May 2017
31/05/2017
163
5 min read
Housing market is shrinking
The final stages of the General Election 2017 campaign has seen all parties feverishly vying for people's votes and the uncertainty in the air has affected housing data negatively - the evidence suggests that people may be delaying buying and selling their homes until they know what the result will be. Although the uncertainty is arguably less than that which accompanied last year's EU referendum, the underlying trends describe a housing market which, in sales volumes, is continually shrinking.
Sales volumes were down in England & Wales and London, 21.0% and 11.7% respectively - this is the tenth month of a continual year-on-year decline - see the table/diagram below. Month-on-month, additionally, prices have fallen for four months out of ten.
Regarding prices in England & Wales, prices fell by 0.5% last month and year-on-year, prices are increasing at a declining rate. For London, prices fell 1.6% month-on-month and the same story of prices increasing at a declining rate can also be observed and more strongly than for England and Wales. Some 73% of home sales are going through for less than market price (see further details from the National Association of Estate Agents' (NAEA) March Housing Market Report below), this was a marginal decrease from the 75% of last month (all data taken from the most recently available data from the Land Registry House Price Index ).
The housing supply, according to the NAEA, has declined by 8% with houses per branch falling from 39 to 36 month-on-month.
The average house price in England and Wales is presently £227,549 and in London it is £471,742.
Monthly Sales Volume Variances for England and Wales
| Month | Sales Volume 2015 | Sales Volume 2016 | Annual Variance | Monthly Variance |
| January 2016 | 60,900 | 63,751 | +4.7% | -32.5% |
| February 2016 | 62,329 | 67,867 | +8.9% | +6.1% |
| March 2016 | 70,924 | 117,255 | +65.3% | +42.1% |
| April 2016 | 67,784 | 47,405 | -30.1% | -59.6% |
| May 2016 | 78,582 | 52,391 | -33.3% | +9.5% |
| June 2016 | 89,201 | 60,683 | -32.0% | +13.7% |
| July 2016 | 97,643 | 70,395 | -27.9% | +13.8% |
| August 2016 | 88,590 | 70,954 | -19.9% | +0.8% |
| September 2016 | 86,348 | 67,803 | -21.5% | -4.6% |
| October 2016 | 94,494 | 62,268 | -34.1% | -8.9% |
| November 2016 | 83,325 | 66,064 | -20.7% | +5.7% |
| December 2016 | 84,496 | 68,909 | -18.4% | +4.1% |
| Year to Date Sales Volume (December 2016) | 796,795 | 815,745 | +2.4% (+18,950) | |
| January 2017 | 63,751 (2016) | 53,552 (2017) | -16.0% | -21.0% |
NAEA: housing supply declines 8% month-on-month
The NAEA's monthly Housing Market Report stated that housing supply dropped 8% between March and April, from 39 per branch to 36 per branch. This is the lowest level since April 2016, when the market was in the throes of uncertainty connected to the coming EU referendum.
Demand also dropped to 381 registered buyers per branch in April, a continuing fall from the 425 of January and February and the 397 of March. Curiously, the figure for the previous April (with its Brexit uncertainty) was 17% less at 325 indicating that Brexit uncertainty has so far trumped the General Election uncertainty.
Proportion of sales to First Time Buyers remains constant, but total sales fall
The NAEA reported that sales to first time buyers as a proportion of all sales stayed at the 25% of March, but sales per branch still fell 20%, from 10 per branch in March to 8 per branch in April.
Small decrease in proportion of properties sold under asking price
Some 73% of properties sold in April were sold under the asking price, a small decrease from March's 75%, This figure is likely to give a small grain of optimism to estate agents.
Monthly Property Price Variance for England and Wales
| Month | Sale Price 2015 | Sale Price 2016 | Annual Variance | Monthly Variance |
| March | £199,435 | £217,901 | +9.3% | +0.8% |
| April | £201,968 | £219,187 | +8.5% | +0.6% |
| May | £204,179 | £223,037 | +9.2% | +1.7% |
| June | £205,747 | £226,115 | +9.9% | +1.4% |
| July | £209,200 | £227,081 | +8.5% | +0.4% |
| August | £211,391 | £226,593 | +7.2% | -0.2% |
| September | £211,916 | £226,768 | +7.0% | +0.1% |
| October | £212,268 | £225,951 | +6.4% | -0.4% |
| November | £213,973 | £226,043 | +5.6% | 0.0% |
| December | £215,023 | £227,063 | +5.6% | +0.4% |
| January | £215,638 (Sale Price 2016) | £227,536 (Sale Price 2017) | +5.5% | +0.2% |
| February | £216,083 (Sale Price 2016) | £229,158 (Sale Price 2017) | +6.1% | +0.7% |
| March | £217,901 (Sale Price 2016) | £227,549 (Sale Price 2017) | +4.4% | -0.5% |
Housing, the Green Party, UKIP and Plaid Cymru
Housing proposals form a clear part of the Green Party's manifesto, albeit without major costed plans and projected numbers, whereas UKIP seems to have concluded that because it intends to cut immigration entirely, this should of itself cure the excess demand in the market. Plaid Cymru did not focus on housing either, although they have stated an intent to provide adequate housing for forces veterans and a scheme to make housing stock more efficient.
We discussed the housing proposals in the manifestos of the 3 main parties last month - to review these click here.
Mark Hayward, Chief Executive of the NAEA said: "Periods of political uncertainty tend to halt activity in the housing market, and this is exactly what we’re seeing this month. All of the main political parties have outlined significant housing promises in their manifestos and we’d hope to see these policies rolled out in the new Government’s first six to 12 months in Parliament. Buyers and sellers alike are recognising this and adopting a ‘wait and see’ strategy to decipher how or if the value of their existing or future homes will be affected.
"However, despite the fact that increasing housing stock is playing a part in the Election campaigning, more often than not we find these pledges are unachievable and turn out to be empty promises. It’s therefore important that the market doesn’t totally stall as this could trigger an unintended domino effect, which we could still feel the effect of years later before supply increases. A business as usual approach will ensure house-hunters are met with a healthy supply of properties to view, and sellers get a fair price and a good buyer."
Andrew Boast, Co-founder of SAM Conveyancing said: "It's to be expected that a General Election is going to cause housing market uncertainty, something which we saw in the run-up to the EU referendum of 2016. The trouble is that it's just additional uncertainty on top of a market which is already dysfunctional and arguably becoming more so.
"We need the next government to take immediate, decisive action to aid the currently disastrous UK housing market with its chronically falling sales volumes, among other points of concern. Talk is most certainly cheap and political parties are apt to forget their weighty words when the campaigning has finished, and this would be disastrous given the need for fast, coordinated remedial action. The plight of first time buyers in particular should be in the thoughts of all parties seeking power."
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