What’s happening to the value of your home?

John Halman of Gascoigne Halman

At long last there is some improvement in the level of confidence and activity in the housing market. Gascoigne Halman is represented by seventeen offices across the region and, as such, our activity levels provide a useful barometer for what’s happening with the property market in your local patch.

I am sure you will be pleased to read that last month we saw not only increased enquiries but also the highest number of agreed sales since 2008.

Rightmove, the country’s most popular property portal has recently announced that average asking prices in England and Wales have passed £250,000 for the first time.  They have also stated that this is a 2.7% increase on a year ago and a 1.2% increase from the month before.  This was the sixth consecutive monthly rise.

Rightmove statistics also indicate that whilst prices in the South East were racing away climbing 14.8%, those in the North, which not only reflect our area but the wider region, rose by 9.2%. Rightmove said that this represented the possibility of a broader housing market recovery and this has certainly been reflected by the activity levels and number of sales generated across our offices in South Manchester, North Cheshire and the High Peak.

The good news for home buyers is that prices have adjusted significantly and, according to the Nationwide Building Society, have fallen 20% in real terms since the autumn of 2007. According to Oxford Economics and the Institute of Fiscal Studies’ Green Budget, prices are now below their long term trend.  They also point out that this is further backed up by the House Price Earnings Ratio which has fallen a quarter since the crisis and is now in line with its average since the period of low interest began in the 1990’s.

One of the recent factors that has had a positive impact on the market has been the increased competition among many lenders enabling more competitive mortgage deals for first time buyers and those requiring a high loan to value. These groups have been penalised over the last few years and this in itself has been a factor in slowing down the property market.

So we are seeing welcome and noticeable improvements in the property market but there are words of caution.  The Intermediary Mortgage Lenders Association says that post-recession home ownership levels have fallen dramatically and transactions are still operating at only 60% of those at the peak.  As a consequence it is likely that the private rented sector will continue to satisfy a significant part of our housing needs over the coming years.

The future sees the introduction of the Government’s Help to Buy Scheme for second hand homes next January and this is a 95% tax payer backed mortgage scheme.  Whilst this has attracted some criticism as it could provide an artificial stimulus to the market and cause prices to rise, it appears that some buyers are pre-empting any potential scheme-induced price rises by doing a deal now.

After several years of having to deal with a significant slump in confidence in the housing market, and with a lack of available funding, this commentator is certainly relieved that on this occasion there appears to be sound reasons for optimism for the market in our area.

John Halman

John Halman is Managing Director of Gascoigne Halman, an estate agent with seventeen offices in South Manchester and is the North West Regional Residential Spokesman for the Royal Institution of Chartered Surveyors.

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