Date Published 22 January 2013
With new seller prices up by 2.4% (+£5,369) year-on-year, more sellers coming to market, and a new year jump in Rightmove traffic, early indicators offer reasons to be confident that both prices and transaction numbers will see a modest rise in 2013.
Miles Shipside, director and housing market analyst at Rightmove comments: `Those coming to market this month have taken a pragmatic pricing approach and kept their asking prices pretty much the same as sellers in December, up by just 0.2%. Sensible pricing will help buyer affordability, one of the factors needed to help warm up the market and encourage a recovery from the credit-crunch freeze in transaction volumes. The thaw will also be helped by growing confidence that prices are more likely to go up than down. There is an increasing body of evidence suggesting genuine ‘green shoots' of recovery after a prolonged period of the housing market bumping along the bottom.`
The jump in the number of sellers coming to the market this month is a clear indication of improving confidence. The weekly run-rate of new property listings is 11,153 this month, up 22% on the 9,108 recorded over the same period a year ago. While still down 37% on five years ago, before the full impact of the credit-crunch, this is the highest level recorded at the beginning of a new year since 2008. Rightmove's traffic in the first two weeks of 2013 was also up by 27% compared to the same period a year ago.
Shipside observes: `While the number of sellers financially fit enough to come to market is still well down on precredit-crunch levels, there appears to be an increased willingness among those that can to ‘give it a go'. With Rightmove breaking traffic records, the chances of selling are on the up for sellers whose properties match the price, location and finish requirements of the greater numbers who are searching for a property to buy.`
Adding to the ever growing visibility of property on digital platforms is the growth in use of mobile devices by home-movers. On Christmas Day the proportion of Rightmove's pages viewed via mobile devices more than doubled compared to normal levels, and has remained high ever since. This provides an increasingly significant route for sellers' properties to reach and impress prospective buyers.
Shipside notes: `Whether more people were searching on the move or just trying out their Christmas mobile gifts at home is hard to say, but how home-movers research their local property market is certainly changing. It means sellers have to be extra mindful of attractive pricing and photography as our research shows the attention span of mobile device users on each property page is shorter, so you have to try harder to make a good first impression.
Agents in many parts of the country report that the market remains patchy depending on where you live and what type of property you are selling. However, they are all consistent in noting that it is the best finished properties that are the most in-demand, especially as buyers do not have the spare cash to improve their new home so are hunting for the finished article.`
One of the reasons for muted transaction volumes has been sellers putting their move on hold. But Rightmove's latest research into those intending to put a property on the market in the next 12 months shows that seven in ten are motivated by discretionary factors rather than forced sale drivers such as the ‘three Ds' of death, debt and divorce. This month's average asking price of £229,429 is only 0.4% (-£999) below the highest January figure ever recorded (£230,428 in January 2008), and the slow recovery in prices over the past four years will be welcome news to many of those who bought at the peak and whose equity was undermined. This will help those with the requisite deposit to think about trading up or moving on, especially in better performing southern regions.
Shipside observes: `Building chains from the bottom up helps create greater volumes and fluidity, and is key to a broader market recovery. After five years of putting their lives and moves on hold with their spare space shrinking around them, it looks like some of the pent-up demand to move is breaking out. Perhaps more are becoming immune to the relentless flow of bad news stories, financial armageddon seems to have been averted and people are choosing to get on with their lives.`
There is evidence of greater mortgage lending to support an increase in transaction volumes, albeit modest. The Bank of England's latest mortgage approvals statistics show a 3% increase from November 2011 to November 2012. This is the highest number of mortgage approvals in November since 2007, as the Funding for Lending Scheme begins to feed through to the market. Those on the wrong side of the minimum deposit borderline are still marginalised, but those that have the funds and earning capacity to trade up will find some lenders offering fixed rate deals at their most attractive ever levels. Lenders are also courting buy-to-let investors as some areas offer a low-risk combination of historically cheap purchase prices and attractive rental income. Rightmove research of professional landlords shows that 74% of those surveyed intend to buy and increase their portfolios within the next 12 months.
Shipside adds: `A further sign of market recovery is when investors look to property to achieve good returns. The majority of professional property investors appear to have spotted that now is the time to increase their investment, and they are obviously confident that prices are not going to get cheaper.`