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August 2017

Marcus Simpson

31/08/2017

Sales volumes continue to fall, exacerbated by seasonal effects

The latest available Land Registry figures – for June – show that average house prices in England & Wales are at their highest level ever, at £235,096, while sales volumes decline.

There was a small average price rise of 0.9% month-on-month but a continually declining rate of increase year-on-year: at 5.1%, the same as last month, this is the lowest rate of increase since November 2013 (4.1%).

Regarding sales volumes in England & Wales, these took a large hit of -23% month-on-month, but many view this as a seasonal/holiday effect.

There was a 2.0% year-on-year rise, however, most notable because year-on-year volumes had fallen for the previous 12 months in a row. The rise must be taken cautiously: volumes for April 2016 were very low in the immediate aftermath of the rollout of the Government's second home stamp duty surcharge.

London – prices fall

Average property prices in London marginally fell month-on-month in June (the latest month for which Land Registry figures are available) to £481,556 but still remain at the second highest figure ever (the peak was in June - £484,758).

Year-on-year, average London price rises continue to decrease in magnitude – the rate of increase, at 2.9%, is the lowest since April 2012 (1.7%).

Sales volumes in London fell by a large amount – 28.3% (5,823) – the largest since April 2016, when the second home stamp duty surcharge was rolled out. Year-on-year, volumes actually rose for the first time in 13 months – by 1.3% - however once again, the immediate effect of last year's surcharge must once again be borne in mind.

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Monthly Sales Volume Variances for England and Wales

Month	cf. Sales Volume 2015	Sales Volume 2016	Annual Variance	Monthly Variance
February 2016	62,329	67,867	+8.9%	+6.1%
March 2016	70,924	117,255	+65.3%	+42.1%
April 2016	67,784	55,412	-18.3%	-111.6%
May 2016	78,582	63,304	-19.4%	+12.5%
June 2016	89,201	78,071	-12.5%	+18.9%
July 2016	97,643	81,886	-16.1%	+4.7%
August 2016	88,590	83,586	-5.6%	+2.0%
September 2016	86,348	79,829	-7.5%	-4.7%
October 2016	94,494	74,292	-21.4%	-7.5%
November 2016	83,325	77,340	-7.2%	+3.9%
December 2016	84,496	82,452	-2.4%	+6.2%
January 2017	63,751 (2016)	59,156 (2017)	-7.2%	-39.4%
February 2017	67,867 (2016)	60,541 (2017)	-10.8%	+2.3%
March 2017	117,255 (2016)	69,510 (2017)	-40.7%	+12.9%
April 2017	55,412 (2016)	56,511 (2017)	+2.0%	-23.0%
2017 Year to Date Sales Volume (Jan - April 2017)	304,285 (2016)	245,718	-19.2% (-58,567)

The worry for housing market professionals is that other fundamentals governing house-buying behaviour are weak. Even though mortgage rates are at an all-time low, household finances are under mounting pressure as the cost of living continues to rise because of facts including a weakening pound and stagnating wage growth.

NAEA: 'summer slump' in the property market

The National Association of Estate Agents' most recent housing market report, for July, noted that housing supply has dipped to its lowest level recorded for a July since 2002. The report noted that the supply of housing dropped on average by 37 per branch down to 35 during the month.

NAEA: first time buyer sales down

The NAEA's report noted that worryingly, sales to first time buyers fell as a proportion in July to 23% from June's 30%. This is the lowest proportion since last September. The proportion has not been lower than 23% since November 2015.

Overall, sales agreed per member branch fell to 8 for July from 11 in June.

Month	Sale Price 2015	Sale Price 2016	Annual Variance	Monthly Variance
May	£204,179	£221,552	+8.5%	+1.2%
June	£205,747	£223,630	+8.7%	+0.9%
July	£209,200	£225,885	+8.0%	+1.0%
August	£211,391	£226,144	+7.0%	+0.1%
September	£211,916	£225,793	+6.5%	-0.2%
October	£212,268	£225,159	+6.1%	-0.3%
November	£213,973	£226,055	+5.6%	+0.4%
December	£215,023	£226,951	+5.5%	+0.4%
January	£215,638 (Sale Price 2016)	£226,841 (Sale Price 2017)	+5.2%	0.0%
February	£216,083 (Sale Price 2016)	£227,880 (Sale Price 2017)	+5.5%	+0.5%
March	£217,901 (Sale Price 2016)	£227,209 (Sale Price 2017)	+4.3%	-0.3%
April	£218,968 (Sale Price 2016)	£230,420 (Sale Price 2017)	+5.2%	+1.4%
May	£221,552 (Sale Price 2016)	£232,889 (Sale Price 2017)	+5.1%	+1.1%
June	£223,630 (Sale Price 2016)	£235,096 (Sale Price 2017)	+5.1%	+0.9%

Holiday season hits demand

The NAEA noted that the number of people registered in member branches as looking to buy a property fell to 347 from 384 in June (-10%). This is the lowest demand level since November 2016 but higher than for July last year, when there were 298.

80% of properties sell for less than asking price

The NAEA noted that some 80% of properties were sold for less than asking price, a rise from 79% last month. However 3% of properties sold for more than asking price, a rise from June's 2%.

Mark Heyward, Chief Executive of the NAEA, said: "It is natural for the market to dip in the summer and then recover. We usually see a subdued July and August, and then a boom in September with an influx of new properties coming onto the market. We’d also expect to see the number of house hunter increase, as buyers strive to complete sales before the winter kicks in."

Andrew Boast, Co-founder of SAM Conveyancing, said: "What is particularly worrying about the recent figures is that fundamentals continue to look very weak, even given the effects of the holiday season in slowing down property sales. In particular, the Government must take action to ensure that first time buyers do not become a vanishing breed. Action could also be taken on headline pricing levels – clearly all is not well if four out of five properties are being sold for less than asking price."