Pre-Christmas Slowdown Comes Early for UK Housing Market

The latest survey from the National Association of Estate Agents (NAEA) has revealed a slow October housing market as the number of buyers on books, houses available and sales agreed took a tumble, indicating a considerable cooling down in the housing market.

Buyers and sellers demonstrating caution
The number of house buyers on estate agents' books was at its lowest for the past four years, with agents reporting an average of 282 buyers registered in comparison to the 326 recorded in September 2007. Interestingly, the second lowest figure recorded was in December 2005 with an average of 302 buyers reported, indicating that the market is experiencing the type of slowdown often experienced in the festive period.

Figure 1 - Average number of house hunters on agents' books

The figures reflect the current housing market cool down, as banks, building societies and borrowers tighten their belts following continued uncertainty in the current economic environment. Prospective purchasers are putting their existing buying and selling ambitions on hold as the present cautionary cloud exists.

With a downturn in the number of house buyers, the properties on agents' books saw a slight reduction as NAEA members across the country reported an average of 65 properties for sale in October, compared to the 80 properties in September. However, when compared to the same time last year the figure is slightly up as 64 properties per agent were recorded in October 2006.

Figure 2 - Average number of properties on agents' books

Drop in sales
The number of sales agreed per agent was down in October with on average 10 sales reported, compared with 11 in September 2007. This is a significant drop from the same time last year when a figure of 14 sales was reported for October 2006, but reflects the current caution in the housing market.

Figure 3 - Average number of sales agreed per agent

The percentage of sales agreed that fell through was slightly higher in October, at 11.19%; again reflecting the current market trends. This increase may be attributed to uncertainty in the market due primarily to HIPs, and the global 'credit crunch'.

Meanwhile, the percentage difference between asking price and sales price widened in October to 4.2%, which is an increase on September's figure of 3.9%, and October 2006's figure of 3.1%. This widening gap reflects that it is fast becoming a ‘buyers market’ again.

First time buyers
First time buyers increased their share of the market from 8.8% in September to 9.2% in October in a positive step forward. Prices have calmed down in selected areas giving some first timers a renewed enthusiasm. However, this figure is down on the same time last year when first time buyers had 16.4% share of the market.
The Association believes that with more competitive mortgage schemes available, first time buyers have the opportunity to potentially increase their share of the market in the future.

The months ahead
NAEA president, Stewart Lilly, comments: ‘The market place at present is experiencing a seasonal slowdown, which you would normally expect at this time of year. However, there are potentially delicate times ahead - particularly if the government presses forward with the final phase plans for home information packs too soon. The removal of homeowners' right to first day marketing - currently planned for January - is, by far, the biggest threat to stability. We hope the government recognises this and makes the necessary changes with the utmost urgency!

'All consumers need a period of stability in order to build up their confidence. We are pleased to see that the Bank of England has suggested it will be lowering interest rates over the coming months, which should go some way to restoring confidence.’