What will happen to Property over the Summer 2011?

publication date: Jul 4, 2011
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Property 2011


What will happen over the Summer 2011?


Since the credit crunch, the summer hasn't been a particularly great time for property sales. August in particular has become a pretty poor month from a sales volume and price perspective. Understandably, most people seem to want to move prior or during the summer holidays, so have already made their offers by April/May. As prices aren't rising just now, there is no ‘rush' to purchase a home, so buyers tend to be more interested in having a break rather than house hunting.

One index which is useful and does seem to give an idea of what might happen over coming months is the GFK NOP consumer survey.  May was a ‘good feel' month from a confidence perspective, even for ‘large purchases' which property definitely falls into! According to GFK, the confidence index for major purchase fell from -24 to -26 which was down on the previous year and previous month.  To put this in context, during the pre-credit crunch months in 2006 the scores for confidence making major purchases were -5 to -7.

Despite this, anecdotal evidence suggests June will be a good month relative to previous months in 2011. You can see this from the mortgage figures, and chatting to brokers gives a good idea of how busy they are. May is usually a much better month than April and so far apart from the ‘April' blip, sales are expected to be better. Since a very slow January, month on month the number of mortgages seems to have been growing, albeit that volumes are down versus 2010.

Bank of England

Jan

MoM %

Feb

MoM %

Mar

MoM %

Apr

MoM %

2007 Height

vs 2007

2011 - No of New
Mortgages

45,858

7.4%

46,445

1.3%

47,145

1.5%

45,166

-4.2%

114,000

-60.4%

2010 - No of New
Mortgages

47,964

-17.2%

46,913

-2.2%

49,008

4.5%

49,871

1.8%

114,000

-56.3%

YoY%

-4%

 

-1%

 

-4%

 

-9%

 

 

 


Auctions are another good place to have a look at what might be about to happen in the market. Auctions often get busier when the general market is sliding. Lenders tend to sell repossessions through auctions if they can't get rid of properties through agents on the open market. Currently, the number of lots being sold through auctions is up dramatically year on year, suggesting a tightening second hand market.

Auctions - Lots Sold

  

  

  

  

  

  

  

  

  

EIGroup

Jan

Feb

MoM %

Mar

MoM %

Apr

MoM %

May

MoM %

2011

317

1,964

520%

1,593

-19%

1,226

-23%

1,867

52%

2010

187

1,920

927%

1,260

-34%

1,095

-13%

1,398

28%

YoY%

70%

2%

 

26%

 

12%

 

34%

  


A healthy auction market suggests that property investors are ‘busy' buying bargains. Typically, investors tend to shop for properties when they know they are getting a good deal, it's at this time that ‘normal' buyers tend to be staying away from the market or bide their time, so it means prices are likely to fall.

The media definitely plays a major part in what happens over the next three months. Currently their ‘news releases' on the latest set of reports include:-

BBC


Daily Mail


Guardian

  • Stagnating house prices fail to tempt first-time buyers - The bad news for potential homeowners comes against a backdrop of static house prices in England and Wales, with the average home rising in value by £20 to £223,971 in May, according to the LSL Property Services/Acadametrics house price index. It takes the annual rise in house prices to 1.1%


So the forecast summary for the next three months is new homes stable, second homes some falls or stabilising depending on the economic conditions, and for London and wealthy areas with lots of cash rich buyers, they are likely to see slow, but sure rises.

Our long term forecast is areas/properties which are already showing signs of property prices heading towards 2007 heights will continue to grow steadily, in line with inflation. Properties and areas which are still showing prices at around 2005 levels are unlikely to grow for at least the next few years.

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