What is the state of the UK housing market? Is the glass half full, and if so, is it a glass of Retsina?
Publication of the latest report from HM Land Registry on Tuesday brought the final data to provide a summary of the health of the housing market for the first chunk of this year, and with it some pretty important numbers.
The number of homes sold remains extremely low with just 2,194 selling across the UK every day (Source - HMRC). The long-term average is 3,474 while 5,333 were selling each day in February 2007.
A total of 5,115 new properties came on to the market every day in May, not too far short of the 5,244 that normally do, although 8,210 were put on every day in May 2006.
The number of months of unsold inventory (used as a guide to the ratio of homes for sale and the rate at which they are selling) over the last decade has averaged 12 months with a low of 7.6 months in December 2006. Today we have 15.4 months of stock.
At this rate and with the current volume of new supply coming on to the market, the chance of a home selling in the first month of marketing is just 6% and if left on the market for 12 months it is only 29%. It would normally be closer to 44%.
The gap between average asking prices (Rightmove.co.uk) and average sale prices (Land Registry) is at an all-time high of £78,571. Whilst the two ‘baskets’ are not exactly comparable, the trend suggests that sellers remain over-optimistic and those few that are selling are taking much less than they are asking. The long-term average is £52k.
Cash buyers (those not dependent upon mortgage finance) still remain a hugely significant proportion of the market with around 40% of the relatively few transactions taking place without the need of a loan. Over the long term, cash deals typically represent around 28% of transactions.
Selling a house remains almost as difficult as persuading a Greek he should pay more tax.
Asking prices offer little help as a guide to value and buyers requiring finance continue to struggle.
We are in for a long, hot, frustrating summer!
Links:
Henry’s graphs
http://web.me.com/henry.pryor/Housing_Expert/The_market.html
Rightmove
Comments
No, Henry, not a "long hot frustrating Summer" more like long frustrating decade.
Good analysis, no doubt. Too sanguine conclusion.
15 months' stock on rising trend.