The first three months of the year have given out mixed messages for the UK property market with regards to prices and transaction volumes, and the market remains heavily influenced by wider macro-economic and political factors, according to a new analysis.
‘At the end of the quarter, we have only just started to see a noticeable increase in property coming to the market, albeit that some asking prices are looking, to say the least, optimistic. Over recent months, we have seen the re-emergence of best and final offers for correctly priced quality homes, and even gazumping for the finest homes,’ says the report from home search company Garrington.
It points out that the Nationwide House Price Index shows encouraging data, indicating that house prices have increased by 0.5% throughout the UK in March, marking the third monthly rise in a four month period.
In addition to this, there was also a modest rise of 0.6% in the three-month-on-three-month measure of house prices in March, which is widely considered as a better measure of the underlying trend in the market. The shortage of stock at the start of the year has undoubtedly supported house prices, though the annual change for the UK still remains negative at -0.3%, according to Nationwide.
Data from the Land Registry however, shows a decrease in house prices in February of 0.8%, with a deeper annual fall of 1.7%. It remains clear in all reports that there is an increasing divergence in house price recovery between London and other regions. ‘Despite a -0.5% price change in February, London still has the greatest annual increase of 3.2%. Although some regions have shown positive growth in the last three months, including the East and North West, their overall recovery is still low by comparison,’ it points out.
‘Whilst Garrington would normally expect to see a levelling off of market activity during the Spring market, we have been surprised by the volume of sellers and their advisors contacting us in recent weeks with off market opportunities. During the first quarter, over 60% of all transactions we agreed for clients were conducted off market, and all acquisitions made over £3 million were on properties not available on the open market. This growing pool of discreet vendors appear to be willing to sell for the right price, the right exit timing and the right buyer,’ the report reveals.
It also shows there is rising demand from international buyers, particularly in the London market. ‘Garrington’s London search team have experienced demand from an increasingly diverse range of international clients, although a hard core of buyers from Asia, Russia and the Middle East remain ever present. London’s international safe haven status continues to attract buyers wishing to invest abroad,’ the report says.
‘This trend has been further underpinned by the attractiveness of the still depressed level of Sterling. Consequently, we have seen a surge in asking prices as bullish vendors have re-entered a market buoyed by foreign demand,’ it adds.
Fuelled by successful London sales, the company has also seen a ripple effect amongst clients looking to relocate to one of the surrounding counties to take advantage of their additional spending power in a location that has not recovered as swiftly as the London market. ‘Many of Garrington’s clients had already been planning a move to the country, but this current market dynamic and price disparity makes the financial logic even more compelling,’ it says.
It predicts further mixed messages in the market for some months to come. ‘The recent fall in the Consumer Price Index showing inflation at 4% will undoubtedly push back any decision by the Bank of England to raise interest rates, which has to be good for the property market. However, over optimistic pricing by sellers could delay a full market recovery,’ it warns.
‘We expect market conditions to remain brisk in the prime market in Central London and neighbouring Home Counties for the finest homes with the right address,’ it concludes.