Published: 27/01/2013 By Jane RobathanEstate agents in London never really have much to complain about, unless it's a lack of housing stock. London is so vastly short of homes that its prices will always top those in the rest of the country. In short, London property just can't lose.
While the UK is teetering on the brink of a triple-dip recession, these things are happening: mortgage lending for first-time-buyers was up 11% by the end of 2012, employment figures are higher than they've been since 1971 and Rightmove is reporting record hits this month. It currently ranks as Britain's 6th busiest website.
On a micro-scale, the Roy Brooks office has seen multiple offers on several properties and a surge of new buyers registering this January. There have been over asking price wars between buyers and impossibly busy Saturdays.
Isn't that great? Well, yes and no.
Every year it's the same
Every January there is a surge in search for property for sale and to rent. A real busting-off-the-graph kind of surge. Pre-internet, office phones would ring red hot as soon as New Year hangovers cleared. Essentially, the property market always picks up in January and activity even increases, albeit on a smaller scale, during recessions.
Marketing homes has changed dramatically over the past 10 years. Since the UK's largest property portal began, (Rightmove started listing property in 2000), there have been huge shifts in how people search for their next home. Not so long ago, buyers would open Google and type 'buy a house in Camberwell.' Today, buyers and tenants likely head straight to a property portal or its corresponding app. Often, they’ve also registered an account with portals, enabling email alerts about new properties to be sent to them as soon as they’re uploaded.
Rightmove report seasonal traffic trends every year. This year Rightmove have seen a remarkable amount of traffic (up 27% YOY in the first two weeks of 2013), so why is this?
People are moving for different reasons
Traditionally forced by the three Ds (divorce, debt and death), home sales are also driven by the need to up/down-size. The recent double-dip recession slowed the market down, making people unable to move due to negative equity, the loss of employment or income, tighter mortgage lending and economic uncertainty.
Director and co-founder of Rightmove, Miles Shipside, explains, “Building chains from the bottom up helps create greater volumes and fluidity and is key to a broader market recovery. After five years of putting their lives and moves on hold with their spare space shrinking around them, it looks like some of the pent-up demand to move is breaking out. Perhaps more are becoming immune to the relentless flow of bad news stories, financial Armageddon seems to have been averted and people are choosing to get on with their lives.”
UK growth is not meeting parliament's forecasts and industry is still struggling. More high street chains are entering administration and small businesses are closing down. Salaries haven't increased, fuel bills have risen and family-based benefits (such as tax reliefs) have been withdrawn. People are spending less in shops and restaurants and the Pound is a bit shaky too. Thankfully, with employment now up, more people can get mortgages—particularly first-time buyers. There was a 3% increase in mortgage approvals from November 2011-November 2012, the highest figure since November 2007. The Treasury and Bank of England’s Funding for Lending Scheme, designed to boost the economy following credit crunch lending fear, appears to be working. Interest rates are still historically low and a Rightmove survey announced that three-quarters of UK landlords intended to increase their portfolio in 2013. Demand for buy-to-let properties is increasing from novice landlords too, attracted by high yields and low purchase prices.
Booms and busts
It shouldn't come as any real surprise that slow-gaining property prices result in stable market conditions. When the property market steams ahead too fast, it simultaneously spins too high. Before you know it, bang goes another property bubble. As a bust can only follow a boom, if we want a secure housing market, we need to steady house prices before they spiral out of control. Whatever you wish for, don't wish for another property boom.