Survey reveals housing market optimism for sales in new year despite sellers having to drop asking prices in January
The housing market has kicked off the year in better shape than it did in either of the previous two years, despite more sellers being forced to drop their asking prices in January, according to a new survey.
A large majority of estate agents are optimistic that 2013 will see a steady rise in the number of home sales and the improving situation will put a floor under prices, which have fallen on average for the last two years.
The survey, by online property agent Hometrack, found that 79% of estate agents are more upbeat about the market this spring than they were a year ago.
The return of the feelgood factor to the property industry will cheer the Treasury, which is keen for consumers to regain their confidence and start spending. A bigger turnover in home sales could also spur the sale of furniture and housewares, which have suffered in the downturn.
The housing market has been a key driver of activity in the wider economy and boosts taxes for the government through stamp duty and capital gains tax.
While many economists have urged ministers to shift the economy away from property and finance to manufacturing, any signs of growth are likely to be welcomed, at least in the short term.
Some analysts have argued that prices are likely to strengthen over the coming year due to the continued shortage of new homes, the UK’s rising population and easier borrowing following the Bank of England’s funding-for-lending scheme. The scheme, which launched last summer, offers high street lenders £80bn in cheap loans. It has largely helped existing homeowners raise cheap mortgages, but Threadneedle Street expects cut-price loans to eventually trickle down to first-time buyers and small businesses.
Hometrack said this spring will be a “key test” of whether households are able to act on the signs of improvement.
Its latest study found that house prices were flat month on month across England and Wales in January following six months of falls. Around 16% of postcodes saw prices fall in January, representing a big slowdown in falls compared with the previous two months, when around 27% of districts recorded decreases.
London, which has consistently outperformed other areas, was the only region to see an uplift in prices, with a 0.3% increase. They fell by 0.1% in Wales, Yorkshire and Humberside and the North East and by 0.2% in East Anglia.
A growing divide has opened up between the property market inside the M25 and the rest of the country, causing concerns that Britain’s economy is increasingly driven by the capital as it emerges from the financial crisis.
Cranes are shooting up across London as plans mothballed after the banking crash, many of them for residential flats, get under way.
Prices were unchanged over the month in the west Midlands, the east Midlands, the north-west, the south-east and the south-west.
Of the estate agents who feel more optimistic about the housing market, most cited improvements to the mortgage situation and a “growing realism” among sellers about pricing as a factor.
Across the country, the typical percentage of the asking price achieved in January was 93.1%.
Richard Donnell, director of research at Hometrack, said: “Despite the slow start, the housing market looks to be in slightly better shape than at the start of the previous two years.
“After the initial downturn in 2008 and the modest bounce-back in 2009/10, the housing market has been struggling to arrive at a point where pricing appears stable and there is broad alignment between what buyers are prepared to pay and sellers are prepared to accept for their home.”
The study regularly asks around 6,000 estate agents and surveyors about achievable selling prices in their area.
But Halifax, part of the Lloyds Banking Group, was more circumspect after it found that activity “picked up a little”. Martin Ellis, the bank’s housing economist, said: “There was evidence of a firming in the housing market in the final few months of 2012. We expect continuing broad stability in house prices nationally in 2013, with prices likely to end the year at levels close to where they begin.”