SELLERS AND BUYERS STILL WILLING BUT FIRST TIME BUYERS ADOPT A ‘WAIT AND SEE’ ATTITUDE

23 / Apr / 2008
According to the latest report from the National Association of Estate Agents (NAEA) first time buyers are finding the current property climate difficult; agents report that the market share for the first time buyer market reduced in March.

More positively, the number of houses available rose giving more choice to potential buyers but the number of sales agreed remained sluggish indicating consumer confidence remains uncertain. However, optimistically, the number of buyers on books has increased showing demand is still out there.

NAEA President, Stewart Lilly comments: “The global credit crunch, squeeze on mortgage approvals and the media cloud that currently surrounds the property market are undoubtedly having effect on individual’s decisions to buy or sell.

“There is a constant need to remind people that the underlying factors that hold-up the property market - low unemployment, historically low interest rates and a pent-up demand for houses – still exist. In fact, a number of NAEA agents from across the United Kingdom are still reporting stable property markets with many of their branches making steady sales.

“There are indications that first time buyers have dropped their market share once again showing a “wait and see” attitude has been adopted. Over the next few months it is imperitative that the shackles are released on the mortgage market so consumer confidence can be rebuilt, allowing the market to stabilise.”

First time buyers feel the strain

There is no denying that the current economic climate is piling the pressure on a majority of individuals. However, it seems that first time buyers have really felt the impact of the credit crunch in March as their market share dropped from 11.7% in February to 8.3% in March. This is the lowest figure reported since 7.9% was noted in April 2006 and is in fact down from 12.6% in the same period last year.

The drop reflects the current air of apprehension that is hovering over consumers. One of the key factors in this decline is the squeeze on mortgage approvals, as mortgage lenders clamp down on offering fixed rate and one hundred per cent mortgages, forcing first time buyers to merely dream about venturing onto the first rung of the ladder.

House hunters on agents’ books improve

Positively, the number of house hunters on agents’ books reported is broadly stable. NAEA members reported an average of 249 house buyers on estate agents’ books in March compared to 243 noted in February 2008. However, this figure is comparatively down on the same time last year when 385 house hunters were reported on agents’ book in March 2007.

Stock levels stay stable

The number of properties on agents’ books slightly increased as NAEA members across the country reported an average of 76 properties for sale in March compared with 74 in February 2008. This figure is up from March 2007 when an average of 62 properties for sale was reported. Part of this rise may be attributed to owners not being realistic about the price of their property.

Consumer apprehension takes effect

Property sales decreased further in March with on average 7 sales reported per agent, down from 8 in February 2008. In comparison to the same time last year when 14 sales per agent were reported, this figure is depressingly low for the beginning of the Summer period and are similar to figures expected during the Easter period.

The good news is that within the last few days there are some reports of an increase in activity which may be as a result of the Government and Bank of England’s clear desire to find ways around the credit crunch.

A longer lead time from instruction to sale coupled with a longer decision making process is undoubtedly having a knock on effect on how many sales can be achieved per agent during one month.

The average number of viewings before a sale is secured for a property rose from 13 in February to 14 in March 2008. This consumer caution is also reflected in the time taken to sell a property with an average of 22 weeks reported in March compared to just over 20 weeks in February. Again, this is up when compared to the previous year when just over 15 weeks were reported in March 2007.

The percentage of sales agreed that fell through unfortunately increased between February 2008 to March 2008, going from 8.6% to 10.3%. This rise again indicates that the current cloud of external pressures that looms over the market is having an unsettling affect on would-be purchasers causing them to re-evaluate their options and in many cases plump to remain in their current home or to continue renting.

The difference between asking price and selling price rose in March with a figure of 4.7% being reported. This figure is up from the previous time last year when 2.9% was noted in March 2008. This figure has stabilised over the last few months but still indicates a gap between aspirational and real values.

Editor Notes:
About the NAEA

The National Association of Estate Agents (NAEA) is the UK’s leading professional body for estate agency personnel, representing the interests of around 10,500 members who practice across all aspects of property services both in the UK and overseas. These include residential and commercial sales and lettings, property management, business transfer, auctioneering and land.

The National Association of Estate Agents is dedicated to the goal of professionalism within all aspects of property, estate agency and land. Its aim is to reassure the general public that by appointing an NAEA member to represent them they will receive in return the highest level of integrity and service in both sales and lettings, for all property matters. Each NAEA member is bound by a vigorously enforced Code of Practice and adheres to professional Rules of Conduct. Failure to do so can result in heavy financial penalties and possible expulsion from the Association.