The nights are fair drawing in, aye. But with shorter days and longer nights we haven’t seen any slowing-down of the property market. Quite the opposite. It appears that, in the absence of being able to go out and actually do anything else in the evenings, more and more people are taking that time to go online and look for a new home. So, with October failing to disappoint from the point of view of anyone looking to sell their property, has that been reflected in the Press? For our October property market update, including a round-up of what has been written in the Press as well as what we have seen happening with our own eyes, read on…!
Press Coverage of the Property Market in October 2013
Property Sales Surge Across Scotland, Prices Also Up (BBC) – http://www.bbc.co.uk/news/uk-scotland-scotland-business-24725562 – There really has been one large story that concerns the property market in Scotland in the past month, with the BBC reporting the widely-reported stats released by the Land Registers in Scotland that demonstrate that property sales have surged in the previous quarter of the year when compared with the same period in 2012. The report notes that a total of 24,274 properties were sold between July and September: 22.5% higher than in the same period last year. This represents the highest quarterly rise recorded by Registers of Scotland since 2008.
Whilst this of course does not mean that property prices are going up, it’s a sign that, from a buyer’s point of view, property prices seem to be more attractive than they have been for a long time and that buyers are flooding back to the market. It would be easy, and wrong, to say that this has been caused by the Help to Buy, government-backed scheme, but that scheme has in fact only just launched in Scotland. The rise in sales is more likely to be down to an increased confidence in the housing market combined with the availability of mortgages at good rates and with attractive criteria that are allowing more people than before to borrow.
With regards to prices though, average prices across Scotland actually rose by 1.5% when compared with the previous 12 month period.
A commentator from Registers of Scotland stated: “This quarter’s figures are one of the strongest indicators yet of a revitalised Scottish property market. This is the fourth consecutive quarter that volumes have increased, maintaining the upward trend.”
So what effect will this have on prices and volumes for the near future? Well, in the absence of any good reason to the contrary, confidence breeds confidence. After a few years where property prices and sales volumes were pretty static and indeed showing a slight downward trend, it is likely that this increased confidence, as reported in the Press, is likely to self-perpetuate. The government has just launched its Help to Buy scheme in Scotland (for new build properties) and the other element of the Help to Buy scheme across the UK (for new build AND second-hand properties), helping lenders to provide mortgages that require a lower deposit level than has been the norm in the last few years (5%).
All of this of course has led to concern that we might simply be entering another housing bubble. Given the UK government’s determination to support the housing market and house prices in the past few years, since the banking crisis and housing market crash, there certainly seems to be a desire at the highest level of government to prevent a bubble from popping. Added to that, for all that prices appear to be rising at a level that outstrips economic growth, much of that is down to the property price inflation statistics in London that are quite frankly mind-blowing – http://www.theguardian.com/business/2013/oct/14/britain-housing-bubble-house-prices. Nevertheless, house prices do appear to be rising throughout the rest of the UK.
So, is it sustainable? Well, probably, as long as the level of house building remains as low as it currently is. For a quite fun analysis of what is keeping house prices high, have a wee look at this article: http://www.buzzfeed.com/dlknowles/britains-dysfunctional-property-market-in-gi-fm44.
Whether or not these arguments make sense to you, the fact is that prices appear to be rising, confidence in the housing market appears to have been restored and people are flooding in to buy properties, not just in the hot-spots of London, but also throughout Scotland. For the time being, at least, the housing market appears to be stable, healthy, growing and all of the reports in the past month appear to have backed-up that suggestion.
What Have We Been Seeing Happening in the Property Market This Month?
So, is what we are seeing happening in the property market in Edinburgh, the Lothians and the Borders backing-up what the nationally-reported statistics are suggesting? In summary, absolutely yes. But we are seeing an interesting pattern developing between the difference in the levels of confidence that buyers clearly have in the property market and the level of confidence that property sellers themselves, who ultimately control the supply of second-hand properties coming to the market for buyers to buy, have in the property market.
With two full working days of October left, we have agreed sales for 79 properties. Our record month, of all time, was last month where we sold 80. I have been saying for a week or so now that I think we might crack 90 sales for the month for the first time, to general looks from my colleagues of sympathy that would usually be accompanied by a wee pat on the head and being sent on my merry way! However, that figure isn’t looking quite so silly now as it did a week or so ago.
However, we have seen a continuing downward trend amongst the number of people who are looking to put their properties on the market. Whilst buyers seem to be reading the news reports saying that prices are rising and that more and more people are buying, many sellers are still very concerned about the state of the market and their ability to sell. It seems that buyers and sellers are looking at different things in the Press. Or that they have different levels of belief in what they read. It could well be a legacy of the last few years where there has been a huge element of caution injected into the property market and this is leading sellers not to want to jump too quickly onto a bandwagon and believe in the good news that buyers are coming back to the market in droves. With the cost of selling generally being higher these days than it was in 2006-07, with the introduction of Home Reports in late 2008, there is certainly a little more financial risk involved in deciding to sell a property now than there was back then.
Combined with this, many sellers have bought-in to the urban myth that you are best to put your property on the market in the Spring if you want to get it sold. The received wisdom used to be that you are best to put your property on the market in Spring and then Autumn. However, that trend has been changing in the past few years to the point where Autumn no longer even sees the bounce-back that it used to. Now, we are seeing the peak months in the summer and then everything starts tailing-off in September, a bit more in October, and then falls off a cliff in November.
So, what happens when a record-breaking number of people are looking for a property at exactly the same time as sellers lose interest and confidence in the market and stop putting their properties on the market? Supply and demand dictates that the shortage will drive prices up. So, it’s perhaps no surprise that we will see more Closing Dates and more quick sales through the late-autumn and the winter months.
Is that happening already? You betcha. Our experience, and the stats, show that buyers don’t stop looking for a property just because they have turned a page in their calendar. However, many sellers are keen to wait until the new year and even the Spring of new year to get their properties onto the market.
Does this mean that it’s a good time of year to be selling? Absolutely! It stands to reason that if we have sold more properties in October than in any other month, yet we have put about half as many on the market as in our busiest month, there is less competition, more chance of selling and indeed more chance of getting a good price as those buyers duke-it-out amongst each other to get the properties that are in lower supply than normal. It seems counter-intuitive because it’s not what we are used to hearing or thinking, but it absolutely is a great time of year to sell.