Seasonal pre Christmas slowdown in housing market

Estate agents have noted a seasonal downturn in activity in the property market during November, as buyers and sellers concentrate on the festive period, rather than home moves.

According to the National Association of Estate Agents (NAEA) the number of buyers on estate agents books decreased, as did the number of properties available for sale.

Sales were also down on figures reported in October, but at a level with those reported in November 2005 as the start of a traditionally slow period in estate agency begins.

Encouragingly, the percentage of first time buyers – although down slightly from last month – was up significantly from the same time last year.

First time buyers

The percentage of sales to first time buyers decreased in November to 13.4%, down from the relatively high 16.4% reported in October. However this was a significant increase on the market share reported in November 2005, where the entry level of the market only managed to claim a feeble 8.4%.

Sales down 21%

Completed sales decreased by 21% in November as NAEA members sold an average of 11 properties, compared to 14 the month before. This is not believed to be reflective of a market that is under performing, and is almost certainly a seasonal trend. This is supported by the sales figures noted 12 months ago, where an average of 11 sales were also reported.

The majority of consumers would be averse to attempting a stressful home move during the months of November and December, as the hectic festive period takes over, and people opt to wait until the New Year.

Demand continues to outweigh supply

The number of properties available for sale in November decreased by 14%, from 64 per agent to 55 – this is again a seasonal trend. As sales also decreased in November it is likely that many sellers have decided to take their homes off the market in order to avoid a move over the Christmas period. Buyers on books however, decreased by only 5% from 360 to 342. Whilst supply of property onto the market continues to be at a deficit to those looking to buy, it is unlikely that national house price inflation will slow as a result.

More sales fall through

The number of sales that fell through in November increased from 8.4% in October to 9.1%. This increase could be due to the rise in interest rates to 5%, announced at the beginning of November. Buyers who were already stretching their budgets in order to buy their desired properties are likely to have had to pull out of sales due to the increased mortgage repayments.

Fewer viewings per sale

The average number of times a house was viewed before it was sold fell from 11 in October to 10 in November. This is to be expected, as a depleted housing stock offers buyers less choice and less properties to view.

Buyers and sellers wait for the New Year

NAEA President, Charles Smailes, comments: “I am not surprised by the figures reported this month. The pre Christmas period is naturally quiet in most areas of the country. It is common for sellers to look to avoid the time obligations of selling at this time of year as they prioritise family commitments.

“I am, however, pleased to see that first time buyers have once again managed to maintain a good level of involvement in the market. I expect the slight dip in market share from last month to be indicative of many opting to wait until the New Year, as is the pattern across the rest of the market.

“Vast regional differences in activity continue to depict the wider housing market in the UK. The increase in interest rates has flattened the market in many areas, whilst other regions are thriving. A further rate rise would clearly have a detrimental effect on the areas that are now struggling.”