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
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.
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.
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:-
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