Home.co.uk
Home.co.uk

News: First-time buyers improve their market share

Members of the National Association of Estate Agents have reported an encouraging end to what has been, in many areas of the country, a good year for the residential housing market.

Average asking price December 2006

£216,055

Average asking price November 2006

£211,401

The number of those registering an interest in buying property increased, despite December being traditionally the slowest month of the year in estate agency, said the NAEA. On the whole the picture for December was optimistic and seasonal, sales were, as one would expect down from November but encouragingly at a level from the same period last year.

First time buyers once again improved their market share in December compared to December 2005. This improvement from levels reported in 2005 is a continuing trend that has been reported by the survey for the last eight consecutive months.

The percentage of sales that fell through and the time taken between instruction and completion both decreased in December, as many people endeavour to move before Christmas.

More people looking to buy

The number of buyers on estate agents’ books increased from a seasonal 302 registered per agent in December 2005 to an average of 351 during December 2006.

This 16% increase is unusual for the time of year, as estate agents would usually expect a decrease in the number of aspiring buyers during the festive period. The survey also recorded an increase of 2.6% from the figure reported in November when it was reported that agents held an average of 342 potential buyers on their books.

Property supply continues to be a concern

Housing stock was depleted further in December, down by 7.3% from figures reported in November. Traditionally very few people look to sell property during the festive period as they concentrate on family commitments. However, with an increase in those registering an interest to buy, the market will become increasingly competitive in some parts of the country, and as a consequence, prices may continue to rise.

Despite the decrease in housing stock, sales remained at an average of 8 per agent, the same figure reported for December 2005.

First time buyers

Overall 2006 saw a more hospitable market for the first time buyer who has consistently increased their market share from levels reported throughout 2005.

This increase is indicative of a return of confidence in the market, undoubtedly helped by interest rates remaining at a level for most of 2006, said the estate agents body.

However, the number of first time buyers decreased to 10.4% in December from 13.4% in November and from 16.4% in October. The hike in interest rates in November is almost certainly attributable to the decrease, as affordability continues to be a very real issue for this sector of the market.

Sales fall-through rate decreases

The number of sales that fell through decreased in December to 6.7% from 9.1% reported in November. This is perhaps explained by the fact that those who agreed sales in the autumn are more committed and prepared to deal with the logistics of a house move during the festive period.

The time taken to sell also decreased from an average of almost 17 weeks to around 16 weeks, from instruction to completion. This is yet another sign of a more determined market place.

Property sales closer to asking price

The difference between asking price and selling price was reported at 3.1% in December 2006, down from 4% noted in December 2005. This indicates that sellers and estate agents are reflecting the current market conditions when setting asking prices. However it remains important that where there is a surplus of supply asking prices are realistic, if sellers are to be successful in finding a buyer.

Market bodes well for 2007

NAEA president, Charles Smailes, commented: “The results of the December housing market survey are mostly encouraging, as the levels of activities reported are predictable for the time of year, as similar figures are reported year in year out.”

“It is pleasing to see the number of people registered to buy increasing; this leads me to believe that confidence in the market is on the up and bodes well for 2007. The lack of housing stock, however, remains a problem in many parts of the country and unless this supply and demand issue improves, house prices are likely to continue to rise.”

“I continue to be concerned about first time buyers, without whom the market is unlikely to remain buoyant. The further rate rise seen in January and the threat of more rises to come will seriously stagnate this sector of the market, as mortgage repayments rise to unaffordable levels. However it is positive to see that this sector has recovered slightly from the abysmal year seen in 2005, I just hope that they will not be completely priced out of the market in 2007.”

“Early indications are that January has seen a significant increase in new instructions throughout many regions, as many sellers have waited for the New Year to enter the market.”

Back to: News Index