The first snapshot of prices, demand and supply in 2016 shows that all have increased over the period, indicating an active year ahead.
The price of property coming to market is up by 0.5% (+£1,509) on last month, the second highest rise at this time of year since 2007. Demand as measured by visits to the Rightmove website in the first working week of 2016 is up by 21% on the same period in 2015. There is welcome and unexpected news for first-time buyers with a 6.6% year-on-year increase in the number of fresh-to-the-market homes in their target sector of two bedrooms or fewer, the highest since 2007. With the monthly price increase in this sector at a near standstill (+0.1%, +£209) this suggests that some of the dynamics of the changing tax regime for buy-to-let investors are starting to play out sooner than expected.
Miles Shipside, Rightmove director and housing market analyst comments: “Upwards price pressure remains, with the second-highest rise seen at this time of year for nine years. The early snapshot of home-hunter visits in the first week of 2016 is up by 21% on the same period last year to 27.8 million visits, showing demand is not letting up either. Encouragingly for first-time buyers there’s more fresh choice with more property coming to market in their target sector. With their asking prices pretty much the same as a month ago, perhaps the knock-on effects of the more punitive landlord tax regime have arrived early and they now face a dilemma over whether to buy now or wait to see if prices drop in this sector over the next few months.”
While the 0.5% rise in new seller asking prices is lower than the 1.4% recorded in last January’s report, it is higher than every other January since 2007, before the credit crunch began. A lack of property coming to market has been an upwards driver of both prices and unfulfilled demand, though encouragingly there has been a slight 1.8% year-on-year uplift in the number of newly-marketed properties. However, the only sector that has increased is that of two bedrooms or fewer, so the only beneficiaries of this are likely to be first-time buyers or investors looking to buy and complete before the April stamp duty hike. Some of this increase could be due to some landlords selling up or more first-time sellers marketing to take advantage of any first quarter surge in investor activity and guard against a post-April slump.
Shipside advises first-time buyers: “Perhaps because of the increased competition among sellers and a keenness to attract buy-to-let investors before the April deadline, prices have hardly increased month-on-month for properties with two bedrooms or fewer. In this stock-starved era it will come as a relief to first-time buyers that their negotiating power may already be improving because the forthcoming tax changes, and there is a window of greater choice as more owners of smaller properties try to sell. Rather than waiting until later in the year, having a good look around now while choice is up and interest rates remain unchanged could get you onto the ladder sooner and at an acceptable price. For several years buy-to-let investors have been enticed by high tenant demand and attractive returns, but as their window of opportunity starts to close it already appears to be opening wider for first-time buyers.”
David Blythman, Managing Director of scottfraser in Oxfordshire, said: “We’ve seen a strong start to the year in Oxford with an increase in general seller enquiries while buyer demand stays strong. We’re also seeing a number of investor to investor sales with an urgency to achieve completion on deals before 31 March stamp duty deadline. Any potential sellers considering coming to market to take advantage of selling to an investor would need to move fast so they have the chance to complete before the end of March.”
Mark Manning, Director of Manning Stainton in Leeds, Harrogate, Wetherby and Wakefield said: “It’s been very busy since the start of the year with the volume of appraisals up indicating plenty of appetite. But such a shortage of stock means there would have to be a huge surge of instructions to satisfy the current demand. We sold the highest percentage of stock in December than ever before. I think 2016 could be a very interesting year for agents with a big requirement to change and adapt to the conditions.”
Julian Peak, Regional Sales Director of KFH South East & Kent, said: “Some areas of London have seen exceptionally strong demand in the opening weeks of the year. South east London has been incredibly busy with more than double the number of buyers registering interest compared to the same period last year. We expect strong demand to continue well into the first five months of the year. A number of factors are increasing the draw of south London to many buyers. These include the government Help to Buy schemes, the changes to Stamp Duty charges and people wishing to achieve more value for their money. Catford, Lewisham and Deptford are great examples of these ‘up and coming’ areas offering better value, with developers and businesses alike continuing to plough money into these high streets, just as we have seen previously with Peckham Rye and Brockley.”