Anyone with an interest in the property market generally understands the influence of supply and demand on house prices. Just like any other “commodity”, if everybody wants something that is in generally short supply, the price tends to rise. In the property sector, the media often describes a rising market good and a falling market as bad.
Indeed, as estate agents, our job is to sell our clients’ property for as much as the market will tolerate and, unlike online estate agency alternatives, we are paid in direct proportion to the price we are able to negotiate. The problem is, prices have risen to such an extent over time that the average house is now well out of reach for the average man/woman in the street. So maybe, socially speaking, rising prices should be seen as a bad thing?
However, the supply/demand equilibrium appears to be about to change. According to Rightmove, the number of sales agreed at this time of year is the second highest for ten years, only slightly lower than the high of May 2014. So supply is clearly up and, during this time of relatively stable demand, sure enough there appears to be a corresponding dip about to happen in prices, as Rightmove goes on to report that price of property coming to market has dropped by 0.4% this month (the first fall in June since 2009 at the height of the credit crunch) and the first fall this year.
Fortunately, these observations could be regarded as fine-tuning, and there are no major corrections about to happen. Nevertheless, it may be that the current levels of political turmoil could possibly persuade marginally more people to sell and fewer to buy, in which case the edge could come off property values – but at least this might just free things up to the extent that anyone sitting on the fence as to whether or not to sell might feel more confident that they will indeed be able to find somewhere else suitable to buy.
Mark Hayward, Chief Executive of NAEAPropertymark, reports:
Demand for housing fell to a six month low in May, the number of prospective buyers on estate agents’ books decreased to 350, from 381 in April. This is unsurprising as political uncertainty ahead of the General Election stalled buyers’ plans.
The number of houses available to buy per branch increased by 11 per cent, rising to 40 per branch from 36 in April. This is slightly higher than May 2016 when 37 properties were available to buy per branch.
The number of sales per branch rose to 10 in May, up from eight in April. However 77 per cent of properties were sold for less than the asking price, with only three per cent of properties selling for more than the original asking price.
Whilst these stats represent national averages, London agents are holding nowhere near 40 properties per branch, and it’s fair to say that from a local perspective, property is still very much in demand, with most agents holding only a handful of available properties at any one time – some properties are still selling (sale agreed) within 1-2 weeks of hitting the market. Our database currently sits at just over 700 prospective buyers, who we contact on a regular basis to ask if they are still looking.
The local lettings market has certainly settled down, making it easier to set an asking price, helped by landlords reacting to market conditions, making/agreeing to price adjustments where necessary. The number of rental property available in the local market, according to Rightmove as at 28th June is as follows, and we think you’ll agree,tenants looking for a 1 or 2 bedroom property in the local area, have plenty of choices.