A survey by the National Association of Estate Agents (NAEA) has probably confused investors after last week’s announcement that asking price growth had fallen to its lowest level of the last couple of years. The report suggests that there are 11 househunters for every property on the market which would seem to suggest there is still significant support. So, why are we receiving mixed signals from the UK property market?
Estate agent activity
This report casts a very interesting light on the UK property market with an average 425 prospective buyers signing up for each estate agent in January. This figure is 10% higher than December, traditionally a quiet month, although the number of properties available to buy has fallen from 41 to 38 between December and January. When you bear in mind that December is often seen as the quieter month this in itself is quite confusing.
One other factor which seems to be at odds with a recent survey is the suggestion that one in 20 homes sold in the month of January went for a higher price than their listed price. This is the highest figure since April 2016 when 9% of properties listed were sold for greater than their asking price.
Who is buying?
It would seem that between December and January the number of properties sold to first-time buyers, through estate agents, fell from 32% down to 30%. This would appear to be in direct contradiction to a recent report on the UK mortgage market suggesting that first-time buyers were in the ascendancy. Interestingly, there was an increase in completed sales per branch rising from six in December up to 8 in January.
Suggestions that there are 11 potential buyers for each property listed does give the impression of underlying support but over the last 12 months this figure has fluctuated between seven in August and 11 in January. So, in all honesty the issue of supply to the UK property market has been there for some time.
The future of UK property
Each report into the UK property market seems to highlight a different trend and very often these reports tend to contradict each other. The fact is that the UK property market is about to enter the unknown as the UK government gets ready to trigger Article 50 as early as the end of March. This would fire the gun for negotiations between the UK and the European Union which could go on for two years.
While pessimists suggest that the UK market will be paralysed for the next two years there has been no real lasting impact since the Brexit vote last year. Yes, we saw property prices fall in light of the surprise vote but this fall has been more than made up and there does seem to be underlying demand. When you consider that the number of potential buyers per property listed has remained fairly steady this would again suggest underline support.
It will be interesting to see if the UK property market reacts to the triggering of Article 50 because in reality each time sterling falls on the currency markets foreign investors become more interested. Indeed we recently saw the sale of the so-called “Cheesegreater” for £1.15 billion which was well above the official valuation. Where the Chinese buyers able to pay a premium because of the currency fluctuations over the last few months?