Phew…has it been hot this month?! So, whilst we’ve basked outside, narrowly avoided heatstroke in our offices and on public transport, and nearly had a heart attack when Andy Murray threw away three match points at Wimbledon before giving the nation the result that it craved, the good news is that it’s not just been the weather that’s been hot: the property market has been scorching as well. For more about why this has been, and what this might mean for you, read on…
Normally we’d expect that July would cool down a bit for us. We don’t just mean the weather, with its usual pre-Festival dip that makes every newly-arrived tourist wonder how on earth we manage to live for 12 months of the year without any natural Vitamin D. No, as well as a dip in the weather, July usually sees a bit of a seasonal dip in the property market as people head off on their holidays or stay at home looking after a house full of children. That usually leads to a bit of a surge and bounce-back in late August, but in the summer months estate agents traditionally put their feet up, kick back and stare at the phone like Christopher Biggins’s agent, just wondering when and whether it is ever going to ring again.
This year has been a bit different, to say the least. Because whilst our jet-powered fans have been trying and failing to cool-down our teams in both offices, the phones have been ringing like a Justin Bieber Complaint Line after an ill-advised signing session at a culturally-sensitive national monument.
Why? Well, all will be revealed below! As is now the usual, this monthly property market update will round-up what has been happening in the news and then give you the low-down on what we’ve been seeing happening in the property market this past month.
What’s been happening in the Press coverage of the property market this month?
The reasons behind any perceived surge in the property market are fairly clear when you look at the reports coming out of the Council of Mortgage Lenders this month, which reported a rise of 26% year-on-year in gross mortgage lending (June 2013 compared with June 2012): http://www.cml.org.uk/cml/media/press/3590.
The report also showed that gross lending for the second quarter of 2013 is estimated to have hit £42 billion, a 24 per cent rise on the previous three months, according to the CML.
Obviously, it is imperative for a healthy property market in the UK that there is also available finance for property buyers. Not only was the figure up on June of 2012, but the figure was also up on the previous month of 2013. We have already been seeing a rise in availability of good mortgage deals this year but it’s encouraging to see that this is also translating into better borrowing figures which put money in the hands of people who want to buy properties.
Interestingly, this was combined with a slightly startling headline suggesting that June mortgage approvals were actually down and that the market was falling-back – ‘Mortgage approvals down slightly in June’: http://www.theguardian.com/money/2013/jul/29/mortgage-approvals-down-june-bank-of-england
However, in looking behind the figures slightly, the telling thing is that mortgage approvals in June were still at their second highest level since December 2009 and were up by 21.5% year-on-year.
Of course there are always two sides to any ‘good news’ story and there are plenty of comments from people below these stories either saying that this is a sign of the property market looking healthier, that George Osborne’s recent Budget initiatives are bonkers and fuelling a property bubble or that the figures are misleading. There are lies, damned lies and statistics of course, and there are various ways of interpreting these figures. However, after a long, long time of property prices stagnating and buyers being unable to move through lack of available funding, the way that I would interpret them is that they demonstrate a property market that at the very least we should be allowed to have a little bit of cautious optimism about.
What have we seen happening in the property market this past month?
I was not exaggerating about it being a busy month, and not just by the usual standards of July. We had to recruit extra help on the phones just to try and allow our advisers to be able to spend enough time on the phones with potential viewers, people making offers and also potential property sellers – we’ve never had to deal with anything like as many incoming calls. There has been steam coming out of the ears and off the fingers of our team in the office in a way that we haven’t seen for many-a-month. In perspective, our property sales team was at 120% of its monthly target with three working days of the month left to go and our Valuation Team (responsible for getting people from thinking about selling to the point where they make a decision to put their property on the market) hit their monthly target with nearly four days of the month left to go. And I genuinely thought that we’d set those targets at a challenging level at the beginning of the month, to say the least!
Of course, for a few years now, the properties that have been selling like hotcakes and attracting significant interest in spite of any property market dip have been family homes and in particular those that are relatively affordable or in prized residential locations. So the most encouraging signs for me are always when we are selling properties that we wouldn’t expect to be selling quite so quickly and also in the proportion of properties selling to the number that is coming on the market. On that last point, for most of the month our ‘listing’ (new business) team has been playing catch-up with our property sales team: put simply, we are selling more than we are actually putting on the market. And that, although not great for business in the long term, is an amazing thing for me to see.
Even though we take the view that we will not put a property on the market if we don’t genuinely believe that it will sell at that price and within a reasonable time (why put a noose around your own neck?) there are always some where you do doubt yourself slightly and wonder whether they really are going to sell: they might just not be the very best example on their particular street or they could be priced at the ‘toppish’ end of what you could reasonably expect the property to sell for. But, as I’ve been driving around Edinburgh and of course gawking at our own For Sale Boards, I’ve been shocked at some of the properties that have had ‘SOLD’ signs on them: properties that have barely gone on the market too! A good few years ago I would have had no qualms that our approach would yield a sale for these properties but in recent times there’s always the chance that you are completely confounded by a property’s inability to sell and you daren’t get your hopes up too much: at the end of the day, a significant percentage of properties coming to the market just don’t sell and, no matter how good a job I believe we do, you still can’t make any guarantees.
The range of properties selling, and the areas in which they are selling, is the most encouraging thing for me: from First Time Buyer properties right through to top-end, premium locations and house types. To me this demonstrates a general health in the market that we’ve not seen for a few years now.
Now…a word of caution…I have almost given up trying to track housing market trends (I say almost…I still try!) in recent years because my expectations are confounded so easily by trends that seem to have no apparent reason, so I am only cautiously optimistic. All I know is that properties are selling, and selling for good prices, and within a good period of time. Not all properties, of course: there will always be some that ‘stick’ for a variety of reasons, some of which even the best estate agent or solicitor/estate agent just cannot fathom. But for the time being I am daring to hope. The market does seem to have freed-up a little bit, the pessimism and lack of finance seeming to have lessened a lot in the past few months, and the effect on the market is not only seen in the numbers of properties selling, the number of buyers registering on our database to be first informed of new properties that come on the market, but also in the statistics that are coming out of various channels, not least the CML stats above.
It’s possible to question things a bit too much at times. After a few years of negative Press, negative sentiment and negative lending positions of the major mortgage lenders, it’s nice to see that things appear, just perhaps, to be turning the corner for the longer term. In the meantime though, it’s great just to take a bit of a deep breath and, like the summer sun, enjoy it for what it is!