It’s summer holiday time and conventional wisdom has it that this is one of the quieter times of year in the property market. Conventional wisdom also has it that, come the end of the school holidays, the property market picks up again, partly because people aren’t distracted by having to keep little ones amused every day and partly because they decide after having everyone at home for a few weeks that their houses aren’t big enough and that it’s time to move house.
But then conventional wisdom really hasn’t had a huge amount to do with the property market in the past few years. So is this really true and has the market cooled a little bit through the summer months?
There have also been some good news stories about the property market in the Press this past month. A rarity in recent times. So what’s this chat about first time buyers coming back to the market? Can it be true or are these journalists simply too distracted by kids running around their own full houses?
For answers to these questions, read on…!
First Time Buyer Numbers in Scotland Up…Officially
The Scotsman newspaper reported this month that first time buyer numbers are officially up on last year (http://www.scotsman.com/emarket/property-news/boom-for-first-time-buyers-amid-slump-1-2411977). The stats are based on figures provided by Bank of Scotland. And if you can’t trust a bank in this day and age, who can you trust, eh?
It is accepted wisdom that a healthy property market needs a supply of first time buyers. So this really is good news.
The report stated that the number of first-time buyers in Scotland rose by a fifth in the first half of the year as homes became more affordable in most parts of the country. In the first six months of 2012, there were more than 9,000 first-time buyers. This represents a rise of 21% from the first six months of 2011. This rise is as a result of the increase in affordability of properties throughout Scotland. The report noted that the proportion of Scottish towns and cities that are deemed affordable for first-time buyers hit its highest level since 2005.
Is this what we are seeing? The answer is ‘yes’. The simple fact is that ‘first time buyer’ properties such as one bedroom ‘starter flats’ have fallen significantly in value in the past few years, from their peak in 2007, though prices have stabilised in the past couple of years. Prices in this sector really ran away, disproportionately, in the last few years of the property boom in the mid-2000s. As a result, they had quite a long way to fall to become affordable again. As a result of the lack of mortgages available in the last few years, post-credit crunch, to first time buyers, this ‘correction’ didn’t really represent much of an advantage to any would-be buyer: they simply didn’t have enough of a deposit to get a mortgage after lending criteria tightened-up, regardless of how much prices had fallen. That, however, seems to have changed.
Flats that would have been expected to achieve £140,000 at the very peak of the market have been selling for around £105,000 for the last couple of years. As a result, given a few years to build up a deposit, first time buyers who can now get a mortgage are able to buy a property for a lot less than they could have just five short years ago.
Anyone who has been getting this newsletter or following our Blog for the last couple of years will have heard me saying repeatedly that certain sectors of the property market have remained strong, regardless of the overall fall in prices across the market. However, the first time buyer market certainly wasn’t one of the most buoyant areas. From a personal point of view though, I came into the office on Friday and asked, as always, what we had sold during the week. I was stunned at the number of more ‘affordable’ properties that had sold: properties that I would have expected to be on the market for several months in recent times. Our mortgages department also seems to be seeing more and more people who are looking for properties around this price bracket and who are able to secure a mortgage to do so.
It’s always possible that it’s a ‘blip’, of course, but it really is a positive sign for the property market. We’re not expecting miracles here: the property market will be pretty flat for some time to come. But in terms of stability in the marketplace in the coming years, it’s a good sign.
What’s Been Happening in the Property Market From Our Point of View?
I’ve been pretty stunned by the level of activity in July, traditionally a quiet time of year. The number of buyers that we registered on our property ‘matching’ database was over 400, up there with any of the busiest months of the year. The number of valuations that we booked-in for potential sellers (the life-blood of the property market of course), was a record for the year. The number of sales has been up there with the busiest months of the year so far too. So, on all indicators, and based on the steam coming off the fingers of all of the team in the office, you frankly wouldn’t really know it was the summer holidays!
We would normally anticipate the market picking-up again in August so it’s looking like it’s going to be a pretty busy next few months in the property market: long may it continue!