Market Report – January 2010
Wednesday, February 03, 2010 by Ivor Dickinson
Ever since our return to work after the Christmas break, I have been besieged by requests from all corners as to what is going to happen to the market this year. My answer has been “we must wait until the end of January to get a good comparison of year on year statistics”. Considering two weeks of this January were virtually a non event because of the extreme weather conditions, the results are perhaps even more startling than they might first appear.
The big story last year was lack of property, both for Sales and for Lettings. The fact that we had less property available, month after month and demand did not waver for a second, it was inevitable that prices continued to rise all year and in some cases had recovered all the loses inflicted since the fall of Lehman Brothers in 2008. Now for the first time since we entered recession, we are seeing our first noticeable change in the market.
Douglas & Gordon did 25% more valuations than they did last January, but of more interest is the fact that we actually took on 70% more instructions than January 2009. Not only that, we actually took on the highest number of instructions in a month since March 2008, two years ago. The fact that the percentage increase in instructions is so much higher than the increase in valuations can either be that vendors are simply keener to sell now than they were previously or there is a slight possibility that since being awarded the top estate agency in the UK our success rate in valuations is higher than before. I don’t think this is the reason, but it will be interesting to see if other estate agents are seeing the increase in instructions that we are. So having seen our number of properties available for sale falling, month after month throughout 2009 we are now, for the first time, seeing them increasing. Despite agreeing a high number of sales in January, we still have 20% more properties to sell than we did at the beginning of the month.
The level of applicants looking to buy remains very high. Douglas & Gordon registered 42% more applicants than they did last January, in fact we registered the most number of applicants since January 2007 when we were incredibly busy and registered 50% more than even this January. So the number of properties available for sale is still low, but at last increasing, and the demand to buy seems to be as high as ever, meaning that prices will continue to increase. But if the increase in property available continues over February and March then the rate of increase in prices will begin to slow.
As regards the lettings market, the opposite is true, as is so often the case. Although the Sales and Lettings market unusually mirrored themselves for most of last year, now the lack of property in Lettings is becoming almost critical. Douglas & Gordon have fewer properties available to let than I can remember. October 2006 and October 2007 are the only times we came close to having this little stock and that is traditionally the time of year when we always have least property, after the busy summer months, not January when stock levels are normally very high.
One of the main reasons for this shift in property is that landlords, particularly ‘accidental landlords’, are now deciding this is the time to sell, so when tenancies come to an end they are now going to the sales market, which is depleting our stocks still further. Despite this lack of property demand is still extremely high; in fact we registered more applicants looking to rent in January than at anytime in our history and 36% more than this time last January. It goes without saying that rents are going to be increasing!
So a very interesting start to the year and it will be fascinating to see what happens in February. The early indications are that the Sales market will continue to be active and Lettings will get quieter. All those estate agents who moved their Sales teams into Lettings for the last two years, had better think about moving them back again.