The residential property market in England and Wales continues to provide rich picking for analysts and continued head scratching for those looking to forecast what is likely to occur in the market over the next 12 months. Mortgage lending is reported at a seven year high in August whilst the supply of homes for sale is apparently at a record low (figures for July 2015). 22% of Estate Agents report a drop in instructions in the three months running up to September though demand from potential buyers continued to increase. The RICS (Royal Institution of Chartered Surveyors) has reported that house buyer demand rose at its fastest pace since February 2014.
There are also several other factors at play in this complicated market situation just to make things even more ‘interesting’. Housing Construction has not been rising in line with expectations. Land supplies are still limited, planning applications are taking more time than forecast and being resisted heavily in some areas and there are problems with the recruitment of experienced construction workers. The Charity ‘Shelter’ has also reported that the effect of the ‘Help to Buy’ scheme on market conditions appears to be manifesting itself in inflating prices. The average uplift on costs from the ‘Help to Buy’ scheme is estimated to be just over £8,000.00.
The RICS believes the lack of balance in supply and demand is continuing to push house prices higher, with prices pushing upwards for the sixth consecutive month. 44 per cent of estate agents reported an increase in property values during the summer period, while 41 per cent predict gains in the coming three months. With all these reported trends apparently pulling in different directions, it would seem that there is an unsustainable situation and instability in the market developing. Interestingly though, transactional volumes reported by Estate Agents are relatively static, which may reflect the new reality of accessing mortgages due to stricter lending criteria and also the lack of property on the market to have transactions with.
However you look at the current market and there is still a high demand for property in the UK. Why is this? If you are already on the property ladder your investment is making money and if you are a landlord you are able to cover your costs with the high rental prices as the rental market is continuing to push rents higher as demand outstrips supply.
This can all look a little bleak for many ‘wannabe’ home owners however people are finding ways round it with more 10% deposit mortgages back on the market and many first time owners turning to the bank of Mum and Dad. We have also seen an increase in siblings or friends grouping together to realise some equity before they are able to purchase on their own.
The main problem appears to be the lack of supply in the market. It appears that people are predominantly choosing to extend their current homes rather to sell them and the development of new properties is just not keeping up with the current demand despite the developments that are going up. The trends would suggest that if you did chose to sell now you would have your pick of offers. Whilst this is great for those who do not have an onward purchase to make, those that do may take longer to find their dream home. The rhw conveyancing team has developed strong connections with local estate agents and mortgage brokers over the years and would be happy to make recommendations.
Whilst the rhw conveyancing team don’t pretend to have all the answers we can help you with your sale or purchase however you chose to approach it, whether it is a joint venture or a buy to let. If you would like to discuss any of the above topics raised above please contact us on 01483 302000.
Rebecca Foxall – Solicitor, rhw Conveyancing Team