Is it all over? Has the housing downturn finally finished? Just when it seemed that house prices might drop to an affordable-level estate agents are declaring a mini-boom. Can this be true? You would think the numerous house price indices might provide the answer, yet in recent days Nationwide has claimed prices are rising while Rightmove claims they are falling.
To make matters worse there are at least 12 different indices, each using data at different points in the market cycle to provide a “snapshot” of activity. Some show asking prices, others sale prices, and some display what mortgage lenders think.
Indices may well give a good feel for general mood of the market but “buyers and sellers must do their own work before taking the plunge,” says Kate Faulnker, spokeswoman for consumer body Which?.
“If indices are showing rising prices, as now, they create confidence. If they're full of gloom and doom, like a year ago, then confidence subsides. That at least gives you some idea of what the population is thinking,” she suggests.
“But people should look within a three mile radius of where they live, walking the streets to see the market in action. Identify properties like the one you’re buying or selling, see if they sell and if so, how quickly and how close to the asking price? Talk to estate agents in detail and then decide whether to buy or sell,” she advises.
She believes that prices in popular areas that aren’t suffereing from significant unemplyment are rising and will continue to do so throughout the autumn. And that prices of new homes, especially in London have “already risen significantly”.
Her view is echoed by property expert Martin Roberts, who presents the BBC property show Homes Under The Hammer: “Indices are OK but nothing beats researching your area. The market’s delicate but positivity is returning. There are good bargains to be had, but not for long as prices are moving up,” he says.
Most, but not all, figures endorse Faulkner’s and Roberts’ positive view
of the market. With five major indices showing prices rising in recent months. Mortgage borrowing in July was a cool 76.7 per cent up on a year ago according to the British Bankers’ Association. Estate agents – never ones to say a glass is half full when they could claim it is over-flowing – are cock-a-hoop: Savills has sold 52 per cent more homes this year than last and Douglas & Gordon is talking of a buyer “stampede.”
But there are still plenty of signals that the market is still in trouble, and could go on to flounder.
Hartlepool has seen England’s largest falls – 16 per cent down over the past 12 months – yet prices there are still over six times the local average wage of £19,521, making home ownership a dream for many.
There is also an argument presented by some economists that if sellers flood the market with homes in response to the higher demand now being reported, prices will drop again as the supply of properties on sale start to outstrip the number of buyers.
Yet for the moment, prices are rising according to Roberts. “Auctions are a good barometer. About 85 per cent of homes are selling and going for an average 11.5 per cent above reserve price. That’s much better than a few months ago,” he says.
The belief that prices are now at their lowest spurred Simon Elphick to buy his first home this summer, a one-bed Barratt Homes flat at the H20 scheme in Eastbourne. The downturn led to a shortage of open market buyers and obliged Barratt to cut the price of the apartment to £95,000 and put it into a shared-equity scheme that did not require a deposit from purchasers. Simon, 42 and a maintenance worker, was paying £600 a month rent but now pays only £330 for his mortgage.
“This was the only way I could buy somewhere without any savings for a deposit. It seemed like renting was the only option but since property prices have dropped in recent months I saw an opportunity to be able to afford my own place,” he says.
On the other side of the coin, Roger and Pamela Clee have put their Berkshire cottage on sale this month because they feel the market has improved sufficiently. It is on for £460,000 with Strutt & Parker (01635 521707) and they are worried that waiting any longer would risk prices dipping again if a glut of other sellers joined the scramble to find a buyer this autumn.
“We’d been wanting to sell for a while but things seemed to be difficult before the summer. We’re looking to buy, too, and there were very few properties available. But since the end of July there have been many more coming on the market. So we want to sell now to be ready when we find a place we like,” says Pamela, a retired nurse.
That buyers can be wary of prices rising while, simultaneously, sellers are worried about a glut of supply possibly forcing prices down, shows that the market is on a knife-edge right now.
Ideally, house price indices may help tell us which view turns out to be the correct one. Perhaps.
Property by numbers: House prices
* Nationwide – prices up 1.6 per cent in August. Based on the society’s loans and valuations in every region across British.(www.nationwide.co.uk)
* Rightmove – asking prices down 2.2 per cent in August. Based on asking prices of homes advertised on its website. (www.rightmove.co.uk)
* HBOS – up 1.1 per cent in July. Based on the bank’s mortgage loans and valuations in each UK region. (www.lloydsbankinggroup.com)
* Land Registry – July prices up 1.7 per cent. Based on a sample of completed transactions two months earlier. (www.ros.gov.uk, www.landreg.gov.uk).
* Department of Communities and Local Government – up 2.6 per cent in three months to June. Based on completed sale prices and mortgage lending. (www.communities.gov.uk)
* Acadametrics – July up 0.1 per cent. Prepared by a consultancy firm, this analyses the sale prices of all homes bought and sold. (www.acadametrics.co.uk)Reuse content