Despite traditionally being a quieter time of year, the health of the UK housing market received intense media attention throughout August. This has centred on revised industry forecasts of future house price changes, increased supply of stock and wavering market sentiment. The headlines in some cases have been dramatic, but do they accurately portray the full story?
The latest data released by Nationwide reports that prices fell for the second consecutive month in August by 0.9%, which in turn has lowered the annual rate of house price growth to 3.9%. These figures contrast with recent information from Halifax which shows that in August house prices rose by 0.2%. These discrepancies in published statistics are due to different sources of information being used – figures may be based on asking prices, some relate to prices achieved, whilst others may only provide an indication of the market in England and Wales as opposed to the UK as a whole. Therefore the relevance of the indices can be misleading and, according to a recent press report, the Government is reviewing their usefulness.
Of particular significance to us is that the top of the market has not been immune to the changes being witnessed in the mainstream market. Primelocation reported in August, that after four months of continuous price growth in the UK’s Prime property tier (top 25% of UK property by value), and six consecutive months of increases for Prime Platinum (top 10%), the average value of a top end home experienced a slight dip in August, with Prime UK property falling 0.3% and Prime Platinum falling 0.4%. However across Garrington’s operating regions, many of the selling agents with whom we are in regular contact are indicating that vendors are eager to purchase another property once sold.
An increase in activity is supported by Land Registry figures released in August highlighting that the volume of transactions averaged 48,219 per month between February and May, substantially higher than the 36,947 monthly average for the same period last year. Also of note, is that properties over £1 Million experienced a 67% increase in turnover between May 2009 and May 2010.
Garrington predicts that transaction levels will be more subdued during the Autumn, with the overall trend likely to be one of slow and steady growth after a period of consolidation, as the market gains some stability. Availability of finance remains a key component of a sustained recovery and recent Moneyfacts research shows that the availability of 80% loan to value ratio mortgages has risen from 166 products at the start of the year to 352 currently available, possibly indicating a more bullish long term outlook amongst lenders.
As we move into the Autumn market, conditions are likely to remain uncertain. Garrington believes that any further price falls should be viewed as more of a ‘soft landing’ as part of a longer-term market recovery. Undoubtedly as this unsettled period continues, some buyers may postpone their moving plans. However, in our experience this market volatility may present an interesting window of opportunity for well-informed savvy purchasers.
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