I can’t believe it’s already coming towards the end of April, the year is flying by. Property news hasn’t been thick on the ground this month, with much of the ‘same old’ being reported in most channels, so this month’s update is a wee bit shorter than normal and contains a little more analysis of whether the prevailing trend of prices going up is something that is sustainable and good for the property market where you are. To find out what’s been happening in the Scottish property market this month, read on!
First Time Buyer Numbers at New High
According to a study in The Telegraph this month, First Time Buyer (FTB) numbers are at their highest levels since 2007, during the last property market boom: http://www.telegraph.co.uk/property/10786658/First-time-buyers-at-seven-year-high.html
What is interesting to note is that the average deposit that a First Time Buyer has to find has also come down significantly this year compared to last. The proportion of the deposit required to secure a mortgage, when compared to earnings, has therefore also come down.
This is in part due to lower deposits being required by lenders due to generally relaxing mortgage lending criteria (something that we’ve been reporting for several months now), the Help to Buy scheme (Part 2) which helps lenders have more confidence to lend to buyers with smaller deposits by getting a guarantee from the government for up to 15% of the mortgage amount and finally also the Help to Buy scheme (Part 1) which is helping First Time Buyers buy a new-build property as their first home through a shared-equity arrangement subsidised by the government.
The knock-on effect of all of this of course is that there are more properties changing hands: as First Time Buyers are able to get onto the property ladder, it allows others already on the ladder to move home.
Lack of Supply Remains a Nationwide Problem
Another article in The Telegraph noted however that supply of properties to the market, at least in England, has fallen to a near-10 year low. The number of properties being marketed per estate agency branch that they surveyed stood at 42 in March 2014 compared with 57 in September of 2013. We are seeing that trend north of the border and have heard from several different sources, many of whom are large agencies, that this is the same experience that they are having.
Isn’t it good that properties are selling well again? Well, yes and no. It’s great of course that the market is starting to move again, however it doesn’t seem that property sellers are returning to the market in the same quantities as property buyers are.
A shortage of supply in any market leads to rising prices whilst an extreme shortage leads to extreme rises and that’s not really great for anyone except for short-term prospectors. All of this is great news for existing home owners who are seeing the value of their property rising but less welcome for buyers who are watching properties that were once affordable suddenly slipping out of their reach.
There is one simple solution of course and that’s for sellers to realise that now is a great time to be selling and to get their properties on the market.
It does seem that confidence levels amongst buyers fluctuate more quickly than they do amongst sellers. In the negative, when there are stories of problems in the market, buyers withdraw quickly and stop buying, whilst sellers take longer to realise that their goods or property aren’t going to sell for quite as much as they had hoped. In the positive, when buyers sense that the market is improving, they rush back to the market and yet sellers continue to doubt that it is a great time to be selling, having perhaps experienced the downturn in years gone by. So it’s perhaps just a matter of time before we see a groundswell of opinion from property sellers that now is the time to sell and housing market supply and demand returns to a healthier balance.
What Are We Seeing Happening in the Market? Slight Easing of the Imbalance of Supply and Demand
Thankfully, we are seeing signs of the balance shifting back a little bit and seller confidence returning. This is partly seasonal: sellers always believe that spring is the best time to get their properties onto the market, so April is always going to be a very busy month for ‘listing’ (new properties coming to the market) activity.
For seven months in a row, to March 2014, we sold more properties every month than we listed. In March, a late surge of listings at the end of the month took listings past sales for the first time in a few months. This month, so far, listings are leaving sales behind in the dirt! Why?
It’s partly due to the time of year: spring is ‘selling season’ (not because properties sell because, proportionately, more actually sell in winter, but because that’s when sellers want to put their properties on the market). It’s partly down to lack of stock to sell: at some point, when you are selling more than you are listing, you run out of things to sell! And, lastly, I believe that it’s also because sellers are seeing so many SOLD signs around their areas that they want a bit of the action too and, after a few months and years of believing that the market was flat or falling, they now have the confidence once again to believe that they can sell and that they can sell for a good price.
We’ll see if that continues as May unfolds but, for the time being, I’m just delighted that we are replenishing our stocks of properties so that we can continue to sell properties throughout the summer.