Eurozone crisis affecting UK property market as prices fall 3.1%

Economic uncertainty and the crisis in the eurozone in particular is starting to spook the UK real estate markets with prices falling by 3.1% in the last month, according to the latest report from Rightmove published today (Monday 21 November).

There has been a 13% fall in the number of new sellers coming onto the market compared with last month and a 11% fall compared with November 2011, its analysis shows.
Also asking prices have fallen over 3%, an average of £7,528, the largest monetary fall since December 2007 and third largest percentage fall on record.

It points out that this early onset of the seasonal slowdown strengthens buyers’ negotiating power. Some 70% of home movers feel it is currently a bad time to sell, offering opportunities for proceedable buyers to swoop. Also winter bargain opportunities’ exist for investors that are fuelled by rising rents and intensifying competition among buy to let lenders.
‘Markets dislike uncertainty, and so do people who are deciding whether or not to enter the property market. Agents report that many would be sellers are postponing their marketing until the New Year, influenced by the current wall to wall media coverage of the Greeks and Italians attempting to get their own far flung houses in order. It’s no great surprise that those who have braved the stormy conditions have had to accept a substantial haircut on their asking prices,’ said Miles Shipside, director of Rightmove.
All regions are showing monthly price falls, the first time this has happened for over three years. However, with lower levels of new listings, especially in higher price brackets, there is some volatility at a regional level, the report points out.
The overall theme of a more buoyant market in the south and a harder hit north remains, though there is nationwide consensus that the balance of power tips further still against sellers.

Findings from the Rightmove Consumer Confidence Survey for the fourth quarter show that 70% of home movers feel that it is currently a bad time to sell. They also believe buyers now have much improved negotiating power, with 61% stating they felt it was a currently good time to buy.
‘While most home movers will have seen some foreign prime ministers losing their jobs, they will be much more keenly aware of the unsettled outlook for their own employment locally. When you are busy looking over your shoulder, you are unlikely to think it is a good market for selling,’ said Shipside.

‘However, that does mean there are opportunities for those who are able to buy, especially as the earlier than usual seasonal slowdown will leave sellers who have to sell in an even weaker negotiating position. Those who are looking to trade up should not lose heart however, as while you may have to accept a lower price for your own property, you should be able to negotiate a good deal on whatever you are buying,’ he explained.
Those who are highly motivated to sell will have to prepare for a longer period of subdued buyer activity before the market traditionally picks up in the new year, especially in locations where there is an oversupply of property for sale.

Average unsold property per estate agency branch has fallen from 78 properties to 75 in the past month, with properties coming off the market as buyers move in before Christmas. ‘We would have expected it to fall more rapidly given the low level of new listings coming to market, and it is further evidence of the subdued number of sales,’ added Shipside.
Some winter buying opportunities in areas of oversupply will be available for bargain hunters  and many agents report that buying activity is on the increase from investors. The report says that buy to let investors looking to raise finance for new purchases are benefitting from increased lender competition, resulting in higher loan to value ratios and lower interest rates.
With over half of tenants expecting rents to be higher in 12 months’ time, according to a recent Rightmove survey, it says investors will be feeling more confident about improving yields too. They have the benefit of greater access to finance than first time buyers, with whom they are often competing when buying, and the ability to pay down the mortgage more quickly due to the prospect of improving rental returns.
‘Reports suggest that buy to let mortgage approvals are at their highest for nearly three years. With good prospects for long term tenant demand from those that cannot buy and consequently solid rental returns, investors will be looking forward to seeing sellers suffer a longer than usual buyer slowdown this winter. The result is a window of opportunity for buy to let investors to bag some bargains, spend less on finance and charge more in rent,’ concluded Shipside.
www.propertywire.com