House Price Index

This month sees the number of sales agreed at this time of year up 7% on the same month a year ago, and it is the highest seen in May for ten years with the exception of a slightly better figure in 2014. However, there is a fall in the price of property coming to market of 0.4% (-£1,172), the first price fall at this time of year since 2009, and the first monthly fall this year. As a consequence, the annual rate of price increase has slowed to 1.8%, the lowest since April 2013.

Miles Shipside, Rightmove director and housing market analyst comments: “It now seems certain that we will have continuing political uncertainty, which the housing market traditionally dislikes, and with the first fall in June prices for eight years there is no doubt that the lack of stability is a factor. The price of property coming to the market had increased in June in every year since 2009, so buyer confidence has clearly been affected by inflation outstripping their pay packets and current political events. However, demand is still high and markets in some parts of the country seem to be getting used to coping with instability and are still strong. The high levels of sales being agreed show that the underlying fundamentals are largely unchanged with high first-time buyer demand which drives movement higher up the ladder, all aided by the cheap cost of borrowing.”

Markets performing at different speeds and levels depending upon geography and sector 
The national average figures conceal large differences between different local markets and property sectors, which appear to be reacting in widely variant reactions to the country’s overall air of uncertainty.

The typical first-time buyer sector with two bedrooms and fewer is now the fastest growing sector, and has seen newly-listed prices surge by 3.5% month-on-month and 5.5% year-on-year.

Shipside observes: “Those at the traditional starter level are brushing aside uncertainty, with demand being fuelled by the ongoing desire for home-ownership, government assistance, and mortgage repayments often being cheaper than rent for a similar property. Increasing prices in this sector have not been enough to shake off the wish to own your first home, whilst in contrast sectors higher up the ladder with a larger proportion of discretionary movers have seen the greatest recent price wobbles.”

The number of sales agreed compared to a year ago is up markedly more in the northern regions than in the South. All regions are up on the post-stamp-duty lull period of May 2016, with a national uplift of 7%, but the northern average of 11% far outstrips the southern average of 3%. This follows through to property prices with the London (-2.4%) and South East (-0.9%) regions recording the largest monthly falls in the price of property coming to market. These London and South East figures account for a significant proportion of the total market and have dragged down the national figure which would be in positive territory without these two slower-performing regions.

Shipside adds: “The swingometer may be leaning towards a buyers’ market in some parts of the country, having been given another tilt in that direction by political uncertainty, but demand for housing and lack of buyer choice are maintaining a sellers’ market in others. London and its commuter belt are proving to be a drag on the national figures, but are currently counter-balanced by continuing momentum in other parts of the country. Markets traditionally slow in the second half of the year, and with a slowing in the pace of asking price rises and the forthcoming months of political and economic confusion, the usual slower market in the second half of the year seems to be one of the few certainties in 2017. Having said that, the historic under-supply of the right property at the right price and ongoing strong housing demand are evidenced by buyer enquiries to agents picking up to a degree after the surprise election result. They were 3% higher on the Monday after the election than the Monday before, showing that people are getting on with addressing their housing needs.”

Agent’s View
Kevin Shaw, national sales director at estate agency Leaders, comments: “May was a bumper month for Leaders in terms of sales, despite the general election. Since the 8th June, even with the continuing political uncertainty, it’s very much business as usual for the property market. Whilst some people may be adopting a wait and see approach, many more are wanting – or needing – to press on with their property transactions. We have, however, started to see a slight hardening of attitude from buyers so sellers need to have realistic expectations and be prepared to be flexible in negotiations.”

Best questions to ask an estate agent for buy-to-let investors

Communication with an estate agent before buying a property is always key, and this is particularly important for buy-to-let investors. There are key questions that should be asked, and they can differ from the standard question that a house hunter would think of. I share my top tips to ensure that investors have all the information they need before making an offer.

Is the property freehold or leasehold? 
I would always recommend buy-to-let investors to check whether the property is freehold or leasehold initially to factor in any service charges and ground rents which could impact yield.

Find out if you are buying a leasehold apartment and what the annual service charge is, because you the landlord are liable for this annual cost. Also, what is the size of the managing agents Sinking Fund in the building regarding cover for future works planned?

For first time landlords, my advice is to be prepared. If looking to buy a leasehold property, ask what is the service charge, what does it cover, and how will large maintenance and repair works be paid? How long is the lease?

Has the property been rented before? What is the demand like? 
I would want to see a copy of the current tenancy and deposit protection, together with a schedule of rent history. Having a good feel for the kind of tenant in the area is important for future lets.

An agent can advise you on the quantities of people looking to rent this style of property. Consider the competition. Find out from local agents whether there is there good rental demand for your proposed purchase plus if this might be effected in the near future.

Investigate the rental demand for that area and ascertain the rental level from agents in the area to do their homework to see how quickly similar properties are let.

Is the area safe and desirable? 
Looking at local amenities such as train stations, schools, and local amenities such as sports centres all helps. The shops can suggest something about the local area as well. Lots of boutique coffee houses and trendy bars suggests professionals with a higher disposable income – these are often the dearer properties though which could impact yield.

Location is key in lettings, as much as it is in selling. Choose a property that suites the market, so if you’re looking in a family area, buy a family house.
There is more to consider about the area, too. Is it a good area? Are there signs of regeneration, and is it on the up if it hasn’t already been regenerated. Look at the demographics of area to decide.

What is most important for you? 
I recommend a more bespoke approach, which requires some thought from the landlord beforehand.
I ask buy-to-let buyers what is most important to them - is it yield, potential void periods, hassle factor, capital growth or ease to let now and in the future?

For example, a buy-to-let purchaser of a five-bedroom property in a University City could obtain a yield between 12% and 15%, which on the face of things may appear very attractive, but the stress of finding five sharers, dealing with the fact that they may fall out with each other and the additional wear and tear may put off certain purchasers.

If maximising yield is not the main driving force, the ease of letting the unit and minimising maintenance may appeal, for instance we have clients who are just looking for a greater yield than can be currently obtained from more traditional investments where a return above 5% would suffice.

It is important to decide which type of let is preferred before starting a property search.
Is your investment long term? Natural growth is often underrated. For some people, if costs are covered, the yield the property can generate is not as important. If you are looking to cover costs in the long term, there can be no greater asset than having the right tenant in your investment for as long as possible. Most new investors, however, turn to short term investments.”

What is the energy efficiency like? 
Be mindful of energy performance ratings. The Law is changing from April 2018 and properties which have a poor energy efficiency rating will be required to upgrade. Tenants expectations rise year after year and a low cost energy-efficient property is more important than ever, and will ensure you don’t have any surprises next year.

Is the continued slowdown in house price growth 'a blip' or due to uncertainty over this month's General Election, asks the Nationwide Building Society.

What’s the latest?

House prices fell for the third month in a row during May, marking the worst quarter for the property market since 2009.

 

Homes in the UK saw 0.2% sliced off their value during the month, leaving the average property costing £208,711, according to Nationwide Building Society.

 

The annual rate at which prices are growing also eased to 2.1%, the weakest level for nearly four years, as the housing market continued to lose momentum.

 

The latest price slide comes after property values fell by 0.4% in April and 0.3% in March.

 

But Nationwide stressed it continued to expect house prices to end 2017 around 2% higher than they started the year.

Why is this happening?

The slowdown in the property market may have been caused by uncertainty due to this month’s General Election.

 

But Nationwide pointed out that previous elections had not had much impact on buying and selling decisions.

 

Instead, it suggested the trend may be indicative of a wider slowdown in the household sector as people feel the pinch from higher inflation.

 

It could also reflect growing affordability pressures after house prices have increased significantly faster than average earnings in recent quarters.

 

Robert Gardner, Nationwide’s chief economist, said: “It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.”

 

There has been a shortage of stock for some time, as reported recently by Zoopla

Who does it affect?

While the fall in house prices might sound like good news for first-time buyers, it is likely to exacerbate the current stalemate.

 

The property market has been dogged by a shortage of stock for some time, with the number of homes on estate agents’ books remaining close to record lows.

 

This lack of choice is prompting existing homeowners to sit on their hands and delay trading up the housing ladder, which in turn leads to fewer properties being put up for sale.

 

The shortage of homes on the market has created a significant mismatch between supply and demand, which has then forced house prices higher.

Sounds interesting. What’s the background?

Today’s data is the latest in a raft of figures pointing to a slowdown in the housing market.

 

The Council of Mortgage Lenders said mortgage advances dropped by 11% in April, while the number of homes changing hands fell by 22% in the same month, according to HM Revenue & Customs.

 

But research by Zoopla found that consumers remained upbeat about the property market’s prospects with nine out of 10 people expecting house prices to rise in the coming six months.

 

Nationwide said given the current uncertainty about the UK’s future, housing market trends would depend crucially on developments in the wider economy.

 

But it added that while it expected activity and house price growth to slow in the coming months, in line with an easing in household spending, the subdued level of house building and the shortage of homes for sale were likely to provide support for property prices.

‘Fake agents’ are crippling independents’ reputations and livelihoods

Think ‘fake agents’ are no threat to your business? Think again. The rise of online agents - dubbed by some as ‘fake agents’ - are costing every agent without exception.

For as long as agency has existed, people have been setting up businesses which seek to cut out or undermine traditional estate agents.

The majority have failed, but not without doing some damage to the industry on their way down. They all make the attack on incumbent businesses the main thrust of their marketing - ‘Nobody really needs an estate agent’ is always the underlying pitch.

Their existence is not a problem but their marketing is.

These quirky, flash-in-the-pan, and sometimes very well-funded ventures (easier.co.uk in the late 90s spent £13 million and easyProperty is rumoured to have spent £18 million) always attract great publicity on the back of the notorious public loving-to-hate estate agency message.

This fact only serves to underline how even those who consider themselves successful, wealthy and experienced business people can completely fail to understand what good agents really do, and get their fingers burnt or lose their shirts in the process.

So, I agree with the commentators who ask why people are wasting time worrying about the increasing number of 'listing agents' - companies calling themselves estate agents but who in reality offer nothing more than an upfront paid advertising service.

Their existence alone is no more a threat to the industry than private sellers used to be in the pre-internet days. There will always be a small portion of people who will choose not to use full service agency, and either try to sell privately, or pay for an advertising service - almost always something they regret afterwards.

But, the marketing by these so-called ‘fake agents’ and the consequences of it are an altogether different matter.

It is the most damaging phenomenon the industry has experienced in the 20 years I have been involved, and directly impacts every single remaining company in the business, especially independent agents.

Even if you believe that your business is so strong in its reputation for outstanding service that you will continue to win as many instructions, you will have local direct competitors who have been affected, who will have lowered their fees as a result, which in turn means further downward pressure on your fees.

Every single independent agent in the country, without exception, is experiencing harder conditions as a result of the marketing campaigns of online competitors.

There is no single independent agent who has the firepower, profile or resources to combat these high-profile and expensive advertising campaigns.

The existing corporate agents, rather than fighting the threat, are jumping on the bandwagon and launching their own (or purchasing) hybrid businesses. Savills, once the paragon of first class estate agency service, has twice invested in YOPA. I see this as almost a tacit admission of defeat (and I say this as someone who has both friends and family who work at Savills).

This is why a group of leading independent agents have joined forces to create an organisation that, with the support of all independents, will have the firepower, resources and teeth to fight back against this destructive marketing which is damaging an already-poor industry reputation further.

CIELA exists solely to promote the collective interests of independent estate and letting agents by forming a collective voice, correcting public perception and lobbying government on behalf of the group of businesses who make up more than 80% of the industry, and more than 95% of the brands.

Without it, and in the absence of any other organisation representing exclusively independent agents, the industry is powerless to defend itself against the effective marketing by the so-called 'fake agents'.

I believe the powerful and relentless marketing continuously drip feeding from these firms is destroying the industry and agents must unite, or face the inevitable further damage to their reputation.

*Charlie Wright is CEO of The Charter for Independent Estate and Letting Agents

**This article was amended on May 18 to remove several references to Purplebricks.

Moving to be near a good school?

Have you been using Rightmove’s School Checker to look for a new home near a good school? We all know it’s important to do research before choosing the ‘right’ school, and there’s much more to it than Ofsted ratings…

What should be your main contributing factors when deciding whether a primary school is right for your child?

• Ofsted reports
• Department for Education Performance Tables
• School’s website
• Their local offer for Special Educational Needs
• Additional activities i.e. breakfast club and after school clubs

What should you be looking for when you visit the school?

• Visit a range of schools so you can compare them
• Look at the classrooms and corridors – what are the displays like?
• What are the interactions like within the classroom? Between children or between the children and their teachers?

How can you improve your chances of getting into a school?

• Know the admissions criteria from school to school
• Know the order in which the criteria are set by the Local Admissions Authority

Find out more information Rightmove’s School Checker here.

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