Latest report contradicts gloomy forecasts that the market is in freefall

The property market is stabilising despite a lack of confidence by consumers and universally downbeat house price predictions.

According to a National Association of Estate Agents (NAEA) report just published, the April figures for number of viewings and agreed sales have leveled off. This contradicts the plethora of gloomy forecasts that the market is in freefall.

Chris Brown, President of the NAEA: “What people must remember is that the market is stable and we are not seeing massive price drops. Sales are still taking place despite the strong economic factors at play, such as high employment and low interest rates. People still need somewhere to live and property remains a good long term investment.

“Consumer confidence is still dented. Properties supply is good but buyers are being cautious and are adopting a ‘wait and see attitude’, watching the market, before making any decisions. Many, especially first time buyers, will be feeling the results of the credit crunch and tighter lending leading to them being unable to move onto the ladder or up the chain.

Some agents are also finding it difficult to stop sales falling through as people get ‘cold feet’ or fail to secure mortgages but we must remember that this happens in the best of markets. Key findings:

• Number of viewings before a sale is secured remained stable at 14 (up by two viewings on the same time last year). This is indicative of buyers remaining cautious but still committed.
• The average difference between asking and sales price remained at 4.7%, showing that although there is still a dislocation in this area sellers may be being more realistic.
• The number of buyers on agents’ books has dropped slightly. NAEA members reported an average of 237 house buyers on estate agents’ books in April compared to 249 in March 2008.
• The number of properties for sale on NAEA agents’ books increased this month - an average of 84 properties were available in April in comparison to 76 the month before. This indicates a shortage of buyers but could also be a result of a seasonal increase in instructions at this time of the year.
• It hasn’t been an easy time for first time buyers over the last couple of months, and it is no better this month, as agent’s reported a drop from 8.3% in March to 7.7% in April.

The credit crunch and squeeze on mortgage approvals has affected the confidence of first time buyers. It has become more difficult for them to secure a mortgage and the effects are felt all the way up the property ladder.

Christian Harper Oliver Finn

June 6, 2008