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The housing market promised much this year but, like a student who seems to pay attention in class, yet flunks the exam, it hadn’t quite delivered. However, the elephant in the room this week is house price inflation. According to the Halifax, prices jumped by 2.7% last month and using Office for National Statistics’ data as a comparator, prices look likely to rise in the region of 6% over the course of 2015, compared with 3% predicted at the beginning of the year.
While the UK housing market has seen some substantial volatility in demand over the last 18-months, the most consistent feature has been a distinct shortage of new instructions. In July, there were fewer properties to purchase in any July since the onset of the financial crisis. The number of properties on the market in August was down by 11% compared with August the previous year and 37% lower than in August 2007, just before the run on Northern Rock. However, according to the Royal Institution of Chartered Surveyors new buyer enquiries increased for a fifth month in succession, the agreed sales balance edged upwards for the fourth successive month but a more robust recovery in activity is continuing to be held back in part by the aforementioned lack of new instructions which have yet to record any meaningful upturn since the middle of 2013, pushing average stock levels to record lows.
The result is that it is a seller’s market yet, people are staying put. Why? First came the effects of last year’s Stamp Duty reform, the more stamp duty goes up the more it costs to move, low inflation and gently rising incomes (annual pay increases are now averaging 3.2% according to the Office of National Statistics) has also lead to a sharp rise in re-mortgaging in order to lock in low interest rates recorded by the Council of Mortgage Lenders. The British Bankers Association last week reported that approval for re-mortgages, by which is meant agreements between lender and borrowers, were 38% higher last month than a year earlier. Mortgage approvals for house purchase in August were up 16%, overall mortgage lending last month was 14% up on the year, at £12.2bn, and represented the biggest annual increase since 2008.
The stock market turbulence will we suspect affect the market- first it will probably delay any rise in mortgage rates (earlier this month the Bank of England voted to leave rates unchanged at 0.5% for the 78 month in a row), second, it will convince many that their money is safer in housing than elsewhere, with good and bad consequences and finally, to the extent that prime central London property is seen as a safe haven by foreign investors, this view will be reinforced.
Locally the housing market shows signs of gradual improvement with many gravitating towards Romsey for a variety of reasons. Those from Winchester see Romsey as a well-priced alternative, those from Southampton, Chandlers Ford and Eastleigh see it as an aspirational move and those from Salisbury and further west (where transport links are slow) can rationalise the value in the geographical move. Furthermore the London buyer is far from a myth as they continue to exploit the price differential between Capital and Country. In 2014, 97% of properties sold would have paid less Stamp Duty under the new rules, but the improved economic outlook is translating into more house sales. The number of transactions in July was almost 17% higher than June and 6% up on July last year according to HMRC. During the last quarter, Woolley & Wallis have achieved some remarkable feats across a broad spectrum. We have sold properties off plan, we have sold properties ‘off market’, we have achieved on average close to £400/sqft on 50% of Morley’s Green site in Ampfield, we have 9 of 11 £1m plus brand new homes on another first class development under offer with many having exchanged, we have agreed the sale of Romsey’s most valuable home currently for sale within weeks of its launch and we have also been highly acquisitive on behalf of clients, being involved in the purchase of land as well as property. For any property related matter please do not hesitate to contact us.