Results of a Rightmove survey into sales agreed and estate agency stock levels are considered a warning of a drought in property supply. Despite some rather gloomy views from commentators in the property sector, I believe there are plenty of reasons to be cheerful.
Yes, sales agreed are down 5.5% when compared to the last quarter of 2016, but the housing market will always fluctuate. Conditions might be tough for agencies right now, but we shouldn’t forget that for every dip in the market, there has been a peak too. And because housing really does top the list of big-ticket items it will naturally be sensitive to market forces.
Let’s not get despondent. House prices, other than in London, are continuing to rise because demand remains high, and unless average household sizes suddenly start to increase drastically, it’s likely to stay that way. People are still interested in property – Rightmove’s own portal has 9% more visitors than it had last year – but there has been a squeeze on incomes and buyers are price sensitive. With little spare cash, high deposits and more stringent mortgage affordability tests, it shouldn’t be a surprise that the sales market has slowed.
We have entered a cautious phase for the purchaser, who is looking for good value and is prepared to hold out for the right property. As a vendor, why would you – if you had the option – choose to market your property at such a time?
It’s challenging, but at times like these, the best agents can really shine.
Accept the changing market
Despite the problems of affordability – which show no signs of going away – the Government’s love of home ownership shows no sign of wavering. Its tinkering does influence the market – recent changes to stamp duty have resulted in more interest from first-time buyers – but the housing market is in a process of evolution.
More and more people are renting longer-term, and as that position becomes normalised, they’re not in a desperate panic to get a foot on the property ladder at any cost. Instead, they are saving for longer. They’re avoiding being saddled with a crippling mortgage and appreciating the flexibility and convenience of a tenancy as opposed to owning, and having to maintain, the bricks and mortar.
Instead of focusing on a sluggish sales market, agencies need to capitalise on the opportunities in the rental sector. As changes to buy-to-let market start to take hold, portfolios will become larger and it looks like rents are likely to rise as demand for good quality rental properties outstrips supply.
The property market isn’t going to suddenly dry up. It will remain strong enough to support a mix of sales and lettings. Houses will still be bought and sold, tenancies will still be agreed, ended, altered and extended because we all need somewhere to live. We grow older and we downsize. A baby comes along, and we want an extra bedroom. We change jobs and relocate, we marry and put down roots. We divorce and rent two apartments. While we need a roof over our heads, there is no reason for gloom.
The time to worry is not when there is one quarter of slow sales, but rather when you’re not expecting that. The time to worry is when you’re not prepared for the changes that are – and always will be – happening.