With the traditionally quiet month of January behind us and 2012 now in full swing we can now have a considered opinion of where the residential property market is likely to progress for the remainder of the year.
To do this I want to look at the current levels of active buyers and sellers in the market place. Firstly the buyers. I was encouraged to read the latest figures released by Rightmove. They quote that search activity during the first ten days of January was up by 27% on the same period in 2011. The data shows there were 44 million searches in that period. Clearly this does not mean that everyone searching is to be regarded as an active, focused buyer in a proceedable position but what I think it does indicate is a pent up demand hanging over from 2011.
There are two factors affecting a prospective purchasers ability to make a house purchase a reality. Firstly, are they in a position to afford the move? Increased funding and a competitiveness in the mortgage market has resulted in a growing number of products on better terms. This trend is set to continue with buyers also taking advantage of historically low interest rates. Secondly, and perhaps rather fundamentally, is the purchaser able to find the right property? Whether prospective buyers are able to find the right property is, I believe, the principal issue affecting the housing market this year, which brings me on to the question of supply – the sellers. There is a shortage of new stock coming to the market. The same Rightmove report I referred to earlier has stated the levels of new instructions coming to the market are at the lowest level for 10 years and almost at 50% of pre credit crunch levels.
The increased search activity and shortage of new stock is starting to result in upwards price pressure in some areas. In my opinion, the key to sustainable transaction levels and house prices in 2012 is down to whether or not prospective sellers, considering a move this year, take the plunge now to take advantage of this increase in demand. If not, I am concerned that prices will rise causing stagnation in the market place. We will see.