The price of property coming to market at this time of year usually experiences an autumn bounce, with an average rise of 1.6% in the month of October over the last ten years.
However, according to the latest report from Rightmove, this year sees a more sluggish monthly rise of just 0.6% (+£1,942), the lowest at this time of year since October 2008. With a slowdown in the number of properties coming to market, down by 13.5% compared with this time last year, there are strong indications that many would-be sellers are being deterred by the combination of muted pricing power and short-term political uncertainty. In contrast, buyers seem undeterred, with the year-on-year number of sales agreed being little changed, down by just 0.5%.
Miles Shipside, Rightmove director and housing market analyst, shares his thoughts on this morning's data: “In a strange Brexit-induced paradox, thousands of potential sellers are holding back compared to this time a year ago, though the number of buyers agreeing purchases is virtually the same. Ironically, this means that those who are coming to market have a better chance of selling, so while some would-be sellers are being put off, it’s actually a good time to sell. Those who are ignoring the Brexit disruption have less competition from stay-away sellers, and their prospective buyers have less negotiating power, with a reduced choice of suitable alternatives.”
The weekly run-rate for property coming to market in October (the average number of new listings per week) is 24,539, the lowest total at this time of year since October 2009. This is down 13.5% on the same period a year ago. Potential sellers are perhaps being deterred by the lack of price momentum, with not only a muted monthly price rise of 0.6%, but also average new seller asking prices 0.2% lower than this time last year. While the number of buyers has held up well so far, the lack of new property listings coming to market now may reduce the number of purchases in coming months as there will be less choice of available properties to tempt buyers.
Shipside notes: ”Some sellers are speculative, encouraged to try their luck if they judge that the market has a degree of froth which might increase their chances of banking a high price. With upwards pricing power now pretty flat, some sellers who are motivated by maximising their money seem to be holding back. They may be waiting for more certainty around both achieving their price aspirations and also the Brexit outcome. While the number of new sellers has fallen, many of those who might normally have chanced their arm this autumn might in any case not have been seriously committed to making a move happen. This is a price-sensitive market, so if sellers are not willing to be realistic on their initial asking price, or to accept a lower offer, they can end up wasting time for both themselves and their agent.”
In contrast, and a positive for those who have come to market and are serious about selling, buyer activity is holding steady. The number of sales agreed is virtually unchanged on the same period a year ago at just 0.5% down. Furthermore, those who are selling are finding that their sales are more likely to proceed successfully to completion.
Shipside adds: “Rightmove data shows that the percentage of sales agreed that have fallen through so far this year is the lowest since 2015. Sellers who are coming to market are fewer but more serious, and buyers seem to be serious too, with the number of sales agreed almost unchanged. Both parties are then working harder to successfully guide their precious “subject to contract” sale through to successful completion. Many people feel that finding their ideal property is a strong foundation for finding their happy at home, so it’s worth fighting for that comforting certainty in these uncertain times.”
As ever, the property industry was quick to react. Here's what they're saying:
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Although they’re ‘asking’ not ‘selling’ prices, Rightmove’s stats are always a useful indicator of current direction of travel for the property market - and these are no exception.
We’ve been in a price sensitive, needs-driven market for a while now where most people only move when they have to, and only if they can see real value. Many buyers and sellers are sitting on their hands.
Discretionary, speculative buyers have become an endangered species which helps to explain lack of the usual autumn ‘bounce’. Saturday’s vote may only reinforce the uncertainty unless the position is clarified quickly – but we’ve been there before."
Nick Leeming, Chairman of Jackson-Stops, said: “Although the UK is yet to experience an Autumn bounce it doesn’t mean one isn’t on its way. Today’s data shows that sales aren’t falling through as regularly as they have been, which suggests that the market is currently being driven by must-movers.
Despite Rightmove’s figures showing that stock is currently lower across the nation, once the UK does leave the EU, whether that be on the 31st October or otherwise, I expect to see an increase in listings and greater activity levels, with the prospect of a modest uplift in property prices in the new year. However, to get the market moving properly again at all levels we do need some confirmation on stamp duty, which we hope will be delivered on Budget day.
Prohibitive stamp duty charges have long been a challenge for those on all rungs of the property ladder, and so both buyers and sellers will now be eagerly awaiting Government’s plans on how they will address this. It was a key focus in Boris’ campaign to become Prime Minister and so it would be very disappointing if this was once again brushed under the carpet.”
Marc von Grundherr, director of lettings and estate agent, Benham and Reeves, commented: “No fireworks and no explosions across the current property landscape, and while continued market uncertainty causes many sellers to hesitate and sit tight, a healthy number of sales are still transacting, and this is proof that the UK property market is yet to disappear down a Brexit black hole.
It certainly looks as if we’ve seen the bottom of the London market and an uplift in the number of sales being agreed is a very positive sign. The capital has been hit hard but is yet to go down and as we enter into what could be the final round of Brexit negotiations, an uplift in positive market sentiment should see the London market regain its bricks and mortar strength and stamina.
We’re also seeing fewer tyre kickers in the market across the board and as a result, a reduction in the number of sales falling through, which is another positive to take from the current climate.”
Shepherd Ncube, founder and CEO of Springbok Properties, said: “No Autumn bounce as of yet, but given the current landscape, this will come as no surprise. That said, we could well see a late rally by UK home buyers now there seems to be light at the end of the tunnel where Brexit is concerned.
Market conditions remain fragile but what we are seeing at present is very much a case of quality over quantity.
While both stock levels and buyer demand remain low, those entering the fray are serious about it and so the transactions that are taking place are doing so with less chance of collapsing.
This has no doubt been driven in part by an urgency to transact before we enter the unknown abyss of life outside of the EU. However, it also demonstrates that for many, homeownership continues to be a life aspiration and not an investment venture and so regardless of wider influences, we continue to buy and sell homes.”
