Mortgage applications for house purchase were down an astonishing 20.9% in April, compared with March.
Remortgage applications also plummeted, down by 26.7%.
Despite the steep monthly falls, figures for house purchase loan applications were back to where they were a year ago, showing that the housing market has really been a case of one step forward, one step back.
According to the latest National Mortgage Index compiled by the Mortgage Advice Bureau, which largely operates from estate agency branches, and London brokers Coreco Group, mortgage applications in April were just 0.1% down on April 2010.
The average loan size on mortgage applications in April was £124,328 compared to £127,546 in March, a decrease of 2.5%.
Remortgage applications fell for the second consecutive month in April. But despite their hefty monthly drop, were still up 19.5% on applications made in April 2010.
Brian Murphy of MAB said mortgage activity had been affected by April’s string of bank holidays.
Andrew Montlake, director of London-based independent mortgage broker Coreco Group, said: “The worry for the property market as a whole is that if house prices remain high due to lack of good-quality housing stock, and mortgage lending continues to be difficult for those looking at higher loan-to-values, first-time buyers will remain a rare breed, and first-time buyers are going to be crucial for any longer-term recovery.”
He said there was little light at the end of the tunnel for first-time buyers, with only a smattering of 90% LTV mortgages available.
Comments
Fair do's to you Chris, I would hazard a guess that it's a mixture of a few factors: where your firm is based, the local labour market, how competitively priced the props are, how many competitors you have etc
Lastly, it stands to reason that even with even super-low monthly national transactions some EAs will do well and some won't. Of course, that's not to suggest that those that aren't doing as well are fundamentally worse (as a business); just that there's only so many listings to go round.
Then again, i'm sure, others are just plain cr*p.
We're having an excellent month now. Sold two properties today and one of them is only £3k of the £200k asking price. Only listed it 4-weeks ago too.
We currently have more properties in our sales pipline than we have left available! (Well today anyway - 4-new listings going on the market tomorrow!)
Last month was quiet. One day over the wedding BH we never received a single call. No point in opening if I'm honest, but this week, the phones have been ringing off the hook!
I'm not saying the market is easy, but the secret is to value accurately using comparables of similar sold properties and not be frightened to walk away if the vendor is too greedy! The more agents that cherry pick like we do, the more knock-backs the vendors get and eventually they will need to agree a sensible price else no one will touch them!
Properties in good condition, in good area's are holding their value I have found, but the less popular area's are struggling or anything than needs work.
Last month was quiet over the BH weekends, but we still finished April on the best month since last Summer and this month has started off well too. Perhaps it's a regional thing or perhaps it's a stock thing (Bad overpriced stock = bad results) but here in the East Midlands, we are doing well. :-)
I run an agency in the South East off the High St where my fixed costs including Staff are around £8,000 per month, my average commission fee is currently standing at £12,000 per property. I have only sold 9 houses this year but you can imagine that I'm quite chuffed with this. The low volume of transactions is a worry but insuring against this is key to survival. I know one or two agents in my area who are still carrying on as if its 2007 and have way too many staff, I used to work on the basis of 1 member of staff per £120k turnover, to me this is sensible.
@F F Smyth
"..... the only way is down - substantially - and it's our job to educate the public".
Possibly, but do not expect current owners of 5-6 years duration to bankrupt themselves to keep you in business - they will adjust their expectations and just stay put.
Phil...your comment about earning 3 times the fee we did 12 years ago is interesting however this is how it was/is:-
Agreed 12 years ago we would be selling a property for less however our commission fee was 1.5% sole and 2.5% Multi..easy and people paid. Yes prices have increased however the fee % has decreased and in our area it is not uncommon for Agents to offer a 1% fee Sole or Multi. Also the number of transactions is probably 1/4 of what they were when the markets were busier.
It seems agents in my area are expanding mainly into the rental market, I would guess the reduction in transactions be compensated by this to a fair degree?
@Mike
"It stands to reason that 50% fewer transactions will in time lead to 50% fewer EA's. Any other business would have to do the same faced with that kind of fall. "
Not if you get 3 times the commission that you did 10 or 12 years ago for selling the same house.
@Vossy
"we have all lost instructions to our competitors based purely on them having overvalued however some HAVE then actually sold at the higher price quoted...so we are infalable also!"
I had trouble finding a single agent prepared to market at my valuation in 2009, yet the property sold to the first viewer for full asking price.
Anonymous Coward - Latest Land Reg release shows London prices down 1.0% over the last month (in this case, February). This is a greater fall than some other regions of the country.
Annually they report the capital's prices are up just 0.8%, a whisker from going negative, but already falling in real terms. The recent stamp duty deadline has briefly skewed London's figures iup n my opinion. The capital saw price falls just as much as the rest of the country in 08 - 09 and it will be the same this time round too I predict.
I am an estate agent - thought I would get that out of the way first.
I own my own home with a mortgage that is larger than I would like (the mortgage, not the house).
To me, at this moment in time, renting looks to be a very sensible option compared to buying.
Where I work, rental prices are static, sale prices are dropping.
Looks to me as though NOT owning a property could be quite a good idea.
Scary, huh?
Lending criteria make property prices 20-30% overpriced.
I remember in the early 90's when the banks & BSocs stopped lending on flats above shops - which meant that prices dropped hard for that sector in particular.
The only reason prices in some areas have not fallen is because there are very few repossessions.
I cannot explain why London prices are going up - it seems like madness to me.
I agree with Hampshire agent about only having sensibly priced property however we ahve all lost instructions to our competitors based purely on them having overvalued however some HAVE then actually sold at the higher price quoted...so we are infalable also!
Its all about keeping overheads low and to bank whatever one can. The staff issue is interesting as good staff will want high wages/earnings and will not stay if not earning. The days of flash young men/women in expensive cars are over (thank G-d)....a more stable and ethical mentality may well be the order of the day looking for longeviity rather than a fast buck.
I have to agree with Hampshire Agent, although independents may lose out on the valuations bidding war, what we do attract, we will sell. I'm frankly not interested in flattering some greedy chancer's with a silly asking price, I'm only taking on instructions I think I have a chance of shifting.
I'm hearing through the grapevine quite high staff turnover in some of our larger competitors
@Mike
It stands to reason that 50% fewer transactions will in time lead to 50% fewer EA's. Any other business would have to do the same faced with that kind of fall.
Over-valuing to secure listings is effecting a slow-death for many but they're not clever enough to see that a boom time strategy will not work in this climate. The survivors will be the ones selling houses ie the ones giving realistic valuations.
So, who has the deepest pockets to sit this out?
The big corporates - still, it seems, pricing too high and picking up houses they can't sell - or the independents - with nothing to sell anyway?
One way or another the size of the EA industry is going to halve as transaction levels fall - and stay low for the next 10 to 20 years.
Who will be the last man standing? Independents or corporates?
Can someone tell me what the ideal weather is for the housing market? Recently it's being reported as either too cold or too warm. Funnily enough, that didn't seem to be a problem when prices were rising up to 2007...
F-FS - another excellent post. I really hope that the lower transactions doesn't see someone with your insight call it quits (or worse). I would welcome EAs getting the word out to vendors. With much of the media not wanting to acknowledge the situation, us lot at HPC have been bearing much of that responsibility alone.
Benjanim Franklin (1706 - 1790) once said:-
"If you want to persuade, you must appeal to interest rather than intellect"
Basically, Vendors dont want to know how bad it is out there, they just want to know how much will they get, how quickly will they get it and how much will it cost them!
I have found by trying to explain the market they see this as being negative rather than honest and will give their business ot the 1st Agent talking up the market and prices....tragic but true.
Actually James your probably spot on with bank holidays, although someone is bound to disagree. Year on we have found that on bank holidays vendors expect a rush of viewings and only to find out every year that their expectations were too high.
@ James, I am one of the HPC idiots, and yes, we did jump on it :-)
It's cos the weather was nice. No, really, you can't go house hunting if you're gonna get sweaty.
The HPC idiots will jump on this
There were only 18 working days in the month, due to four bank holidays
Experienced agents know that Bank Holidays are now a quiet time for the market not a busy time
I suspect for once the numbers are indeed partially influenced by the bank holiday (sorry if that sounds like the standard 'wrong type of snow' cop-it). But that influence is fairly minor I suspect.
We have made some sales this year but looking forward the tisution is gloomy ... indeed on current trends it's shaping up to be a pretty dire year. The next month or so will be critical and while stock is increasing, I don't see a corresponding increase in serious, proceedable buyers. (A slight increase in tyre kickers though with their own places to sell and no serious intent - cheap recreation I guess).
I've said it before on here: the only way is down - substantially - and it's our job to educate the public. A 1.4% drop in a month is NOT flat-lining whatever Smiley-boy Shipside says, rather, it's evidence of falls gathering pace. You can't suck out more than half the finance and expect prices to be unaffected, and cash buyers simply can't make up the difference.
Meanwhile I still have new vendors looking for 2007 prices and going elsewhere after I tell them the truth about what they need to do to make a sale in this market. I get a number of these people back eventually after wasted months with one or other of the big corporates, but by then their house is old on the market and the damage is done.
I'm not in the NE or somewhere dire BTW I'm in the SE, barely 25 miles from the M25 and not much more than an hour out of London by train.
Survival is the name of the game this year.
@agent still (just)
I think that lenders have reverted back to ridiculous practices such as verifying peoples income. It takes time for the applicant to collate and the lender to check 3 months bank statements, payslips, P60's etc. Pre crunch my dog could have got a mortgage, it was that easy.
not surprising, the market is on its knees again, sales much lower than last year and 2009, and only just ahead of 2008 levels. Also with mortgage lending so low why on earth does it take twice as long for lenders to process applications? Oh well may need to become a double glazing salesman - at least i'll be held in a higher regard by the public
Of course mortage applications are down. Most vendors and EA's seem to believe that it's still 2007 and are setting asking prices to suit. This is ridiculous and potential buyers know it. There is limited demand at such prices.
The notion that prices can remain high while finance dries up is laughable.
Prices are not high due to a lack of supply, they are high due to previous lending practices, which have now ended. Prices will drop to fit the new regime.