Market Recovery good for Sellers and Landlords |
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28th August 2009
House prices in England and Wales rose by 1.7% in July compared with June - the biggest monthly leap in value since July 2004, the Land Registry said. Every region recorded a monthly rise in prices, with the average home valued at £155,885, the analysis found. But prices were still 11.7% lower in July than they were in the same month a year earlier and sales were also down.
The Land Registry is widely regarded as producing one of the most authoritative house price reports due the complete market data it obtains, although it does lag behind data from lender and way behind those of estate agents.
Additionally, it tends to paint a national picture rather than provide detailed local analysis.
It compares the price of properties sold now with the price paid when they were sold previously. However, repossessions and property transfers following a divorce are excluded from the sample.The annual fall in prices eased in July compared with June, when the year-on-year drop stood at 13.8%. This was at the lowest level in July since October last year.
This is good news for the rental market which had been flooded with properies from 'reluctant' landlords forced to rent as they were unable to sell. Agents had found that rental values had fallen and there were too many new agents tapping into a market which they didn't fully understand. As prices increase, so will rents and as such yields will be maintained.
There were an average of 35,848 sales per month between February and May this year, compared with 61,743 in the same period a year earlier. Nevertheless, this situation will changes as properties which were rented out of necessity return to the sales market and those tenants who were nervous of the falling market start to consider buying again before prices rise.
It seems that supply and demand has fuelled this increase, though it must be remembered that these figures are properties registered at the Land Registry after completion. True price increases happened when the sale was agreed, often a few months earlier. This suggests that further prices rises are yet to be reported and looking at our figures, this have accellarated in London, again due to lack of stock and a reduction in the number of new builds.
The market will continue to recover. There will be peaks and the occasional trough, the latter will be less deep than the previous one. The general trend is up, and in London, its gaining pace.
