First Time Buyers Have Cause For New Year Cheer

National Association of Estate Agents report improvement in market share

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Members of the National Association of Estate Agents (NAEA) reported that first time buyers once again improved their market share in December allowing further optimism to stoke this sector that is in need of a vital boost.

Nevertheless, agents still reported a chilly December housing market with the number of buyers on books and sales agreed taking a tumble during the festive season. Yet, the number of houses available on the market remained fairly static.

December is traditionally the slowest month of the year in estate agency and so the drops come as no surprise. However, consumers gave the market a particularly frosty reception this Christmas as apprehension over the effect of the ‘credit crunch’ and home information packs (HIPs) remained.

First time buyers continued to increase their share of the market with a substantial hike from 10.1% in November to 13.0% in December. This is the highest figure recorded for first timers since November 2006 when a 13.4% share was reported by NAEA agents.

The higher than average number of one and two bedroom properties coming onto the market to beat the 14th December HIPs roll out deadline certainly proved fruitful for first time buyers in the run up to Christmas.

With interest rates having decreased in December and prices reported to be falling in some key areas, first timers are now in a prime position to take advantage. However, the issue of affordability will continue to be a pivotal concern for this sector of the market throughout 2008.

The number of properties on agents’ books remained fairly steady, with only a slight drop as NAEA members across the country reported an average of 76 properties for sale in December compared with 77 in November 2007.

When measured against the 51 properties recorded in December 2006, the higher stock levels for Christmas 2007 may be attributed to the influx of one and two bedroom homes being rushed onto the market before the 14th December final phase implementation of HIPs.

The number of house buyers on estate agents’ books decreased from an average of 290 registered per agent in November to just 248 in December – the lowest figure recorded by the NAEA housing market survey to date. Whilst this decline may be partially attributed to the festive season, other factors such as uncertainty surrounding the current economic climate, including interest rates and the effect of the ‘credit crunch’, are helping to fuel buyer caution. For those choosing to enter the market now, there is plenty of opportunity.

The difference between asking price and selling price remained fairly stable at 4.4% in December compared to 4.2% in November 2007. However, this figure is up from the same time last year when 3.1% was noted in December 2006. This indicates the continuing need for agents and homeowners to set realistic prices for properties in today’s market to allow the best chance of achieving a quick sale.

NAEA President, Stewart Lilly, commented, “The past year has certainly been a rocky road for many, as HIPs confusion, escalating interest rates and low consumer confidence all fuelled apprehension in the property market.

“We were finally given respite over interest rates in December when the Bank of England announced a quarter percentage point drop. We had hoped this would be swiftly followed by another decrease in the beginning of 2008 but unfortunately have not seen one yet. The recent drop may have buoyed confidence slightly, but more needs to be done before it can be restored to healthy levels.

“A particularly encouraging sign for December was the increase in first time buyer share of the market. They have been able to take advantage of lower prices in some areas and the influx of one and two bedroom properties specifically prior to the HIPs roll out.

“We hope this positive trend will continue into 2008. Another interest rate drop would be a very positive move for the struggling first time buyer group – and indeed for consumer confidence as a whole. While we expect the coming 12 months to be fairly uneventful in terms of prices, we hope that further rate cuts might restore a sense of optimism in the market.”

January 25, 2008