In its Market Insight report for July-August this year, Hamptons International insists that transactions are a much better indicator of the health of the property market than house prices.
It explains that a rise in activity shows that it is “easier to move up and down the housing ladder to find the most suitable home”. Additionally, it can benefit the overall economy, as people move for work.
During the financial crisis, transactions dropped much further than prices in terms of percentage. They have also recovered much slower, even in London and the south, where Hamptons describes the markets as being “most buoyant”.
“Compared with last year the level of activity is still subdued, but that may now be beginning to change,” notes the report. “As economic conditions improve and confidence grows, we would expect pent up demand to begin to shift.”
Hamptons has found that zones 2 and 3 in London and the zone 6 commuter belt have experienced an increase in activity in the last few months. This is due to the slowdown in the prime and central London markets, where affordability pressures have caused buyers and investors to look elsewhere.
Further out of the capital, better value for money is also causing activity to pick up.
The latest figures on the time it takes to sell and the difference between asking prices and achieved prices also indicate a rise in demand-led activity.
However, the news has been full of stories emphasising a lack of housing supply, which is “frustrating a market improvement”, according to Hamptons.
It is being felt all over the country, with the amount of stock available for sale and the number of new instructions all down on this time last year.
“That means that price growth will creep up everywhere unless stock picks up too,” warns Hamptons. “In addition, the supply of credit is still a barrier to some potential movers, particularly those whose homes haven’t recovered to their earlier levels.”
Additionally, there are the first time buyers struggling to raise the huge deposits required by mortgage providers.
But it’s not all bleak, Hamptons believes the future could be positive.
“While buyer enquiry numbers are still down on last year, this looks like it may be beginning to change,” it reports.
“The net balance of buyer enquiries reported by the RICS [Royal Institution of Chartered Surveyors] survey tends to lead transactions by around six months and this has picked up sharply recently. That should augur well for a much better market in the coming months.”1
1 http://www.hamptons.co.uk/research/market-insight-julyaugust/focus/