Waning demand and slumping sales offset an increase in residential asking prices according to a report on UK real estate, but lending access rather than interest rates is the biggest factor going forward. Meanwhile, a steep drop in supply pushed prices for rental properties higher. See the following article from Property Wire for more on this.
Overall demand from UK property buyers fell over the three months to November as confidence waned and mortgage availability remained tight, according to a new report.
However, the number of properties for sale across the UK remained stable and above the levels seen over the same period in 2009, says the report from Winkworth, the leading franchisor of estate agencies.
And it was strong demand for good quality family houses that underpinned the market and helped support average price growth.
Winkworth saw average asking prices of properties on its books rise from £494,000 to £532,000 nationally and from £518,000 to £551,000 in London between August and November 2010.
The number of sales agreed over the period fell year on year mainly due to the exaggerated number of sales at the end of 2009. But an injection of new mortgage lending in October and November supported the market, the report also says.
Prices for flats softened further over the period while demand from family movers with access to affordable mortgages helped support the London market. But demand from new buyers in prime central London remained flat over the period.
In rentals, demand continued to outstrip supply with tenant registrations peaking earlier than usual in September and the seasonal rush lasting three months longer than normal. The number of rental properties on the market over the period was over 45% lower than a year ago. As a result, average monthly rental prices rose 11% from January 2009, ending at £2,096 in November.
According to Dominic Agace, chief executive officer of Winkworth, lending will be a key determining factor for the real estate market in 2011. ‘There is much debate concerning the timing and extent of interest rate rises in 2011, but the consensus is clearly that the cycle is now bottoming out,’ he said.
‘While this will have an impact on owners and buyers, particularly those keen to lock in fixed rate products in anticipation of this change, it is the availability of finance which remains a key determinant of the level of activity in the housing market in 2011. Until the banks feel comfortable to lend again, particularly at the bottom end of the market, volumes are likely to remain constrained,’ he explained.
‘Against this backdrop we will continue to grow our business cautiously in 2011 through the opening or acquisition of new franchises. Our position as a leader in the London market enables us to benefit from the concentration of UK activity which takes place there, while we also expect to be busy in our country house business, meeting the demand of families looking to leave the capital in search of extra space,’ he added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.