Home Property One in five house sales fell through during 2018

One in five house sales fell through during 2018

by LLP Reporter
29th Jan 19 6:16 am

New data on the UK housing market released by TwentyCi shows that there was an overall market slowdown during 2018, resulting in a largely subdued market.

Property exchanges for under 35-year olds saw a 2% year-on-year rise – a good indicator of growth in first time buyer numbers.

However, there was a decrease in overall exchanges across all other age groups, with a fall of 7% in 36-45-year old exchangers and 6% fall in 66+ year old exchangers.

Colin Bradshaw, Chief Customer Officer, TwentyCi said, “The lacklustre volume of properties coming to market has the potential to thwart demand. Q1 2019 and the outcome of the Brexit process will determine the out turn for the next 12-months.

“An orderly Brexit and consumer confidence and pent up demand may be released fuelling a property market upturn. The opposite, as the Bank of England has warned, could cause a temporary but significant hiatus within the UK property market.

“Whilst many indicators show that property prices are remaining stable and not falling this is the undoubtedly the direct impact of a lack of supply.”

This is also demonstrated by figures on final price achieved compared to asking price narrowing in 2018 compared to 2017, with the highest gap only 3.73% in inner London, and the lowest gap just 1.57% in the west Midlands.

2018 also saw a steady increase in the percentage of rental properties available and Q4 data reveals that 40% of the housing stock is now rental, rising to 50% in cities such as Newcastle Upon Tyne and Manchester.

Affordability, the London crisis

While prices have fallen in London, affordability for London residents living and working in the city is at crisis levels. TwentyCi has looked at various cities in the UK and assessed the affordability of these cities for the poorest 25% of people (by income) and the wealthiest 25% of people to pay a mortgage or rent.

Overall, the data suggests that the North-South divide is very much still in existence, despite higher salaries in the south. For example, the 25% of highest earners in London will be paying between 40-60% of their take home pay on their mortgage to buy a property of equal standing with a 40% deposit. While the 25% of lowest earners in London will not be able to afford to buy a property of equal standing as it would mean spending between 70 and 131% of their take home pay on their mortgage. While for the lowest earners the cost of renting a property of equal standing would be between 57 to 90% of their take home pay.

However, figures show there are many places in the midlands and north of England where the 25% of lowest earners can afford to rent or buy. In Nottingham for example, to rent a property of equal standing involves 35% of take-home pay on rent, or to buy might involve 37% of take-home pay on a mortgage.

Bradshaw said, “With consumer confidence low and Brexit providing an overarching economic shadow, the performance of the London property market continues to decline. Notwithstanding Brexit, affordability within the capital will provide an ongoing brake to revitalisation in the short to mid-term with the ripples being felt across the whole of the UK economy.”

Online agents

The latest report for Q4 also revealed that the market share of online estate agents for 2018 has stabilised at 7.2% of all exchanges (down from a high of 7.6% in Q2), but additional analysis shows that online agents are struggling to penetrate south of the Watford Gap and on properties valued at over £200k.

Bradshaw added, “The unexpected demise of eMoov and the recent results of Purplebricks suggests the building of an online proposition continues to be challenged by the ability to win customers and build brand awareness especially in southern regions.

Similar to the dot.com boom of the early 21st century, without a reduction in customer acquisition costs the current model remains significantly flawed. It remains a paradox of this market that online agents are doing better in the north where properties are generally cheaper compared to the south, however based on their fixed fee structures one might have reasonably expected this to have been the other way around.”

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