The National Association of Estate Agents (NAEA) released figures from its latest housing market survey today, revealing a slowdown in the housing market. The figures in July clearly indicate that consumers are now starting to feel the pinch following the recent interest rate rises, which are visibly having an impact on household spending.
The number of registered buyers, the number of properties on estate agents' books and sales per agent all took a tumble during July, in some cases falling as low as figures usually seen over the quiet Christmas holiday period.
The number of people looking to buy a home decreased by 2.5% in July with agents reporting an average of 314 buyers registered in comparison to the 322 recorded in June. This is a sharp contrast to July last year when there was an average of 387 house hunters reported on agents' books, meaning a decrease of 18.9% between figures seen in July 2006 and those of July 2007.
Worryingly, this is the lowest number of buyers on agents' books since December 2005 when an average of 302 was reported. This continuing drop can be partly attributed to the movement in interest rates coupled with the anticipated holiday period slowdown. The number of properties for sale also decreased by a significant 33.8% in July as NAEA members from across the country reported a slowdown. Agents revealed an average of 45 properties for sale during the month compared to 68 properties in June.
With housing stock having dropped considerably recently, the NAEA is concerned that Home Information Packs (HIPs) will have a further adverse effect on housing supply over the coming months. Following the launch of HIPs on 1st August - when it became mandatory for all four bedroom plus properties being marketed for sale to have a Pack - agents reported a decline in the number of four bedroom homes on the market. With the second phase of the HIPs implementation due to come in on 10th September, which will require three bedroom properties to also have a HIP, it is likely that there will be further shortages.
NAEA president, Stewart Lilly, comments: "The dramatically reduced figures reported by agents are clearly quite concerning. It is apparent that the summer season coupled with the interest rate rises has clearly affected buyers and sellers during the month, leading to the significant drops in buyers, sales and stock. The turbulent weather experienced in some parts of the country has also impacted on the market as buyers and sellers in the affected areas are forced to re-assess property situations during the aftermath of the flooding. The next couple of months are likely to see the housing market continue to be slower than usual for the time of year as buyers and sellers gain back some confidence and much needed equity, enabling them to get moving once again. We hope that as we move into the traditionally busier months of September and October that rates will remain stable and this confidence will return in full force."
