Agents report subdued housing market

The National Association of Estate Agents (NAEA) released figures from its latest housing market survey today, revealing a slightly subdued residential housing market in June as consumers demonstrated apprehension about the coming month’s economic developments.

Both registered buyers and the number of properties on estate agents’ books decreased slightly in June. However, on a positive note sales remained stable and first time buyers’ share of the market increased for the first time since February.

Buyers and sellers apprehensive

The number of people looking to buy a home decreased by 6% in June with agents reporting an average of 322 buyers registered in comparison to the 344 recorded in May.

This drop can be partly attributed to the May interest rate rise combined with uncertainty over the movement of rates in the near future. It appears that consumer confidence has taken a tumble and individuals are tightening their belts with the prospect of future interest rate rises just around the corner.

Alongside a drop in potential buyers, the number of houses for sale also decreased by 6% in June. NAEA members across the country reported an average of 68 properties for sale during the month compared to the 72 properties in May.

The May interest rate rise may have deterred some sellers who were hoping to make the move to a more expensive property in the near future. In addition, with house price inflation slowing in some areas of the UK the prospect of a buyer’s market may have caused some homeowners to change their mind about selling for the time being.

Meanwhile, the recent change of plan for the implementation of home information packs (HIPs) has had an impact on sellers. Many of those who had previously rushed to put their property on the market to avoid paying for a HIP may now be taking it off again, as only properties with four or more bedrooms will require a Pack from 1st August.

Sales remain stable

The number of sales reported remained level over the second quarter of 2007, with an average of 13 houses sold per agent, per month. While consumers have been demonstrating increased caution recently, there have been enough serious buyers and sellers continuing with the process to keep the market stable. Levels are down on those experienced last year, however, when NAEA agents reported an average of 15 sales agreed for June.

Meanwhile, first time buyers took a greater share of the market in June, increasing their percentage share from 8.9% in May to 9.8%, as the desire to get a foot on the property ladder proved a highly motivating factor, as prices have begun to stabilise slightly.

Selling apprehension

The average time taken to sell a property increased by just over a week, from 16.5 weeks in May to 17.8 in June. Unfortunately, the percentage of agreed sales that fell through also increased from 7.7% to 9.2% in June, as did the average number of viewings, which rose from 11 per sale in May to 12 in June. While the latest findings do seem to indicate some caution in the market, it should be noted that these figures are approximately the same as those recorded in June last year.

Consumers likely to continue with caution over summer period

NAEA president, Stewart Lilly, comments: “The next few months are likely to be characterised by consumers being cautious due to uncertainty surrounding future economic movements and recent government changes. Buyers and sellers have been reacting to mixed messages over the likelihood of further rate rises. Many are choosing to employ a ‘wait and see’ strategy as a result. This, coupled with the summer period approaching, suggests there will be a quieter housing market over the next few months.

“I continue to be concerned with the recent increases in interest rates and the effect that these will have on consumer confidence. I urge the Bank of England to seriously consider the effect a further rate increase will have on the market.”