Monday, 28 October 2013

Discounts track towards boomtime high

A revealing snapshot of the dynamics driving a strong - but possibly jittery - housing market is provided by the latest Hometrack survey. It recorded a 0.5% increase in house prices in October, a similar trend to most other price surveys. What makes the Hometrack one interesting is the various market dynamics it also tracks, such as the demand-supply balance. The number of new would-be buyers registering with estate agents increased by 2.0% during the month, while the number of properties listed declined by 1.6% (chart below).


The proportion of the asking price being achieved jumped to 95.2%, up from 94.7% in September and just short of its all-time high of 95.7% in June 2007. The proportion was highest in London, 97.2%, but all regions saw declines in the discount to asking prices (chart below). Prices in the capital rose by 0.8% over the month.
One contrasting feature was a nudge up in the time on the market, from 7.9 to 8.3 weeks nationwide, after eight months of steady declines. Hometrack attributes this to a possible combination of reduced quality in the stock of homes for sale and increasing sensitivity among buyers in the face of strong price rises and the widespread debate over whether or not this constitutes a “housing bubble”. Another reason (BI’s view) might be lead times in buyers receiving initial approval under the newly brought forward second phase of Help to Buy. 

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