Spring Springing Slowly in the Local Housing Market
The “Beast from the East” may be a thing of the past but the housing market, which traditionally sees an increase in properties coming to the market in Spring, is taking its time to react.
The ESPC recorded a 10.1% decrease in the number of properties coming to the market between January and March 2018 when compared to the same time last year. Weather conditions, particularly in February and March, have undoubtedly had an effect on this.
Whilst ‘listings’ have remained subdued, the average selling price in East Central Scotland, however, increased by 6.1% between January and March of this year when compared with the same period in 2017, with the average price now sitting at £230,590. Selling prices in Edinburgh have further improved with an average selling price in the same period of £250,875, an increase of 7.2% compared with the same period last year.
Compared with the 10.1% decrease in the number of properties coming to the market, the number of homes sold in East Central Scotland over the last three months decreased by only 2.4% compared with the previous year. The imbalance between supply and demand that we saw in 2017 is clearly continuing into 2018 and is good news if you’re selling but continues to pose a challenge for sellers who are also buying.
Elsewhere in the UK, by contrast, there have been reports of a drop in new buyer enquiries whilst average selling prices remain flat, according to the Royal Institute of Chartered Surveyors (RICS).
It is important to note that this is based on a survey of estate agents in the UK who are members of the RICS and is based on their own perceptions of the market. We certainly are not seeing this picture in East Central Scotland at the moment, with an increasing number of properties going to a Closing Date and selling for prices well in advance of the Home Report Valuation.
Mortgage Volumes Rise
Mortgage lending for first-time buyers, home movers and those remortgaging increased significantly in February 2018, according to a report by UK Finance. The total number of homeowner house purchases, combining home movers and first-time buyers, reached 50,000. This is the highest level for the month of February since 2007.
More locally, there has been strong growth across the Scottish mortgage market. Carol Anderson, the chair of UK Finance’s Scotland Mortgage Committee said: “The mortgage market has shown strong growth in Scotland, with first-time buyers and remortgaging levels at their highest for a decade. Remortgaging has also risen by a fifth compared to the same period in 2016, which demonstrates homeowners are shopping around for suitable mortgage deals.”
The number of buyers securing finance is a key barometer of the health of the market and the appetite of potential property buyers. Whilst the supply of new properties coming to the market for sale remains tight, demand and buyer activity clearly remain strong, suggesting that the market could happily support house prices if more properties started coming to the market.
Interest Rates Likely to Remain Unchanged
The Office for National Statistics (ONS) has released its preliminary estimate of GDP for Q1 2018, showing that the UK economy grew by just 0.1% in real terms in the first three months of the year. This is down from the 0.4% quarterly growth recorded in the Q4 2017. These figures put growth at just 1.2% in the year to Q1 2018, the weakest level recorded since Q2 2012.
The Bank of England has hinted at a May interest rate rise however, according to the Centre for Economics and Business Research (CEBR), the Bank now looks more likely to leave rates unchanged for the time being and they anticipate that the UK’s economic performance will improve in coming quarters.
This is good news from the point of view of property buyers and homeowners who have a variable rate mortgage. In real terms, interest rate increases are likely to be modest and, for the average mortgage borrower in the UK, the per-month cost of any such rise would be around £10.
From Our Point of View
We have experienced an incredibly busy start to 2018 with all of the key indicators of a very healthy property market.
Viewing numbers have been at a historical high, the average price achieved versus the Home Report Valuation has increased, the number of offers received at Closing Dates has also been at a historical high and selling times are coming down.
Our in-house Conveyancing Department has been busy with activity from property buyers
seeking to place offers for their dream home and this has highlighted the number of property sales, across the wider market, going to Closing Dates.
There is no doubt that the market is challenging for buyers at the moment, with limited stock to choose from and a lot of competition from other buyers. However, for property sellers the outlook is hugely positive with fantastic prices being achieved in record times.
We’re Here to Help
If you are thinking of selling your home or investment property, get in touch with us by calling 0345 646 0208 (Option 1) or by emailing [email protected] to organise a free valuation of your home or to get a full, transparent breakdown of the costs of selling your home.
You can also now instantly book a free valuation appointment, online, by following this link