Welcome to BuyAssociation.co.uk

Property Market Update September 2009 - Kate Faulkner, Designs on Property

Property Market Update

Trying to understand what’s happening in the property market and whether it’s a good time to buy or sell is rather difficult just now! One story will tell of ‘green shoots’ the next will say prices are going to fall even further. This is confusing if you are thinking of buying or selling or currently in the market and struggling to get a result in the area YOU live.

We track over 20 property statistics on a monthly basis and talk daily to property professionals so we can report on what’s happening in the market and how it might affect what you do.

What’s Really Happening in the Market?

Property prices tend to go up and down depending what’s happening with supply and demand. Over the last year we have only sold half the number of properties than normal. Prices fell following the credit crunch as buyers struggled with finance, confidence was low and sellers realised they needed to drop their prices to tempt buyers. In August 09 properties sold for between 9 per cent and 20per cent* less than the previous year.

Since the start of 2009, many sellers have taken their properties off the market or rented them and as a result supply has fallen while demand has slowly risen. Access to mortgages has improved slightly and for most buyers, life moves on (people get married, have children, get divorced or become ill) so they still purchase. As supply and demand started to match, so prices have begun to stabilise.

However, one of the difficulties with these ‘national averages’ is that locally ie, where you are buying/selling, these figures don’t always reflect what’s happening in your area, so it’s essential you concentrate on you market and worry less about ‘national averages’.

For example, when you analyse the number of boards for sale and sold, this shows that relatively well off areas such as Canterbury, Fleet and Warwick, there are few properties for sale while demand is rising, so well priced properties are selling and prices aren’t likely to fall further. In contrast, areas such as Telford, Newark and Cannock still seem to be suffering from supply being higher than demand so some may see further price falls.

Will Prices fall again?

This is a difficult question to answer as in some areas and for some property types the answer is probably yes, others no. For those that report prices will fall further, they give two reasons, the first unemployment is expected to rise and this could cause forced sales from those who lose their job. Secondly, some property forecasters believe the average property price must be three times the average salary and in their view prices haven’t fallen to this level yet.

So will these factors cause prices to fall further? Current data suggests not. Although more properties may come onto the market via repossession, repossessions this year have been soaked up quickly either by lenders renting them out or investors and bargain hunters buying them at a discount. The view that property prices should be three times income hasn’t worked for nearly 10 years now as interest rates are historically low; people are inheriting money (and property) and having children typically later or not at all, so finance, in the long term, will continue to be based on affordability.

Finally the best way to find the answer to this question is to ask developers or sellers if they could afford/would sell their property for 10 or 20 per cent less? Most people say no and the reality is that builders won’t build and sellers won’t sell, (unless they absolutely have to), so if prices fall further, supply will decrease further.

Time to buy a new build?

It’s not just different areas where market performance varies it’s also different property types. For example, if you are thinking about buying a new build and you can raise the 25 per cent (or more) deposit, now is definitely a good time to look!

Normally new builds are sold at a premium versus properties that have already been lived in. This premium can be as much as 20 per cent but at the moment it’s zero. On-going new builds have the advantage of lower utility bills thanks to energy efficiency measures such as double glazing and insulation. Some developers also offer ‘part exchange’ where they buy your home and you buy theirs. This can be very helpful if you are struggling to sell and need to move fast.

Over the coming months developers will be releasing more properties too and it should mean more choice. However, start looking now as some areas such as Scotland, Wales and London are already recording price rises of 10 per cent or more for new build!

Worth Bagging a Bargain at Auction? Desperate to Sell?

Then why not try your local auction? Over the past year, auction houses have been extremely successful at selling properties, selling 70% of properties that come onto their books.

However, the time to bag a bargain may be slipping away at the moment as there are fewer properties, especially repossessions, to choose from and sellers are less willing to accept a really low offer.

However, if you do decide to buy at auction, make sure the legal pack is checked by a specialist solicitor and the property surveyed. Have your finances in order, including your mortgage pre-approved and a deposit ready to pay on the day.

Struggling to sell? It might be worth talking to your local auction too as they may well be able to help sell your property at a price you are happy to sell for.

*Land Registry Data.

Kate Faulkner

Kate Faulkner is MD of www.designsonproperty.co.uk and is author of six property books including four for Which? If you have any questions about property, Kate will aim to give you an independent answer for free.

More pages

Page 1: Property Market Update

Advertise Your English Rental Property simple, effective and affordable marketing online!

UK Investment property from just £34,500 High-quality student rooms in an emerging market with 10% net yield guaranteed

All you need for a beautiful bathroom - at affordable prices

Discounted hotel rooms in the UK - click here for Laterooms special offers

Holiday homes to rent - across the UK & Ireland

Calculate how much you can earn - rent out your UK holiday home here