Review of the year

With the latest Land Registry numbers out earlier this morning we now have the complete picture for last month and so can compare November every year from 2003. Surveys from Rightmove, Halifax, Land Registry and Revenue & Customs each publish ‘December’ reports which actually cover November.

It may be timely also to look back at 2009 and compare it to the previous six years. I attach summaries of both. As usual, I try to provide raw data and allow others to draw conclusions but I am finding it harder and harder not to make the odd observation. Hopefully you will find these helpful and they might provide some balance to the ‘glass-half-full’ comments you receive from others.

The headlines for November are;-

Number of new properties coming to the market is up 8% on November last year but at 81,339 it is about half the long term average of 167,232.
The number of properties selling has jumped considerably by nearly 60% to 84,000 according to HMRC. This is still some way below the long term average of 112,267.
The number of individual homes on the market is 35% below the long term average at close to 700,000.
Home buyers will feel that there are little choice at present and estate agents are fighting for instructions leading to fee cutting and raising fears of ‘valuing for instructions’ where agents give optimistic valuations in the hope of getting instructions.

The Nationwide will publish their monthly survey tomorrow (Thursday) which I expect will once again provide a warm glow for the end of the year. Nationwide have been traditionally the more ‘optimistic’ of the lender indices but their data samples are modest by comparison to those of HBoS.

Turning now to the past twelve months as a whole and how it compares to previous years. I have prepared draft numbers as we are still counting sales in December and some institutions are yet to confirm their December figures. Where necessary, I have extended recent trends to provide as clear a picture as possible. Final confirmation will be available at the end of January.

The pressures on those businesses based on turnover in the housing market (estate agents and mortgage providers) were expected to ease slightly in 2009. 2008 was a truly awful year with volumes of sales per day falling to an average 2,541 from a long term average of 3,705. However as we finish the count up 2009 looks like it will be even worse with the rate dropping to just 2,300. Back in 2006 agents were erecting over 4,500 ‘Sold’ boards every day!

Today, there are 25% fewer estate agents handling about 3,154 new instructions per day down from 6,792 a day in 2005. Once again, this shortage of instructions will lead to fees being cut by some agents (good news for consumers who still pay around 1.5% despite house prices tripling during the last decade) but over-optimistic valuations by agents looking to impress nervous potential sellers.

What is particularly noticeable though is the gap between what people are asking for their homes and the average price that they are selling for. Sure, the samples aren’t exactly the same but they are close enough to be spooked by what they show.
In September 2005 the gap between the two was just £28k. In June this year the gap between the average asking price and the average sale price was a staggering £70k!

The lack of inventory, down over 30% compared to last year may lead some to suggest that the lack of supply will help prices but I remain unconvinced. The removal of the Stamp Duty holiday for homes between £125k and £175k on Friday added to the other challenges that the economy faces in 2010 makes it hard to see house prices rising. Unless they were very savvy, most of those who bought in 2009 will find that their homes are worth less in 2010 although some buyers will lay the foundations of future property fortunes as forced sellers are pushed over the edge and lenders struggle to recall their primary function and instead hoard the bail out cash they have been given.

The stock market may now be back to levels last seen before the demise of Lehman Brothers but house prices according to the Halifax remain about 15% below the peak of the market.

Happy new year!