By Chris Sapey of Sapey & Co
Despite a slow start the month of September the overall level of activity in the housing market has continued to be relatively good. Obviously the number of sales being achieved in the market as a whole is still considerably lower than at the height of the boom some two years ago. However, we are still seeing prices at the lower end creeping up and on some properties competition amongst buyers which is pushing the agreed purchase price in excess of the asking price.
This is despite the fact that the Ernst & Young Item Club has expressed concern that the recent rise in UK house prices is a false dawn and that property prices will not return to their 2007 peak for at least another five years. Whilst I concur with the Club’s view that values will not reach the 2007 values until around 2014 I do not agree with the view that we are seeing a false start in the market. My reasons for this are based on both data from other sources and our own recent experiences in the market.
Firstly we have seen the level of mortgages gradually increasing. For example in August last year only 21,001 mortgages were approved by the major banks compared with 38,095 this year. Whilst mortgage lending is still much lower than normal the trend is upward and will continue upwards as banks become more financial secure and the terms on which mortgage providers are prepared to lend gradually improve.
Secondly according to HM Revenue and Customs the number of houses actually sold in August 2009 was 83,000 – some 19% more than for the same period last year. Thirdly the average number of sales per surveyor/agent has increased to 17 each in the last three months. This is the highest level of sales since May 2008.
Therefore unless the banks restrict their current level of lending or we see punitive taxation on house sales and or incomes there is no reason why the recent rises in house prices should start to decline.
It is also interesting to note that September has also been very good from a rental view point. The number of lettings our rental department has achieved this month is 50% higher than for the same period last year which has resulted in our stock of available properties falling. If this trend continues then we could also see rental values beginning to recover next year which would be excellent news for landlords and house prices.
*Chris is on 01603 616666.