Confusion in the housing market

Over the past week we have had various reports on the health of the housing market. The Nationwide reported a small rise of 0.5% in house prices last month whilst the Halifax noted a fall of 0.4%

The Land Registry reported a rise of 0.2% but Acadametrics who use Land Registry data to compile the FT House Price Index based on every single sale in the month concerned warned of a possible double-dip on the back of a recorded 0.2% fall in sale prices.

Yesterday web site FindaProperty trumpeted a 35% increase in homes for sale echoing the views of others who have linked the abolition of Home Information Packs to an tsunami of new instructions. On closer inspection however the FindaProperty numbers don’t strip out properties that are being marketed by more than one agent (multiple agencies), sellers that have changed agent (so called ‘churn’) or indeed new homes that have come onto the market from builders and developers as they usally do in the Spring.

Average asking prices last month were confirmed by as being a staggering £69,000 above the average sale pricerecorded by the Halifax!

This morning, a mist descended with the regular confusion that is the monthly RiCS House Price survey. Unlike the other surveys that at least try to estimate average sale/asking prices and consequently if they are going up or down the RiCS survey reports the sentiments of surveyors or how optimistic they are. 

In May Chartered Surveyors (from just 241 members who sell houses) reported that “the price balance increased from +19% to +22%, it’s best level since January”. This may give some the impression that prices are on the up. However in their press release they confirm that whilst the balance of surveyors over the past three months reporting a rise minus those reporting a fall was 26% the number reporting “no change” was 62% up from 61% in April!

The volume of new stock has increased substantially. In April there were 121,000 new instructions, a 78% increase on the 68,000 in April last year. The volume of sales has increased too but not at the same rate. Latest figures suggest that they have only picked up by 24%.

Increased supply together with a yawning gap between average asking prices and average sold prices suggest that whilst the main market indices are confused about the general health of the market and direction of prices the outlook is not good. The main market data is churned out by those whose business is selling homes, mortgages or who provide services to estate agents or lenders. The brave statements made by Savills last week warning of price falls in London in particular in H2 together with the analysis of Acadametrics who warn of a possible double dip should be the messages that buyers and sellers take note of. 

Next weeks budget is bound to create further turmoil in the housing market with details on Capital Gains Tax proposals and some indication of what action the Government intends to take to repair Labours financial legacy. Home owners should batten down the hatches and buyers prepare for the opportunities that uncertainties bring. There’s a storm coming!