Tentative signs of UK property market picking up
More house hunters are contacting estate agents in the UK with the latest figures showing numbers up 41% in December last year since their lowest levels for the month in 2008. The December 2012 Housing Market Report from the National Association of Estate Agents (NAEA) shows the number of house hunters reached an average of 282 per branch. This represents an increase on the three months to December, a high point for the quarter and up 7% on the previous month.
‘December can typically be a challenging month for the property market, as many buyers abandon their search until the New Year. However, December’s figures show a healthy December boost, and a substantial gain on the mid-recession low of December 2008,’ said Mark Hayward, president of the NAEA. ‘Demand is clearly returning to areas of the market, and agents are seeing more house hunters looking for their ideal home,’ he added.
The NAEA Housing Market Report also showed that the percentage of sales made to first time buyers saw a slight decrease in December, with agents recording 21% of market share compared with 22% in November. However, the number of sales made by agents fell below the 2012 average with branches recording an average of five sales for the month. ‘In this climate it’s important that those seeking to buy a home, and particularly first time buyers, have access to affordable mortgage finance,’ Hayward said.
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His comment comes at a time when there is more confidence in the lending market. Robert Gardner, Nationwide’s chief economist, said that the government’s Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick-up in lending activity. ‘Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves,’ he explained, adding that progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in at the end of 2012.
Gardner also said that the sharp decline in first time buyer numbers, from an average of 32,000 a month before the financial crisis to 20,000 currently, has remained a cause for concern. ‘While economic and financial conditions remain difficult, there are encouraging signs that in a number of key respects conditions for first time buyers are improving. We expect first time buyer numbers to gradually rise in the quarters ahead,’ he said.
The Nationwide’s latest index shows that UK house prices increased by 0.5% last month but have effectively not moved in the last 12 months. The typical UK home is now worth £162,245, the same as it was in January 2011. There is also considerable variation in price falls and rises across the country with the North/South divide widening. The data shows that 11 out of 13 regions saw prices fall in 2012. London experienced the most growth while Northern Ireland saw the steepest falls in home prices.
‘Affordability has already improved modestly, and policies such as the Funding for Lending Scheme should provide further support for the market, by keeping down the cost and boosting the availability of credit. However, the most decisive factor in achieving a sustained increase in first time buyer numbers is likely to be the performance of the wider economy, especially the labour market,’ Gardner added.