Housing Market News And Views The Housing Market: An Update

Date Published:

20/05/2009

What is happening to house prices and the property market now? Are there really green shoots of recovery? Are houses selling faster? Here, we attempt to demystify the headlines and statistics.

By Kate Faulkner

Are There Green Shoots?

First let us explain why there appear to be green shoots at the moment. Prices (or rents) go up when there are more buyers (or tenants) than there are sellers (or landlords renting property). When the opposite happens, prices fall. To understand how the statistics ‘fit together’, it’s worth just thinking about how the property market works and where (and when) the statistics come from.

If you are a buyer, the first port of call is to go into an estate agent and register the property type you are looking for. So, the first sign of ‘green shoots’ should come from estate agents or letting agents.

The second thing buyers will do is to make offer on a property, again this is done via the agents, so you will hear data about how much buyers offer versus the ‘asking price’ the property is marketed for. So if the property market is moving forward, this figure will go up, if it’s reversing, it’ll go down.

Another measure of how the market is improving is the number of properties for sale versus sold boards. It’s one thing that you can actually track yourself locally, looking up and down streets to see how many properties are for sale and how many have actually sold. At the start of the year, there was one street after another which had just for sale boards, now in some areas, some or all of these have turned into sold boards.

Once an offer is made, people apply for a mortgage and this is where Nationwide and the likes of Halifax get their information. However, their data is interesting, but at the moment isn’t very robust. Halifax in particular has been in trouble as a bank and as such doesn’t appear to be offering lots of mortgages, so its data seems to be based on a small number of mortgages. Nationwide data is still good, but bearing in mind that the number of people buying a home and securing a mortgage is less than half what it was in previous years, it is unlikely to be as accurate as it was before the credit crunch. It’s also worth bearing in mind that a third of people who buy DON’T typically need a mortgage, so they aren’t included in any reports by mortgage companies.

Typically after a mortgage has been applied for, a survey is carried out, but this is on a tiny number of properties, only 20% of people who apply for a mortgage have a proper, independent survey. Their information is accurate, but in today’s market when we are selling so few homes, it doesn’t track that many homes and the lower the number of homes surveyed, the less robust the data is.

Finally, when the purchase of a home is made, it’s recorded by the government’s Land Registry, which records every sale in the country, but only once the actual sale has gone through, which could be months after the original offer was made. So, the reason we are being told that there are ‘green shoots’ at the moment in the housing market is that:

* Agents are reporting a rise in the number of buyers registering, up from 240 per agent in February 2009 to 268 in March 2009.
* The percentage of sold boards versus for sale signs is on the increase at 23.7% up from 21.1% in March 2009.
* Offers versus asking prices are increasing, up in March 2009 to 88.8 from 88.3 in February 2009.
* The number of mortgages has increased by 16% in March 2009 versus February 2009, however this is still less than half the amount lent in the same month last year.

However, all these statistics are measuring is that we are selling a few more properties than we did last year. This doesn’t mean there is a ‘recovery’ yet as prices are still low versus last year, the most accurate price data (which is from the Land Registry) is still recording falls, but more importantly, the number of people buying and selling is less than half than it was last year.

More On Buying, Selling & The Housing Market

Buying Property: advice, info and the latest news
Selling Your Home: how to, costs, advice and information
House Prices: the latest news
Housing Market News & Views: the very latest on what's happening

Check out the mortgage calculator, loans, credit cards & savings comparison tools