“LIES, DAMNED LIES AND STATISTICS”
If you are consulting this part of my website, you are no doubt looking for some sage advice or information to assist you in your possible decision to buy, sell and move home in the near future. I am naturally keen to oblige, but at this time we live in a funny old world property-wise, so to try to offer the most up-to-date clues to the state of things, I have been reviewing the various reports, indices and comment on the property market and specifically house prices since the start of the year.
I need a strong cup of tea. My head is spinning. What on earth is going on out there?! Here is a sample of what I discovered:
House Prices
- The Centre for Economics and Business Research says house prices will rise by 15% by 2016, that’s 2.8% a year, including this year
- Rightmove says they will rise 2% in 2012
- The Royal Institute of Chartered Surveyors says they will fall by 3% – 5% in 2012
- Hometrack says a fall of 3%
- Nationwide says they will stay flat
- Halifax (my favourite for covering all bases) says they will either fall by 2% or rise by the same amount!
House Sales/Supply
- The number of people taking out new mortgages in 2011 was the lowest in 27 years, even fewer than in the dark days of the slump of 2008/9
- Estate agents reported a resurgence of sales in January, and a growth in new instructions
- According to RICS almost 20% of estate agents say that the supply of property is outstripping demand
- An equal (if not greater) number of agents (and many of my Stacks colleagues around the country) are saying that there is a desperate lack of decent stock available for sale, especially in the upper price brackets. That is certainly the case in the West Midlands.
Phew! Take a deep breath and let’s try to unravel this. The first thing to do is to acknowledge the widening gulf between the state of the market in London and the South, and that for the rest of the country. These areas, and especially London, have scarcely been dented by the market woes of the past three years. Houses in that part of the world are snapped up, often at or above their asking prices, which are still at the levels of the peak of 2007. The reports quoted above are of course national in their scope. Take out the “London bubble” and things look a lot different. Beware headlines about the “average house price rising” for that reason.
Secondly, the term “house prices” covers asking prices as well as sold prices. You have to look at how much prices had to reduce from the original asking price to get a house sold, and as I’ve pointed out before, there is a continued stand-off between buyers and sellers. If you don’t live in the golden South, or your home doesn’t tick all the “most desirable” boxes, and you really want to sell, it has absolutely got to be priced competitively. If you think a buyer will come along if you leave it long enough, you may have a long wait. True: agents are seeing an increase in viewings of property on their books, but this is not converting to sales. That means buyers feel property is too expensive for their fragile sense of security. It is a recorded fact that sold prices (as per the Land Registry) have fallen by an average of around 20-25% in real terms (and even more in some parts of the country) since 2007, and the West Midlands is no exception to that. The longer a house sits on the market shelf, the more it looks like a stale bun.
Thirdly, it is true that sales increased this past couple of months. That is mainly in the lower price brackets and much of that increase is down to first time buyers trying to beat the stamp duty holiday deadline which expired on 25th March. Plus there are the professional buy-to-let investors taking advantage of the eye-watering increase in rental costs. But now that stamp duty holiday is over, and for many of us, squeezed by rising costs in everything from food to fuel and with mortgage rates rising despite the base rate staying at a historically low level, price sensitivity will be even more acute.
There are numbers of new properties coming on to the market at most price levels, but that is the norm for the time of year. I suspect that their number is not as great as most agents would wish. There are continued challenges ahead, and we are not out of the woods yet.
But let’s not be negative! There remains one big conclusion to be drawn from all this: if you want to move house, it is not at all a bad time to do so, if you do your homework, take note of the real local market and negotiate shrewdly. You could bag a bargain.
