The property market in September slowed after a strong August, according to the National Association of Estate Agents (NAEA). Buyers and sellers on estate agents' books were down from levels reported last month and marginally less than the same period last year, despite this sales were encouragingly up from September 2005. The average asking price in September was £208,617, down from £216,014 in August, a change of -3.42%.
The widely reported plan to increase interest rates further in the coming months could be deterring people from attempting to move up the property ladder. The market seems to have absorbed the August quarter per cent rise, but a further rise could have a negative impact on the market as buyers and sellers are demonstrating caution.
Sales were down in September by 6.6% from the previous month, with NAEA members reporting an average of 14 sales compared to an average of 15 the previous month. It is clear that the market is in good shape and has recovered from the downturn seen in 2005 with sales up by 7.7% from the same period last year when agents reported an average of just 13 sales.
The number of people wanting to buy property decreased in September by 13% from a high in August of 398 buyers per agent to 346 in September. This is 7% down on the same time last year. The prospect of a further interest rate rise could further deter buyers from the market.
The number of people looking to sell property also fell in September at a similar pace as potential buyers, with a 12% drop reported. The consistent ratio between buyers and sellers is a positive indication of a steady market. However demand clearly continues to outstrip supply with just 61 properties for sale per agent.
First time buyers accounted for 11.1% of the market in September, consistent with the 11% reported in September 2005. A further increase in interest rates will inevitably deter the foundation level of the market, taking property ownership further out of grasp.
The time taken to sell decreased slightly in September to an average of 16.5 weeks from instruction to exchange of contracts, down from 16.9 reported in August. Also on the decrease was the difference between asking price and selling price, from 3.3% to 3.1% from August to September. This is an encouraging sign that people are being more realistic in their asking prices, perhaps contributing to the decrease in time to sell.
The rental market continued to perform well in September, with time taken to let decreasing from 12.6 days on average to 11.6. The number of vacant properties also decreased from 6 in August to 4 in September as many students returned to their studies.
NAEA President, Charles Smailes, comments: "September is typically a busy month in estate agency and although this September saw fewer house sales than last year, it should be remembered that September 2005 was exceptionally busy following a reduction in interest rates. There are currently fewer buyers and sellers registered with estate agents than the same time last year, I suspect a wait and see situation regarding the speculated rise in interest rates. The survey on the whole is encouraging and stability is positive to see. I am pleased to see asking prices come back to a more realistic level and hope to see this continue. The first time buyer share of the market continues to be a concern and I would once again like to take the opportunity to call upon the Government to do more to assist this vulnerable sector of the market. Affordable housing schemes need to increase and stamp duty needs to be brought in line with the pace of house price inflation. I would hope to see this sector claim around 25% of the market."
