 2014 and the most recent month saw increases in property coming to market compared to the same periods a year ago, up by 4% and 6% respectively. However, the number of new properties to market this month remains 31% down on the same month in 2008.
But it is not necessarily plane sailing ahead. This upturn in new sellers coming to market needs to continue, so that each rung of the property ladder is busy and better balanced, with those trading up swapping places with those trading down or not buying again.