The arrival of March for many people signalled the start of Spring, traditionally a time where activity increases in the property market. The start of the month however saw a marked divide between commentators as to whether the market had seen a ‘blip’ in February but was still recovering, or was heading for a double dip. The ensuing press commentary did little to comfort anyone contemplating a move, painting a picture of a property market that is as unpredictable as the weather.
By the end of March the market data suggested that February may well have been a blip. Nationwide’s House Price Index for March shows a rise of 0.7%, effectively reversing the fall seen in February. This takes the year on year price change to 9%, a trend further supported by data from the Land Registry which shows a 0.3% fall in prices in February, aligned to Nationwide’s data, and a year on year price change of 7%.
The volume of recorded transactions also rose according to latest data released in March by HMRC. This rise equated to a 13.7% monthly rise and a 34.9% year on year rise, again suggesting forward momentum in the market but with a loss of traction in February due to the effect of a number of factors, as we reported last month.
This data reinforces what Garrington has witnessed in the market. Across its operating regions the company has seen an increase in enquires and activity with many people starting to turn ‘moving ideas’ into ‘moving plans’. Key to this for many purchasers has been timing, both at a market level relating to prices and stock availability, and wider factors such as economic and political, all of which have a bearing on sentiment in the market.
From a market perspective Garrington has witnessed more property entering the market over recent weeks, across all price ranges. This trend is supported by data from the Prime Location Prime and Prime Platinum stock indices. In March both indices showed stock levels grew by 6% from February and are almost 30% higher than one year ago. Prime Location further reports that stock levels are now higher than at any time since the beginning of 2008. Garrington is also seeing more off-market opportunities in the prime market which are starting to become available as sales agents value more homes where some tentative sellers are being attracted by a low profile marketing approach.
The economic and political landscape still remains unpredictable albeit with some encouraging news and positive confirmation on key measures. Inflation was reported last month to have fallen with the CPI rate now at 3%. The headline rate of unemployment was also reported in March to have fallen to 7.8%. Whilst both indices only reflect minimal changes they are however both positive indicators to an early stage recovery which is likely to have a positive effect on buyer sentiment.
We also now have confirmation that the General Election will be held on May 6th, another key milestone to providing onward clarity and some certainty in the mind of home movers.
The March budget brought news of Stamp Duty changes at both ends of the market. A Stamp Duty holiday for first time buyers will help stimulate demand at the bottom of the market but is only available until 2012. The budget also saw the permanent introduction of a new 5% top tier rate applicable to property transactions in excess of £1 Million that take place after 6th April 2011.
Garrington believes that this policy is likely to cause price distortion at the threshold level. It will also affect regional markets disproportionately with 48% of property in London, for example, falling into the new bracket.
Arguably, March could prove to be another crucial stepping stone in the property market recovery with reported price and stock increases supported by more positive economic news. It is likely that only post election will we see a full picture emerge to support these early indicators.
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