Kate's price summary analyses the various property indices' reports on supply and demand for property and includes data from the Bank of England and Halifax.
What are the indices reporting about demand for property?
Rightmove: “The likelihood is that demand will continue to outstrip supply, prices look set to increase again in many locations in 2016. (Nov 15)”
NAEA: “The number of sales made to first time buyers (FTBs) is at the highest in six years, with more than three in ten (31%) sales made to the group in October, a rise of 2% from September and a jump from 20% in August. The average number of prospective house buyers registered per member branch continued to fall in October, with 336 house-hunters registered per branch, compared to 342 in September. Demand has been on the decline since July, when registered buyers reached an 11-year high, with 462 registered per branch. (Oct 15)”
RICS: “Buyer demand grew at a more moderate pace during October. Following a slight pick-up in agreed sales in September, activity was reported to have been broadly flat over the course of this month with respondents seeing a [small] rise in agreements to sell. However, the sales market appears to be quite disparate across different parts of the UK with feedback more upbeat in some areas while remaining cautious in others. In Scotland, for example, sales sentiment has by and large been consistently firm over the past year. Meanwhile in areas such as the East Midlands, the sales trend remains flatter. (Oct 15)”
Bank of England: “The number of loan approvals for house purchase was 69,630 in October, compared to the average of 68,099 over the previous six months. (Oct 15)”
BBA: “The gross mortgage borrowing in October was £12.9 billion, 26% higher than a year ago and the highest since August 2008. The number of mortgage approvals in October was 27% higher than a year ago, with remortgaging up 34% and house purchases up 21%. (Oct 15)”
Land Registry: “In the months May 2015 to August 2015, sales volumes averaged 77,046 transactions per month. This is a decrease from the same period a year earlier, when sales volumes averaged 82,748 per month. (Oct 15)”
What the indices are saying about supply?
NAEA: “The available supply of housing increased in October, following a small decrease in September. The average number of houses registered per branch in October was 43, compared to 37 in September and 38 the previous month. (Oct 15)”
RICS: “Due to the ongoing shortage of new instructions coming to the market, demand continues to outpace supply across most parts of the UK. In fact, the supply of new instructions coming to the market decreased for the ninth month in succession, with [some] respondents reporting a fall; instructions have only increased in one month since the middle of 2014. (Oct 15)”
Home.co.uk: “The national portfolio of property for sale has shrunk to a new record low. Buyers, on average, now have only half the choice they had back in 2007 and, in areas of high demand, the situation is much worse. Lack of supply and fierce demand is most keenly felt in Greater London, East of England and the South East where the number of properties coming onto the market over the last 12 months in the same regions is down by 15%, 13% and 10% respectively. (Oct 15)”
Nationwide: “Surveyors have continued to report a dearth of properties on the market in recent months, with the number of available homes reportedly at the lowest level since the late 1970s. (Nov 15)”
Agency Express: “For new listings ‘For Sale’, regions to buck the seasonal trend were the North East 4%; East Anglia 2.5% and the East Midlands 2.1%. The steepest decline made in October was recorded by Wales, which fell by -10.7%. (Oct 15)”
How have the forecasters performed throughout 2015?
2015 forecasts haven’t been too bad at all. Nationwide suggest the overall price growth of mortgaged properties is up by 3.7% year to date (Q3 15), while the Land Registry, which includes cash sales, is up by 5.6%. So not far off the forecasts at all. However, growth in London continues at a pace (albeit not so much in the prime markets) and London (on average) has grown by 10.6%, beating all expectations.
Regionally the South East and West forecasts were not far off, although the spread of growth out to the regions hasn’t been as hot as expected, but the rest of the forecasts were not too far off.
Of course we have another quarter to go, so the forecasters’ results may improve or not look quite so good!
At the moment, most of the price forecasts are similar to the ones for this year, but Savills are expecting the South East and West as well as the East of England to perform well. Both Savills and Knight Frank are predicting lower than average long-term annual growth for London as a whole. What’s interesting is that there is no ‘super growth’ following the recession expected next year, meaning that areas such as the Midlands, North and Wales are unlikely to gain much of the losses still being felt since the credit crunch.