The housing market bubble is still showing no signs of bursting. Figures flowing in for July seem to point more towards the market stabilising, with some reporting no change in average asking prices between June and July.
Property portal Rightmove believes the standstill is encouraging buyers back into the market. If this continues, it suggests brokers will be in for a busy autumn.
In its house price index report for August, Rightmove says: “An element of this trend is normal for the summer, when one expects a difference between the numbers coming off and on the market as sales agreed earlier in the year reach final stages.
“If asking prices stay stable and demand continues to encourage buyers back, we could see the turning point in the market as conditions ripen for a potential autumn surge.”
Regional variations are where the real story lies. The North and North-west have been buoyant markets for most of the year, with 4.5 and 2.2 per cent growth respectively in the last month. The South-west saw growth of less than 1 per cent while the South-east did not move.
Four regions recorded negative monthly changes in average asking prices – Wales (-0.9 per cent), the West Midlands (-1.5 per cent), Greater London (-1.4 per cent) and East Anglia (-3.6 per cent).
In the South-west, WDS managing director Julian Stephens says prices are beginning to stagnate, which he believes is the first sign of them sliding back.
Stephens has seen prices in Bristol rocketing over the past couple of years driven by low interest rates coupled with massive expansion of the mortgage market. “Low interest rates and crazy multiples have allowed inflated prices to be sustained but, while in the mean time it does not seem to be on the cards, a slight increase in interest rates could tumble the market,” he says.
From offices in Midlothian, Alan Steel Asset Management consultant Alan Adam has been watching the market with keen interest. Prices in the South have stabilised but he believes that the North and Scotland are still on the top of the wave. “The stagnation in the South has not reached us yet. I think we are likely to see it in about six months time,” he says.
Research by the Bank of Scotland indicates that prices in Scotland rose by 6.7 per cent in the second quarter of 2003 compared with the first quarter against an increase of 3.3 per cent for the UK as a whole. A spokesman says: “There has been a mixed picture across the Scottish housing market. Prices have risen most strongly over the past year in Dumfries & Galloway (48 per cent), Fife (35 per cent) and Lothian (27 per cent).
“Demand has been much weaker in the Borders, with average selling prices in the second quarter of 2003 a more modest 5 per cent higher than in the same period last year.”
The Royal Institute of Chartered Surveyors looks at price changes on completed sales and the stock of unsold properties on surveyors' books rather than the average asking price. It believes new buyer activity is showing further rises.
It says these figures show that: “House prices continue to rise at a firm pace in all of the northern regions of England as well as Wales. Moreover, the pace of price increase accelerated in Yorkshire and Humberside for the first time since last October.”
It figures also shows that stocks of homes for sale have fallen for the first time since November, resulting in a contraction of supply. This is in stark conflict with a depression in the number of completed sales, which have fallen to the lowest level in two years.
Most regional IFAs still believe we are at or near the end of the housing peak.
Stephens says: “There will not suddenly be a big crash. The housing market will not tumble. But I think most IFAs would agree that we are definitely heading for a correction sometime in the future. Of course, anything can happen.”