The latest Land Registry report on the state of the housing market has been published and the last quarter of 2009 appears to have come as a relief to estate agents and those looking to sell.
House prices were up in England & Wales according to the Land Registry by 2.5% at £161,783. However there were significant regional differences with prices in London up 6.1% in December over the year but falling by 2.5% in Wales where they were down 2% in December alone.
Even within London though there were mixed stories. Prices in Newham were down 5.7% and 14.5% in Barking and Dagenham over the 12 months but they were up 6% in Richmond upon Thames.
Of more significance though was the increase in the volume of sales recorded. The Land Registry are always three months behind so they are reporting last Octobers volumes but they are up in England and Wales by 34% to 59,700. This is against a six year average of 85,616. Sales in London were up more with homes between £800k and £1m up 116% on the year before and by a massive 144% for homes between £1m and £2m.
“As usual” says Henry Pryor, housing expert “the broad statistics don’t tell the whole story. The market has improved strongly in London and the South East but the picture is different as you move further away with some parts of England and Wales still in real trouble. Sales volumes are returning and some sellers are finding that they can get a good price due to the lack of choice available for buyers but there is still a long way to go before this good news story in Central London is mirrored elsewhere.
“That sound of escaping air is not coming from Tony Blairs’ direction. It’s estate agents and mortgage brokers breathing a collective sigh of relief!
I’m not sure which is worse. The fact that there could be estate agents out there who might be persuaded to recommend a conveyancing lawyer solely because of the referral fee they might get or the fact that there is a company who wants to conduct a survey to discover if this is actually the case?
In a report in The Law Society Gazette today an early challenger for ‘non headline of the year’ whimpers from the page. “Estate agents not influenced by referral fees”.
The recent preliminary findings by the OFT into the views of the buying and selling public published in November last year made uncomfortable reading for some in the estate agency industry with confusion in the minds of some buyers (53%) as to who the selling agent actually represented. That said, the survey did reveal the fact that 79% of people apparently take the advice of the estate agent when it came to Home Information Packs – the business that The Partnership are in by coincidence.
Retailers and manufacturers don’t declare the price they pay for the raw materials or mark up they put on their products so it may be unreasonable to expect agents to declare their revenue sources but common sense prescribes that like others they should disclose when and where they get a ‘procurement fee’ as it’s sometimes referred to in mortgage broking circles.
If it’s done with the knowledge of their fee paying client then I see no particular problem in this. However, if I were asking someone I trusted who they would recommend I wouldn’t phrase it “Can you tell me which lawyer bungs you the biggest back hander?”!
In the 2009-10 Premier League season up until the 19th January most of the teams have played 10 matches at home and so far 7.161 million supporters went to watch. Thanks to ITv.com, I can tell that Manchester United top the table with 832,786 visitors to their 11 games which is over 99% of their capacity. At the other end, Wigan Athletic have pulled in 166,173 in their 9 games. Still, it is the national game.
Add in the Coca-Cola League Championship, division 1 and 2 and you find that more than 16m fans have been to see their clubs play. Put another way, that’s about 1.6m people a month.
So it might come as a surprise to learn that more than 2.2 million people looked for a new home in December in just one place, on the biggest property portal or web site Rightmove.co.uk.
Surveys by industry groups like the National Association of Estate Agents and the RiCS suggest that there are 6 buyers for every home which suggests that a typical agent might have 350-400 people registered on their books. Some will of course be registered with more than agent but even so, I suspect that there might be 2m people registered across the 10,000 estate agent offices in the UK.
Yet it looks like there will have been fewer than 800,000 properties sold in the whole year and yet according to Nielsen, the company who measure web traffic or the number of ‘unique users’ to individual web sites then Primelocation had 809,000 visitors and it’s sister FindaProperty had 747,000. Some people will (I pray!) have been to more than one site but looks like there will have been more than 2m people looking online alone.
Last year only 68,000 homes sold each month. When we get the December figures there won’t have been many more so it begs the question what were the other 2.1 million visitors to Rightmove looking for and what effect do these tyre kickers have on the market?
The blunt answer is that the vast majority must have been casual browsers. Some of course will have been nosey neighbours and a number will have been looking at other homes to get an idea of what their own might be worth. Many will never go and actually look at a house but many will download the details or take the virtual tour that these web sites now offer.
Looking after all those ‘tourists’ used to be a very expensive job for estate agents, printing and mailing brochures to millions of applicants most of whom couldn’t afford to buy let alone wish to, calling one or twice a week to see if they could be tempted to go and see something and this chore has been greatly reduced by the advent of the internet.
To the surprise of many, house prices rose last year and are now about 4% higher than they were at the start of 2009 according to the Halifax. One reason for this must be the apparent demand for property from all these people logging on. Estate agents think that there are 6 times more buyers than there are sellers so of course they are confident in their predictions both for house prices and their ‘saleability’. What none of us know is just how many of these might be serious viewers and how many are just voyeurs.
A Rightmove spokesman said in February last year that estate agents “often need to register 100 applicants for every successful sale.” To paraphrase an old saying, when it comes to finding a buyer for your house you certainly seem to need to kiss a lot of frogs.
The latest numbers form HMRC of sales across the whole of the UK published this morning come as a pleasant surprise with 100k completions in the month up from 57k in December the year before. Housing Expert Henry Pryor says “The end of the Stamp Duty holiday clearly will have had some influence on this and the rush to complete ahead of the December 31st deadline illustrates just how much the market can be effected by a 1% saving. Despite an optimistic end to the year, the total number of sales as expected was less than the year before with just 848,000 properties selling compared to 920,000 in 2008. In 2006 and 2007 over 1.6m homes were sold each year.
“Demand from those looking for houses has helped underpin house prices through the last six months with some areas of central London for instance reportedly seeing increases of 50% from their lows last February.” Pryor continues, “However this is not reflected across the whole country. Over 2.2m people looked online for property in December alone and with only 700,000 individual properties for sale it’s perhaps not that surprising that 100,000 sold which is only 12% below the long-term 7 year average of 112k sales a month.
“Like unemployment” continues Pryor “it would seem that the Government are going to be able to take the credit for turning around the housing market although there are similar concerns over the long term prospects with the impact of higher interest rates and affordability issues still casting a long shadow. It’s too early to conclude that the housing market is anything other than off the life support machine. It remains in a critical and highly vulnerable situation.
Numbers released today from the Council of Mortgage Lenders adds weight to the HMRC figures reporting that gross mortgage lending was up 14% on November and 3% on the year before.
What’s odd is that unlike sales volumes which were 8% down on the year before, total lending for 2009 was down a whopping 43% on 2008 lending at just £143.7b. Many more buyers obviously have the cash or are funding their house purchases in some other way.
The latest RiCS survey out this morning is once again a “percentage -of-surveyors-who-are-more-optimistic-than-those-who-are-not” kind of prognostication. Their December survey (when they ask the very few estate agents who are Chartered Surveyors what kind of month they have had) suggests that 30% more surveyors saw prices rise than fall but as always with the RiCS survey this doesn’t necessarily mean that the majority of their members saw prices rise!
If there were 100 surveyors in their survey of over 10,000 agents in the UK (they won’t tell us but I guess there might be 1,500) and say 26 saw prices rise, 20 saw prices fall then it follows that 30% more surveyors saw prices rise than fall. However, the remaining 54 will have seen no change in prices.
The survey does go on to talk about how supply and demand has become much tighter and it may be that the dearth of properties being put up for sale is helping prop up prices.
It’s hard to know how ‘demand’ can be measured. RiCS seem to count the number of buyers registered with their estate agent members but would you register with just one estate agent if you were looking for a new home? Many people now use the internet to look for homes and the number of registered users on Rightmove and Primelocation seem to be ticking ever upwards.
The only numbers that can be measured and that might provide a helpful guide to supply and demand are the number of new homes coming onto the market every day and the number selling. Both are a fraction of their six year highs and make predictions about the wider market extremely difficult.
The average number of homes coming onto the market every day is 5,530 which peaked in May 2006 at 8,210. Last month there were less than 3,000 new instructions a day.
Similarly, on average 3,705 homes sell across the UK each day. The peak was February 2007 at 5,333. Once again, when we get the formal figures from HMRC in a couple of days I expect that we will see fewer than 3,000 sold every day last month.
One conclusion that is hard to avoid is that life for estate agents and mortgage brokers who are both paid on commission is extremely tough at the moment and looks like it will continue to be for at least the first half of the year.
There are many monthly guides to the health of the housing market and in my view most are more helpful than how a very select group of estate agents who are Chartered Surveyors happen to ‘feel’. Group hug anyone?