The housing market

Citation

(1998), "The housing market", Property Management, Vol. 16 No. 4. https://doi.org/10.1108/pm.1998.11316dab.015

The housing market

The housing market

The slowdown in the housing market will bring much-welcomed stability to house prices after a period of volatility which has seen short-term "near boom" conditions in parts of the country, particularly London and the South-East.

In its latest quarterly housing market survey, ISVA, the professional Society for Valuers and Auctioneers, reports that the slowdown was more noticeable in the London and the South-East areas which reflected the traditional differences in regional cycles.

Michael Day, ISVA residential committee chairman, said: "The property market has entered a period of greater stability. Successive interest rate rises have had the effect of dampening rapid price increases although there is still a strong underlying demand.

"We are seeing the shifting of the balance between supply and demand which means those thinking of moving can put their property on the market in the confidence that there are still buyers looking, but also sufficient properties for them to purchase.

"If interest rates were to rise further, then the shift in supply and demand is likely to see fewer buyers chasing an increasing housing stock."

The ISVA survey reveals that while the first quarter of 1998 showed a sharp increase in activity, there is a widely-held view that in the second quarter the market showed signs of slowing down. New instructions and applicants were lower and price rises were generally modest and in line with the level being advocated as sustainable in the long term by government.

For many respondents, the improvement in the housing market observed in the first quarter has continued despite limited available stock. This has resulted in quick sales for quality property at the right price and a buoyant market with prices rising in some areas. More generally, however, many respondents report a falling level of activity, with rising interest rates being the main explanation.

Christopher Legrand, ISVA professional services officer, said that the low level of new instructions had been an issue for 18 months. The survey identifies the reasons as a reluctance of potential vendors to come forward and a lack of supply which has pushed up prices.

The first quarter of 1998 saw a considerable improvement, with 69.6 per cent of respondents reporting an increase in instructions: that was only partially sustained in the second quarter, with 39 per cent reporting an increase but 42.4 per cent reporting a fall. Of the latter, over half were in London and the South-East.

In the second quarter, 42.1 per cent and 44.8 per cent of respondents reported falls in new applicants and viewings, respectively, compared to the majority who reported an increase in new applicants and viewings in the first quarter.

In the second quarter, 44.1 per cent of respondents saw a rise in sales (27 per cent a fall) and 33.9 per cent a rise in contracts exchanged (23.7 per cent a fall) compared to 68 per cent who reported higher sales, only 29 per cent reported an increase in contracts exchanged and 39 per cent reported a fall in the first quarter.

While almost half the respondents report no change in the rate of aborted sales in the second quarter, explanations followed the normal patterns of adverse surveys, broken chains and an increasing rate of purchasers changing their minds. The incidence of adverse surveys rose, several respondents drawing attention to lenders increasingly requiring additional specialist surveys.

In the second quarter, 57.6 per cent of respondents reported an increase in prices, averaging 2.17 per cent, but 39 per cent reported no change in prices compared to 55.1 per cent who reported an increase in prices, which averaged 1.57 per cent in the first quarter.

The average time between instruction to sell and sale completion was reported to be 6.18 weeks, a slight quickening on the last quarter, while the average time between exchange of contracts and sale also improved slightly at 8.07 weeks.