Up or down? A summer snapshot of the property market

January 31, 2011

For the last two or three months, news that property prices are beginning to take an upward trend has reached our ears. So, has the market ‘bottomed-out’, or is there still some way to go before stability truly returns?

In this article, we take a look at figures and predictions from leading sources in the property industry and wider economy to assess the state of play.

Scores on the doors

New buyer enquiries have risen for the eighth month in a row, and newly agreed sales have risen sharply, according to the latest survey by the Royal Institute of Chartered Surveyors (RICS). The survey shows that, while sales are rising, they are still very small in number with sales per surveyor averaging at around 1 a week.

Let’s take a look through the estate agent’s window. The National Association of Estate Agents found that the average estate agent made strong sales in June, despite having slightly fewer properties available for sale than in May.

Property website Rightmove has reported this month that the average asking price of a home has risen to £227,864. This is the fifth such rise in six months and coincides with a 20% increase in the number of houses for sale on the Rightmove website. The average asking price of a flat has risen the least, up only 0.6% to £182,800.

According to mortgage lender Halifax, the property market is, and will remain, volatile this year. Despite reporting that house prices rose by 2.6% in May compared with the previous month, the lender says that prices fell again by 0.5% in June. The Nationwide, however, saw a 0.9% rise in June, and the mutual’s take on house prices is that the current average is £156,442.

The property tracker survey carried out by the Building Societies Association in June pointed to cautious optimism with a 1.4% rise in house prices expected over the next year by survey respondents.

The bleakest view of the property market has come from Pricewaterhouse Coopers, which warns that news of house price rises could be a ‘false dawn’. The consultancy firm predicts that prices will fall by a further 5-10% next year, will be flat in 2011 and could then take until 2020 to return to their pre-crash peak.

If house prices are beginning to stabilise, consumer spending remains low and the lack of availability of jobs is not improving either. The latest Manpower employment outlook survey shows that hiring intentions for the third quarter of this year remain at a low last seen in the early nineties. 10% of employers questioned predict a decrease in headcount with over 80% expecting no change.

In retail, the picture is improving slightly, with the British Retail Consortium reporting that like-for-like sales rose by 1.4% in June compared with the previous year. The warm weather and clearance sales appear to have boosted clothing and outdoor leisure, though, as furniture and homewares sales remain difficult.

In conclusion

Property prices remain well below their August 2007 peak and it could be that it takes some time for these values to be regained. The picture is also mixed across the country, with Northern Ireland, Wales and the North East faring far worse than London and the South West.

If you’re a would-be first time buyer, it could be a good time to start house hunting but the jobs and retail figures show that the UK economy is far from out of the woods. With the predictions on house prices ranging from modest increases over the next year to a fall of a few percentage points, there may not be a need to rush into a purchase.

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Sources

RICS Housing Market Survey June 2009
Halifax House Price Index June 2009
Nationwide House Prices Press Release July 2009
National Association of Estate Agents, press release July 2009
PricewaterhouseCoopers housing market news release 14/07/09
Manpower Employment Outlook Survey Q3 2009
British Retail Consortium Retail Sales Monitor June 2009
Building Societies Association – Homebuyer Confidence Increases Press Release June 2009