The latest data from haart estate agents reveals that house prices are beginning to stabilise as the average London house price decreased by just 0.25% last month, falling from £249,211 in May to £248,642. The slight drop in May contrasts to the more dramatic price correction that has already occurred this year, with house prices falling almost 14% in the last six months.
Graph 1. Showing change in London house prices in the last 6 months
Russell Jervis, Managing Director of haart, comments: "The Spicerhaart London index, which uses real-time information, is a true reflection of what is happening in the market at the moment. Our data shows that price corrections have already happened and the market is now starting to stabilise, as it is underpinned by some strong fundamentals, such as the rental market and the increase in interest from first time buyers."
Market boosted by rentals
While house prices have been falling, the rental market is strong, seeing a 2% increase in rents between May and June.
Russell Jervis comments: "Investors are capitalising on the current market conditions. Cash-rich investors are buying properties at competitive prices and benefitting from increased yields, as demand for rental property continues to grow with potential buyers continuing to sit out of the market."
First time buyers looking to secure a good deal
The moderation in house prices along with the rise in rents and rental demand, has caused an increase in enquiries from first time buyers to 19% in June, a percentage change of over 12% since January, following a drop immediately after the credit crunch.
Russell Jervis comments: "The last ten years of house price growth has been unsustainable, and the current moderations will help ease the affordability constraints of first time buyers, who should be encouraged by the relative stabilisation of house prices. The reduction in house prices will help first time buyers make that first step on to the property ladder. However, the increase in enquiries is not necessarily translating into sales, due to financial constraints. The lack of finance is stopping potential buyers in their tracks, and could force the market to grind to a halt. To resolve this, lenders need to start relaxing the mandates for lending."
Graph 2: Enquiries from first time buyers
Along with the overall drop in house prices, asking prices have also reduced, with most properties selling for around 95% of the asking price compared to 97% this time last year. However, although haart predicts asking prices to fall a further 5% this year, offers compared to the asking price will start to rise, closing the gap further in the fall in prices.
Russell Jervis concludes: “Sellers are starting to be a lot more realistic about the value of their properties. As a result asking prices have already dropped. Although we expect to see a further drop of 5% in asking prices, the offers will start to match more closely as prices continue to stabilise in the second half of the year.”
-ENDS-
Notes to editors:
About the data
• The information used in this market analysis is based on application, listing and sales data from thousands of buyers and sellers using haart’s 100 branches across London. This unique data is gathered on a daily basis and provides an accurate snap shot of the London market over any given period. haart is one of the largest independent estate agents in London.
About haart
• haart is part of the Spicerhaart Group, the largest independent network of estate agents in the UK and Europe.
• Spicerhaart operates 250 branches of haart, Spicer McColl, Felicity J. Lord and Darlows throughout the UK.
• Spicerhaart’s 2000 staff handle residential property sales, lettings and property management for over 300,000 customers a year.
• For more information visit www.haart.co.uk
For more information please contact
• Vicki Fletcher or Caroline Trotman-Dickenson at The Wriglesworth Consultancy on 020 7427 1400 or caroline@wriglesworth.com