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News: Estate agents say confidence is rising

The National Association of Estate Agents has released figures from its latest housing market survey revealing an energetic market in the run up to the budget. The number of sales agreed climbed dramatically in February, as interest rates and employment levels remained stable and buyers’ confidence increased further.

First-time buyers took a smaller share of the market compared with the previous month. The NAEA strongly advises the Chancellor to address more than just his extended plans for shared ownership schemes as it is quite apparent first-time buyers need far more help to get onto the property ladder.

Sales climb for third month running

Sales soared in February with a 30% increase, from 10 per agent to 13. This is an encouraging 10% rise on the same time last year, when estate agents reported an average of 12 sales per agent. With interest rates remaining stable and some experts now forecasting significant price rises for 2006, consumers were clearly feeling optimistic in February.

Following another positive trend, the average difference between asking and selling price decreased once again in February, from 3.7% to 3.5%. Realistic pricing has been a significant factor in the positive sales figures over the last few months, and is also helping to speed up the sales process.

In good news for both buyers and sellers the average time taken to sell a property reduced again in February from 18 to 17 weeks. This was also a reduction on the figures witnessed at the same time last year, when the average time was 18 weeks.

Meanwhile, the number of viewings to achieve a sale remained on a level at 12 per sale, compared with 14 in February 2005.

The number of buyer applicants on estate agents’ books decreased in February from 355 to 322 in a fall of 9.3%, an 18.9% drop from the same time last year. This paired with a decrease in the number of properties on agents’ books from 75 in February 2005 to 64 this month.

First-time buyers hold back

First-time buyers reduced their share of the market further in February from 9% to 7.8%. A number of announcements regarding rises in council tax and utility bills way above the rate of inflation combined to hinder their progress, creating a greater challenge for young people attempting to save to buy a home.

Adding to this pressure is the UK house price to earning ratio (HPE). ‘Creator and Trader, A vision for growth in the UK mortgage market’ a new book published by Stephen Knight, states that at six times the average income, the UK house price to earning ratio (HPE) is too high for most first-time buyers.

The Chancellor is expected to announce measures to help first-time buyers in his budget report today. The government plans to extend shared equity schemes through partnerships with building societies and banks. Investment companies and housing associations were also on the Chancellor’s list of those expected to get involved. The NAEA supports all measures to aid first time buyers, but reiterates this alone is not enough.

Lettings

The average time taken to let a property decreased from 14 to 12.7 days in February in a positive downward trend, whilst the number of tenancies terminated by lettings agents has remained constant, at 5 per agent, since December.

Landlords to be aware of new HMO licensing

Plans to introduce licenses for letting homes in multiple occupation (HMOs) are due to be implemented on 3 April this year and will have a significant impact on the buy-to-let landlord.

The main objective of the new license is to ensure that sub-standard properties are no longer being let, and that all tenants in the private sector are guaranteed safe living environments which provide a good quality of life.

Impact from home information packs

Consumer research published by the NAEA has highlighted that 73% of homeowners said they would think twice about marketing their home for sale due to the mandatory cost and delay in marketing caused by Hips, which come into effect in June 2007. A forecasted lack of property on the market – a direct result of the introduction of Hips – will only serve to further increase property prices.

There are more imminent short-term implications to the market with the introduction of Hips. 57% of homeowners surveyed said they would consider putting their home on the market prior to 1 June 2007 to avoid paying for the Hip.

Market showing positive trend

NAEA president, Christopher Hall, comments: "It was extremely heartening to see sales increase so significantly for the third month running. This is a sure sign that although we are operating in a smaller environment, there is no doubt that the housing market is going from strength to strength.The outlook is good for not only a busy Easter holiday period but 2006 as a whole."

"The NAEA and its members await the Chancellor’s budget report with anticipation and encourage any reforms that will help increase the number of first time buyers purchasing property. Eradication of stamp duty for first time buyers would help enormously but if the Chancellor is not feeling in quite such a generous mood perhaps he would raise the entry level to £150,000."

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