The property market hasn't exactly been on an even keel over the last few years. What with rapidly rising prices, growing transaction numbers, and then tighter regulations seeming to put a temporary brake on things, it's been hard to know what's coming next! Well, latest figures suggest that the market could be returning to some form of normality, with a more stable outlook being predicted for the months to come.
Latest research from haart estate agents has shown that house price growth remains strong and transaction levels buoyant, indicating that the market is becoming more stabile as we head into the final few months of the year. According to the figures, UK property prices grew by 8.9% year-on-year to stand at £206,578 in August, and despite the number of new buyer registrations having decreased by 5.5% annually, an average of 9.5 buyers now chase every property.
This would go some way to explaining the strength of overall transaction numbers – sales were up 8.9% on last year – while the number of homeowners looking to sell has increased by 4.1% over the year. The increased number of houses coming onto the market, combined with increased competition as buyers vie to get their hands on their dream property, is serving to drive property price growth, said haart CEO Paul Smith. "The property market is currently recalibrating," he added, signifying a "gradual return to normality [which] should now dispel fears about property bubbles".
The findings follow a separate study which provided further support for a stabilising market, with figures suggesting an annual drop in housing market activity.
According to research from Connells Survey & Valuation, the number of valuations recorded in August was 4% lower than in August 2013. However, as Connells' John Bagshaw points out, "that's partly because August 2013 was particularly strong – an exceptional month for comparison, being the first time where it was clear the property market was moving into sustained positive territory. Since last summer progress for the housing market is on a new, steadier, and more sustainable track".
Mortgage lending figures back up this sustainable trend. Recent figures from the Council of Mortgage Lenders (CML) show that gross mortgage lending reached £18.6bn in August, down 5% on July's total (£19.7bn) but 13% higher year-on-year – partly explained by housing market activity typically being stronger over the summer months. Seasonal factors come into play at this time of year, which drive up activity, and taking those factors into account – and using seasonally-adjusted figures – paints a much more subdued picture of the marketplace.
It's anticipated that the recovery will be further muted over the coming months, as CML chief economist Bob Pannell says: "A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market."
Arguably, this isn't a bad thing, as the previous pace of growth was largely unsustainable in the long term. This steadier pace, therefore, will hopefully keep its course and ensure that the period of normality continues.
The prospect of an increase to base rate in the not-too-distant future could be an even bigger influence on the path of housing market activity. In the near-term, activity is likely to remain buoyant as people take advantage of favourable conditions before mortgage rates start to rise too quickly, something which is expected as the market gets closer to a change in base rate. But, when those rates do start to rise, it has the potential to dampen activity and further ensure a sustainable, stable market.
As haart's Paul Smith concludes: "People now see the reality that interest rates will rise early next year but are keen to take advantage of current market conditions. Our message to people thinking about selling is that autumn is crunch time. Good mortgage deals are still plentiful but won't last forever. Buyers do have increased choice right now but the strong competition that remains in the market will ensure that those selling now have the best chance at the best price."
So, whether you're looking to buy or sell your home, now would be a great time to get things moving. Sellers will still be able to command healthy prices while buyers can take advantage of historically low mortgage rates, so start scouring the mortgage tables for the best deals and make the most of market conditions.
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