Potential buyers continued to test the market during March as the Stamp Duty holiday for first-time buyers came to an end, according to the latest RICS housing market survey.
But the outlook for sales volumes, not prices, remains the big question for the residential property market, with a Lloyds TSB report saying transaction levels are back to 2008 levels.
Meanwhile, critics say that low transactions are making house price data look volatile and unreliable.
The RICS claims that new buyer inquiries edged up last month, as buyers tried to beat the deadline.
However, pricing remains an issue, with many surveyors reporting that those looking to sell their homes must be realistic in their price expectations. The survey reports prices edging downwards everywhere apart from London.
In contrast, the latest Halifax survey claimed that house prices had jumped 2.2% in March. But the Halifax put the jump down to yo-yoing caused by data from low transactions.
However, RICS predictions for future prices also remain pessimistic for the second consecutive month.
But the major question is whether sales transactions will rise this year or fall. RICS surveyors insist they are seeing ‘gently increasing levels of demand’, but official figures show that sales volumes fell back last year from already low levels.
According to the Land Registry, there were just 630,389 sales in England and Wales in 2011 – 4% less than in 2010 (654,481).
Regional variations are evident in the latest RICS survey, with the North, East Anglia and Scotland seeing buyer interest drop, while the North-West housing market saw a notable upturn in activity.
RICS chief economist Simon Rubinsohn said: “Demand saw a slight boost in March as many first-time buyers looked to beat the Stamp Duty holiday deadline.
“There has been a gentle increase in activity across the market in the early part of the year, but it remains to be seen is whether this can continue, given the changes in the Budget and ongoing problems affecting the economy.
“London continues to outperform the rest of the UK in terms of prices but, interestingly, the North-West did see an increase in activity in March.”
According to a new survey by Lloyds TSB, sales rose in only 202 out of 500 towns tracked for performance last year.
Lloyds said it was the lowest proportion of towns experiencing a rise in sales volumes since 2008, when all towns recorded a fall. In 2010, 82% out of the 500 towns recorded rises in sales volumes.
Surprisingly, perhaps, the towns that did best for sales volumes were in the North last year, rather than in the South (59% compared with 41%).
This reversed 2010 when 53% of southern towns accounted for most of the county’s property sales hotspots.
Regionally last year, the North of England and East Anglia had the highest proportion of property sales hotspots, with 61% of all towns surveyed in both regions seeing a rise in sales.
By contrast, London sales went down by 6% over the last year.
Suren Thiru, Lloyds TSB housing economist, said: “The overall level of housing market activity across England and Wales has weakened over the past year, reflecting the concerns over the outlook for the UK economy.
“Additionally, consumers are experiencing difficulties in raising the necessary deposit, which is preventing many potential home buyers from entering the market.
“Whilst a number of towns in the North have seen a significant rise in home sales, these increases have been from a historically low base. Generally, property prices in the North continue to be weaker than in the South.”
The latest Halifax report puts the average house price at £163,803 following March’s claimed 2.2% jump in prices.
But the report contrasts with rival Nationwide, which said that house prices fell 1% in March.
Martin Ellis, Halifax’s housing economist, said that its latest monthly figures were volatile ‘as a result of the historically low level of sales volumes’.
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Comments
@ mike Williams
The only reason estate agents survived 2008 is becos they were saved by the Bank Of England, had the 2008 crash continued naturally half the agents would have gone bust.
The current scenario suits agents to a degree, hardly any have gone bust in my neck of the woods.
It's now a waiting game, this scenario could carry on for many years, but it's better than the alternative which would cripple the banking industry and ultimately this country with it.
Monkeytennis, but you made it through 2008, right?
But cost inflation is still outstripping wage inflation (in other words wages are deflating in real terms) and real household income has dropped back to what it was around 10 years ago, so how long do you think it will be before wage inflation will catch up with prices?
You missed it! :P
@ Mike Williams
No, I don't to go bust. would rather limp along for another couple of years and wait for inflation to catch up.
Thanks for the sticker appreciated. You never answered my questions on the thread regarding proceedable buyers.....do i take it you agreed with me or did I just miss it?
HC - Absolutely right. 'Best interests' is not fixed at price alone. Well done. Have a sticker ;)
There are lots of elements that contribute to performing and operating in the best interests of the vendor. However, in 95% + of the time, the best possible price is extremely high on the priority list.
AofS Best price possible alone does not = The best interest of the client.
Lower than boom prices do exist today look at the regional stats from the land registry. It would be interesting to get a regional picture on volumes i.e. are they up or down, by how much and what is the trend?
Anyone know where to get this?
Monkey tennis...don't get me started on the estate agent fee models.
Are the HPC nutters still at school or lost interest? It was never thus in Japan. Where are idiots like Brit123 etc
@ neo
Its not the lower prices that are bad for the estate agents.
Its the transition to lower prices which is the problem.
In a booming market an agent will sell at least 1 in 3 instructions. So 40 instructions = 15 sales roughly which a £3k a pop makes £45,000 with related costs of a bout £30,000 - £35,000. Tidy profit of about 25% of turnover.
In a falling housing market, the instruction - sales ratio increases, indeed in 2008 this ratio was 1 sale per 8 instructions for some agents. So 40 instructions produce just 5 sales @ £3k = £18k, related costs will be higher than this to staff a company managing 40 instructions a month and this is where the no sale, no fee becomes a bust model.
Lower prices would already exist today, if property was not selling at it's current prices. We're crawling out of a recession and 45,000 odd transactions per month is extremely good, given the circumstances. People forget that.
With this volume of transactions in this climate, there is no need to hit the panic button and reduce prices drastically. My point being is that every industry in the World could increase sales volumes by reducing the price of it's product.
While the steady volume of transactions continues, there won't be a drastic turn in property prices.
Don't confuse deliberately over-valuing with the agent actually working to get the best price for the client.
Hands up, I got carried away with the 'knock down price'.. let me re-word it...
"That does not mean selling a house for less than it could be sold for, to increase sales activity."
While I am normally bullish about the housing market, (Rant will testify to that) my concerns around other factors on the horizon mean that I am a little negative this week and the market has the potential of a big fall in house prices this year!!!
So what are my concerns then?
Something reported on the news yesterday was that the government are looking at the tax break given to buy-to-let investors that allows them to offset the income they earn against the interest they pay on their mortgages. If in the future they remove this allowance, what do you think will happen next? A million or more BTL properties will enter the housing market causing an over-supply of stock and this would mean only one thing, prices will crash!
Plus another million families, normally the most funerable in society, will find themselves homeless and it is this fact that offers a glimmer of hope that the government won't take this step.
Essentially it is unfair to BTL investors. Allow me to explain. My business has costs and it has income. If I take out a loan to pay for advertising etc. I can offset the cost of the interest on that loan against any income I have made. Add up my costs, subtract them from my income and anything left over is profit, which is taxed accordingly. This is only fair and I doubt anyone in the country including any business would agree with this. You should only be taxed on profit.
In the case of the BTL investor, he has income from rent and costs for maintenance, repairs, running costs and interest on the loan. Anything left over should be taxed accordingly, but the government are not happy with this.
On some of my own BTL properties my mortgage payments are nearly as high as my rental income £450 a month interest on the loan v £520 a month income in rent. Subtract one from the other leaves only £70 a month, but then there are the repair bills, management costs to consider so if I'm lucky, I'm left with £10 a month in profit to pay tax on. Take away the mortgage interest and I could be paying tax on the other £450 as well !!!!! Nightmare. Instead of making £120 a year before tax and paying only £24 in tax, I would be paying £1104 a year in tax if I was a basic rate tax payer or £2088 if I was a higher rate tax payer !!!
Can you really see BTL investors hanging onto property that was costing them £2088 per year per property? I can't.
@ AceofSpades - well it's all about definitions isn't it? For example, what do you consider a 'knock down price'.
Do you consider anything short of 2007 prices, inflated by lenders throwing money at buyers (e.g. around half of all mortgages handed out in 2007 did not involve income verification) as a 'knock down price'?
Or do you consider a fair price to be one which reflects the current lending conditions, which are more in line with what they have generally always been (circa 2000-07 excepted), arguably worse?
Also, what about 'working within the best interests of the vendor'? Does that involve raising their hopes of achieving an unrealistic price and possibly leaving them in limbo for months/years as their home languishes unsold? Or pricing realistically and enabling a relatively swift, pain-free move?
@ Jonnie - not aimed at you specifically, rather the general flavour of the comments aimed at anyone suggesting lower prices may actually help.
@Neo
Nothing at all mate, I've never said lower prices are a bad thing for everyone
In fact, im the wrong man to ask about the 'antipathy' either way - I don't really have an opinion on prices, no one has ever called the market right so I have no chance and my old Dad always said don't get wound up about what you cant control, so I don't
Jonnie
Any salesperson in any industry can encourage a flood of buyers when they underprice their stock. Regardless of what they are selling, sweets, books, sofas or property.
Estate Agents have a legal obligation to work within the best interests of the vendor.
That does not mean selling a house at a knock down price to increase sales activity.
@ Jonnie on 2012-04-11 16:05:05
So essentially, what you're saying is that low prices would lead to "a rush of bidders". So following your logic, the lower prices get, the higher EA turnover would be.
Given this, I am genuinely curious why there seems to be so much antipathy towards the notion of lower home prices on this site. Perhaps you or someone else could enlighten me as to why lower home prices would be A Bad Thing?
'It takes genuine expertise, which appears to be in short supply - judging by the paltry number of sales currently being achieved these days.'
Are you taking the piss?
House prices are the thermometer of the housing market.
It's the responsibility of anyone deciding what to ask for a particular house, to take 'all' of the salient factors into account - including its exact location as well as the neighbourhood.
No mean task these days. The financial people don't seem to have a handle on this because it takes more than mere statistics to allow someone to discern the correct answer.
It takes genuine expertise, which appears to be in short supply - judging by the paltry number of sales currently being achieved these days.
P.S. I do not expect everyone to agree with this either ;>)
@naked emporor
Funny guy, witty and clever post - well done
First off let's go with your thing on pricing - one size fits all as you have carefully calculated, I'll ignore the fact that you have missed that prices in many areas will need to rise for your thing to start up, we will let you have that one
Okay - so, lets pretend the world as you want it starts at 08.00 tomorrow morning? Prices all as you say they need to be.................how long do you think it will take for them to go up a bit in say, well Guildford?
I'll tell you - not long, in fact the rush of bidders on a 2 bed flat in many places would be so big by lunch time 25k a year 30 something's would be back out of the market.
Cool comment on EAs going out of business too, nice one, you clearly understand the workings of the industry well.
Jonnie
What is the appropriate average to use when considering housing affordability....Mode Median or Mean?
I would say mode as this is the one most people earn
So between 13-15K (according to reports below)
http://news.bbc.co.uk/1/hi/magazine/8037500.stm
http://uk.messages.finance.yahoo.com/Your_Money/threadview?m=ts&bn=UKF-property&tid=21689&mid=21846&tof=-1&rt=2&frt=2&off=1
I wonder why that one is never used to calculate affordability?????
Naked Emp- well done those prices are OK in Burnley, not sure they work in Surrey. So you suggest one price accross the UK or fix local prices depending on ave wage in the area? Not sure this iw working!
As RR says, we have a simple choice: either prices come down or volumes stay low.
The reason: prices are way out of line with average earnings - so, by defininition, only people with above average earnings can afford to buy. The UK has a 67% owner-occupancy rate - which means people on upwards of about £20K a year (the 30th centile) need to be able to afford to buy before volumes can get back to the long-term norm. That means one-bedroom flats for £60K, two-bedders for £80K, 3-bed semis £130K and so on. Until prices get to that level (or wages rise by 50% - dream on!) volumes will stay low.
On the bright side, at least low volumes put estate agents out of business....
"Surprisingly, perhaps, the towns that did best for sales volumes were in the North... Generally, property prices in the North continue to be weaker than in the South."
There's a couple of dots here just waiting to be joined...
Wow thats clever and show you kmnow nothing about the real market. Poor fool.
So, the major question is whether the volume of sales transactions will rise this year, or fall.
I say whether or not the volume of sales transactions will rise this year, all depends on the accuracy of asking prices, which need to follow the economics of the current local marketplaces, everywhere in this country.