For many buyers contemplating a move and seeking reassurance, the tabloid headlines and conflicting research reports issued in February, will have done nothing to steady nerves and provide a clear and concise view of the property market. At Garrington we witnessed a widening gap last month between ”on the ground” market activity and quantitative data issued in reports which analyse historical trends.
Latest market data issued by Nationwide’s House Price Index reports a monthly fall of 1% in February, bringing nine months consecutive growth to an end. This reported fall in values comes days after the news that Gross Mortgage Lending declined to an estimated £9.1 billion in January, a 32% fall from £13.4 billion in December and a 21% fall from £11.5 billion in January 2009, according to the Council of Mortgage Lenders. We believe that the fall can be explained by the spike in market activity in December, which in part was bolstered by purchasers wanting to complete their transactions before the end of the Stamp Duty holiday. A proportion of these transactions would have, under normal circumstances, rolled into January and Garrington believes that this factor, together with the adverse weather conditions, compounded the loss of momentum in the market in early 2010.
Despite this, the latest Land Registry data released in February (which covers all market transactions) reports that the annual house price movement continued to move in a positive direction standing annually at 5.2% during the reporting period up to the end of January.
The economic landscape remains volatile with inflation hitting a 14-month high last month. Again this can be attributed to a particular set of triggers, which according to Mervyn King, Governor of the Bank of England, were an anomaly i.e. VAT reverting back up to 17.5% in January and a weather related rise in fuel and transport costs.
Despite these factors Garrington has received a marked increase in both enquires and new clients so far this year. For many of our clients lifestyle requirements are core triggers for making a move in 2010, with schooling and quality of life being common themes.
In the prime sector, both in Central London and the rest of the UK, we are still experiencing a lack of quality stock entering the market. Sales agents, with whom we are in regular contact, are reporting an increase in valuation requests but this is yet to translate into a significant increase in new listings. Accordingly some agents have stated that in the £1 Million plus bracket they have at least ten potential buyers for every new property coming on the market.
This is borne out by property portal Primelocation, which has reported in its Prime Platinum UK property index (incorporating the top 10% of all UK property by value) an average price of £618,706 in February. This represents an increase of almost 0.1% on January and an annual increase of 6.0%. Clearly it is the top of the market which is leading the property market recovery. According to the portal, the North East is the best monthly performing region for Prime Platinum property prices, recording monthly growth of 0.6% and annual growth of 5.0%. Garrington’s North East team confirm this is reflective of local conditions where they have recently successfully acquired a property for a client that had three competing purchasers chasing the same property.
There is no doubt that we are not out of the woods yet, and with the Election looming there remains caution in the air. Of central focus moving forward into March will be whether the issues we have highlighted represent a blip or the start of a new trend.
Garrington will continue to monitor the market carefully and report its latest findings next month.
For further information on Garrington contact +44 (0)20 7099 2773 or email firstname.lastname@example.org or visit www.garrington.co.uk