For the past three months house prices have gone down, but in the first month of the New Year it looks like the housing market is ripe for a fresh start.
After 3 months of dropping house prices amounting to a dip of 6.2% during November and December, January’s national average house prices rose by 0.3% (£711), The House Price Index from Rightmove reported. In Ealing house prices saw a monthly rise of 0.2% and an annual rise of 2.4%. The Rightmove report points to some early indicators of potential buyer and seller activity. These early indications may be the key to spotting a pattern that may evolve over the course of 2011.
Besides severe weather conditions and the usual seasonal lull caused by the holiday period, house prices were kept low at the end of 2010 by too many properties being offered for sale with too few buyers to buy them. At the beginning of 2011, the levels of supply and demand look as though the trend may start to swing in the other direction. This month fewer new properties have been listed for sale than we have seen in two years. With fewer properties being put on the market, the re-balance of supply and demand will very likely support an upward trend in new sellers’ average asking prices for the next three months, particularly as the spring moving season approaches.
Who will stand to gain the most?
The sellers who are coming to market in areas where there are likely to be cash buyers or those with sizeable deposits will stand to gain the most in asking price.
There are certain types of property that are particularly unavailable on the market at the minute. According to Rightmove, “The semi-detached property type is in the shortest supply, down 30% on last year, while detached, terraces and flats are all down around 10%. Owners of semi-detached homes wishing to move rely heavily on the ability of terrace home-owners to trade up, but terrace occupiers, in turn, are hardest hit by the dearth of first-time buyers and lack of chains. In addition, for owners of semis bought within the last few years, the overall price standstill during that period has probably seen their equity stagnate or diminish.”
Are there buyers out there?
One of the most reassuring aspects of the Rightmove report is the record internet search traffic experienced by the property website. The first ten days of the year were Rightmove’s busiest ever period for website traffic, averaging 25 million pages viewed per day. This sort of surge in buyer interest provides a welcome sign of pent-up buyer demand.
Having said that, there is still a reticence on the part of lenders to provide financing unless applicants have significant deposits or equity.
Has the VAT Rise had Any Effect?
There has been quite a lot of discussion and debate about whether or not the base rate will be raised to combat inflation, the impact of VAT has gone mostly unnoticed in the property market. The change in VAT is more likely to affect the day to day spending of first time buyers or those closer to the bottom of the property chain rather than those detached home owners near the top. The change in VAT may also put a dent in the savings of those people trying to find the spare cash for a deposit for their first home.
Dependent on Base Rate Remaining Low
Miles Shipside of Rightmove says that: “The sustained period of record internet property traffic we have seen at the start of the year shows that the prospective mass market are searching avidly to find the right buy that will satisfy their housing needs. But everyone now sees less money in their wallet as a result of the VAT increase and so stability in base rates for the majority of 2011 is very important if we are to avoid the de-stabilising effect of increased repossessions and encourage greater transaction volumes.”
Find the right property to satisfy your housing needs by visiting searching the properties Northfields has available for sale here.
If you are planning on selling your property, find out how much your property might be worth in this market by contacting our new Branch Manager, Darren Monks on 0208 840 6666 or click here to request your free valuation online.