The UK residential property market slowed in August, following the traditional cyclical pattern, and the longer term trend is broadly positive as the sector is in a strong year on year position, according to a new report.
The monthly market report from the National Association of Estate Agents (NAEA) shows that the number of people registering with agents fell on average from 292 in July to 250 in August. The number of sales made by the average branch also dipped slightly, from eight in July to seven in August. The percentage of sales made to first time buyers dropped from 26% to 21% from July to August.
Over the longer term however the market remained in a similar position to 12 months previously. A particular positive was the fact that the supply of housing appears to have recovered. The average agent had 69 properties on its books, up very slightly from 68 the month before.
‘Year on year, it does not appear that there has been a drop off in activity. However the next couple of months will be telling. The market appears relatively flat at the moment, which we expect during the holiday month of August. We would expect some indication during September and October as to which way it is likely to go, before we get the traditional pre-Christmas slowdown,’ said Michael Jones, president of the NAEA.
He explained that among the expected fall off in activity that always typifies the high summer, the figures on supply of housing are a welcome piece of news. ‘Supply of housing has been low in the first half of this year and it is welcome to see it return to similar levels 12 months ago,’ he said.
The market though needs a boost and this has to come in terms of more lending, he warned. ‘What we need now is for the lenders to increase mortgage availability particularly to first time buyers. There remains a strong underlying confidence in property, which is still considered by many to be the best long-term investment,’ Jones added.
Meanwhile, the latest monthly report from the Halifax shows that property prices rose for the second month running in August, confounding expectations of further falls predicted by other indices.
It shows that real estate prices increased 0.2% in August and along with a 0.7% rise in July, declines recorded between April and June have now been reversed. Prices are now 4.6% up in the three months to August compared with a year ago. The average price of a house is now £167,953, some 9% above the lows of April 2009 but still 16% down from the peak in August 2007.
Analysts had expected a fall of 0.5% on the month, for a three-month annual rate of 4.4% after rival mortgage lender Nationwide reported a 0.9% drop in house prices in August.
Halifax economist Martin Ellis said that August’s rise still only left prices at a similar level to where they were at the end of 2009, and he expected house prices to remain static in 2010 as a whole.
‘The overall impression coming from the data and survey evidence is that housing market activity is muted and prices are soft. The very modest rise reported by the Halifax in August does not fundamentally alter our view that house prices will ease back over the final months of 2010 and very likely soften modestly further in 2011,’ said Howard Archer, economist at IHS Global Insight