It’s a short month, February, but it’s been a good one. As well as being an Olympic year, most importantly our clients have an extra day in which to sell their properties. Nice!
So what’s been happening in the property market in Scotland in February? Below is our wee recap of the month from the point of view of someone working at the sharp end of the property sales industry.
Press Coverage of the Property Market This Month
I’m not sure if it has anything to do with the Leveson Enquiry, but the Press has been very well-behaved so far this year when it’s come to property-related stories.
Still, though, they try to take a positive and turn it into a negative. The BBC recently reported that, ‘Property sales see new year drop, says HMRC’: http://www.bbc.co.uk/news/business-17112242. The statistics leading to that headline actually showed that the number of property sales across the UK in January was a full 20% higher than the same month in 2011! Not only that, but the number was the highest recorded since 2008. Hardly cause for doom and gloom: quite the opposite!
Gross mortgage lending was also up 10% in January 2012 compared with January 2011. This time at least the headline was the not-really-sensational, ‘Mortgage lending up on a year ago, says CML’: http://www.bbc.co.uk/news/business-17095649.
You’ll probably see an above-average number of stories in this newsletter from the BBC. Of all the news services out there, they seem to have the smallest axe to grind and their stories are generally pretty factual when it comes to the housing market. That’s my take on it anyway, though I’ve no doubt that plenty people disagree with this point of view.
What Have We Been Seeing in the Property Market?
The statistics above really don’t surprise us at all. Normally I’d warn against reading too much into UK-wide statistics, particularly when it comes to movements in property prices, because the UK property market is so regional. And that warning still exists. However, we certainly feel that the year started with a ‘bang’ compared with 2011.
Property sales were through the roof compared with last year. Not for the first month recently we found that we were actually taking-on less properties than we were selling. Towards the end of February, that statistic has been slightly reversed, with a flurry of activity from people looking to put their properties on the market. However, at the beginning of February, properties were flying off the shelves faster than we could restock them.
Is the End of the Stamp Duty Exemption Causing a Flurry of Activity?
It’s POSSIBLE that it has something to do with the Stamp Duty exemption coming to an end towards the end of March. First time buyers currently don’t have to pay Stamp Duty on a property purchase up to £250,000. That will change near the end of March when it will revert to its previous position: that any property buyer will pay 1% Stamp Duty on a purchase over £125,000.
However, I honestly don’t think that this is the main motivation of buyers at the moment. It certainly wouldn’t explain all of the purchasing activity that we have seen for properties OVER £250,000. And, in a market where buyers typically are needing at least 15% or 20% deposit to get a mortgage, it’s not quite the same incentive that it would have been a few short years ago when that Stamp Duty saving could have helped you towards the 5% deposit that you needed to purchase your first home. Apart from anything, we’ve not really heard any property buyers citing this as a reason for their purchase in the last few months.
My Property Sales Manager has just told me that there has been one buyer in the last few days who mentioned the Stamp Duty exemption and moved their Date of Entry by a week to take advantage of it. But it was on a property that they had already agreed a purchase on anyway. The movement of the Date of Entry came after speaking to their solicitor. That’s one sale out of umpteen this month. It’s hardly a groundswell.
If Sales Aren’t Higher Because of the Stamp Duty Exemption Ending…What’s the Reason?
My view is perhaps a little bit ‘out there’ and might belie the fact that I don’t have a degree in Global Politics and Economics…but here it is: I think it’s because people want to buy houses. [Collective gasp at this level of insight!]
Quite honestly, it feels to me as if people simply have got fed up of reading negative headlines and watching negative news stories about impending Armageddon and, since it’s not really materialised yet, they’ve decided to just bite the bullet and buy their first home or to move from their existing home to another one.
What other reasons might there be for the jump in property sales in the past year? Mortgage lending criteria, for the time being, seem to be a bit more relaxed than they have been in the last few years. And people will have had a chance to save up a bit more of a deposit in order to satisfy lenders who are requiring larger deposits than they did a few years ago.
But here is the simple fact, I think…As long as property prices aren’t plummeting towards the floor, home ownership is something that some people will always aspire to. Being able to raise your child in a property where you have picked the colour of the nursery, getting married and stamping your mark on a property that you have bought together, or retiring to a property where you can live for the next 20 years without having to move every 6 months at the whim of a landlord…these are all privileges that some people will pay for, as long as property prices aren’t crashing in a way that makes that decision simply suicidal on a financial level. For the time being, in a period of relative housing market stability, these people can make that decision. And they are.
I’m interested to hear what you think though? Do you think this is the beginning of a long-term trend or is it just a short term spike? Leave YOUR Comments below!