Property Market Stable but Consumer Confidence is Still Shaky

Members of the National Association of Estate Agents (NAEA) reported that the picture is still very regional but elements of the market are stabilising. Members reported stability in the sales agreed, the number of viewings before a sale is secured and the average difference between asking and sales price.

Chris Brown, President of the NAEA, comments:

‘The figures from the April report suggest that the market is stable, however, consumer confidence is still dented. Properties supply is good but buyers are being cautious. It is apparent from the survey results that some people are adopting a 'wait and see attitude', watching the market, before making any decisions. Many, especially first time buyers, will be feeling the results of the credit crunch and tighter lending leading to them being unable to move onto the ladder or up the chain. Some agents are also finding it difficult to stop sales falling through as people get 'cold feet' or fail to secure mortgages but we must remember that this happens in the best of markets.

‘However, what people need to remember is that the market is stable and we are not seeing massive price drops. There are still strong economic factors at play, such as high employment and low interest rates and sales are still taking place. Moreover, people need places to live and property purchase remains a good long term investment.’

Market stability
Number of viewings before a sale is secured remained stable at 14. This is indicative of buyers remaining cautious but still committed and is only up by two viewings on the same time last year. The average difference between asking and sales price remained at 4.7%, showing that although there is still a dislocation in this area sellers may be being more realistic.

House hunters on agents' books decline
The number of buyers on agents' books has dropped slightly. NAEA members reported an average of 237 house buyers on estate agents' books in April compared to 249 in March 2008.

The drop in interest could be attributed to the current market conditions, including the effects of the credit crunch and difficulties in obtaining a mortgage. These factors are making consumers more cautious and hesitant to buy as there has been indication from sources that the market might improve.

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

Stock levels increase
The number of properties for sale on agents' books increased this month as NAEA members reported that an average of 84 properties were available in April in comparison to 76 the month before. This indicates a shortage of buyers but could also be a result of a seasonal increase in instructions at this time of they year.

Figure 2 - Average number of properties on agents' books


Stable sales for agents'
NAEA members have reported that they are still selling homes, with an average of 7 sales. This remains consistent with March's figure and the sales figures have remained relatively stable since January this year.

Figure 3 - Average number of sales agreed per agent


First time buyers remain hesitant
It hasn't been an easy time for first time buyers over the last couple of months, and it is no better this month, as agent's reported a drop from 8.3% in March to 7.7% in April. The credit crunch and squeeze on mortgage approvals has affected the confidence of first time buyers in the property market. It has become more difficult for the first time buyer to secure a mortgage and this may be having an effect on the number of buyers from this category.

Figure 4 - Average percentage share of the market for first time buyers


Regional Summaries from Branch Chairmen and Officials

Napoleon C Wilcox - Somerset
There is no doubt that the West Country has seen a considerable downturn in the number of properties being sold. However, in relation to other parts of the UK a drop of 20/30% in sales volumes compares well with many other parts of the UK seeing 40% and in some case 70% reductions in volume.

Homeowners and agents need to appreciate however, that the West Country property market is not self sustaining and wonderful as it is cannot be an 'island' to what else is going on across the UK - Vendors and Agents need to appreciate that if there is a downturn in the Home Counties and the Midlands where so many of our buyers come from that this will ultimately impact on local house sales, the number of properties being sold, the speed at which they sell and ultimately the price that they achieve.

A common comment at the minute is that ‘well people will always want to move to the West Country’ How true that is!! However, their ability to move and the money that they are able to bring with them to purchase that West Country Home will be less than last year! - get the price right and homes will still sell - However, anything over priced, whether it be under £200,000 or over £2,000,000 will be waiting on the market for some time unless you really are lucky or your home really is ‘unique’

Andy Goundry - Cornwall
April has shown a glimmer of hope with most agents reporting slightly improved sales levels over the earlier months. This is balanced by a concern that some existing buyers have been looking for excuses to withdraw or attempting last minute reductions before agreeing to exchange. Pressure continues downward on prices and the same remains true, if a property comes to the market at a sensible initial price it will gain interest and often sell. However, trying a higher price intially can backfire and in fact result in a lower final price agreed.

Paul Adams - Leicestershire
April has continued in a similar vein as March. There is a lot of activity, and plenty of people wanting to buy and/or sell. Unfortunately, very few are in a position to proceed.

We have also started to see one or two sales falling through because of problems getting credit or mortgage deals being withdrawn. On the positive side, with fewer sales being agreed solicitors are getting the deals through much quicker. Also, we have an exceptionally busy lettings market at present.

Geoff Graham - North East
The market overall continues to be much slower than 12 months ago with fewer sales taking place. Houses are still selling but it is very price sensitive indeed. The 'credit crunch' and changes in lending policy are still a concern to most buyers.

Andrew Knapp - South Cheshire Merseyside and North Wales
There is still a good supply of buyers out there and there are sellers willing to make adjustments to their prices to take account of market conditions. There are also, however, some asking prices that are unrealistic in the current climate and, on the other side of the coin, some very cheeky offers. A sensible approach is needed by all to enable the market to recover momentum.

Tim Denning - East Sussex
The market remains stable. More vendors now accept that their properties need to be priced at a realistic level if they wish to move now. Applicants who are able to proceed are thin on the ground. We hope that buyers will see that the market is not dropping, and then the quality applicants will then return. The rental market still has a small number of properties available and is still active.

Simon Dunn - Yorkshire
There still is a property market, contrary to the message that the media would like us to believe. Newspapers and television are relentlessly highlighting and invariably exaggerating the difficulties currently being experienced in the housing market, bombarding us with facts and figures in their headlines that sell newspapers but undermine any potential return of confidence to the market.

Estate Agents in the region are reporting that while the level of new instructions seem to have slowed down, buyers are still actively looking but having identified a suitable property to buy are then experiencing difficulty in arranging funding. Because of this a percentage of sales are 'dragging' giving the potential buyer the opportunity to withdraw from a purchase if another horror story hits the headlines! A percentage of buyers are only confident to go ahead if they can buy at a realistic price and if not will 'sit on the fence' and wait to see if prices fall further.

However, it is not all 'doom and gloom'. The underlying fact so far this year is that if a property is realistically priced from the start rather than 'chasing the market down' on price, Estate Agents will have a greater opportunity to generate viewings and a resulting sale is more likely to be effected within a reasonable timescale.

Colin Girling - Suffolk
It's very hard work at present to get a sale. Buyers are extremely thin on the ground and first timers are in hibernation. When a buyer is found the Lenders won't come good with the funds. Offers that are being made are up to 20% below asking prices. Even sales instructed on are taking an age to move forward. If there is a light at the end of the tunnel I confess it is not as yet visible in this area.

Peter Hughes - West Sussex
In West Sussex there are definitely signs of more activity, especially with the onset of warmer weather. The best properties in the prime positions are still achieving good prices, everything else is still struggling. Buyers have very firmly got the message that they are in control. Concerns over the short-term are still holding some buyers back. Fall-through rates are probably at their highest for years.

Joanna Cobb - Hereford and Worcester
The Housing Market is still moving along in Herefordshire, but with most buyers feeling cautious and still a lack of proceedable first time buyers and investors which is frustrating. HIPS are still not being looked at by buyers although they are generally helping to ensure the sale itself goes through a bit quicker.