Everyone’s talking about a property slowdown, but how do you find out what’s really happening? Ask the removal men. Graham Norwood quizzes the people in the know
Open house, double digit price rises, buyers making sealed bids – remember those? They have melted quicker than an ice cream in the sun, thanks to a summer slowdown, the scale of which has caught everyone in the buying and selling business by surprise.
It is not just that purchasers and vendors are more interested in school holidays and the beach than, gasp, house prices. Even some of the deals that are still going ahead are bogged down by delays.
The surge in transactions during the spring has created mammoth backlogs in agreeing mortgages and exposure shortages of qualified solicitors and surveyors, as well as delays in council searches thanks to years of cuts. The consequence is simple. Everyone from agents to removal men are reporting a fall-off.
Whatever happened to agents talking up the market? If anyone was going to be eternally optimistic about the health of house prices, it was estate agents. Yet Wilkinson Grant, a West of England agency with its HQ in Exeter, has just emailed clients to warn that
mortgage restrictions are having an impact on the previous very positive outlook of buyers.
This more sombre mood music, combined with delays for buyers and a rash of new properties coming on sale, makes it likely that we will see a swing from what has been a sellers’ market to buyers having more choice; a feeling of less urgency, greater caution.
It is a scenario beginning to be played out across the country. The property analyst Hometrack using data from estate agencies, reports that 50 per cent of postcode across England and Wales showed price rises back in April – now it’s only 32 per cent and falling.
Ed Mead, a director of Douglas & Gordan, a southwest London estate agency, says
Stock is 40 per cent up on a year ago, with buyers down by 20 per cent. Buyer applicants between April and the end of June fell by a quarter compared to the first three months of the year. That’s all you need to show how the market changed.
Many home owners did well to sell homes quickly and above the asking price during the spring rising, but today’s vendors are having a tougher time.
Hometrack says sellers this month are getting, on average, 96.6% of the asking price – still high, perhaps, but below figures earlier in the year. And some vendors who thought they had beaten the summer slowdown have been hit by the dawn – out side effects of recent mortgage restrictions.
Among them are Norman and Liz Gaston, whose six bedroom Georgian house in Peckham Rye, London, saw a flurry of interest within 24 hours of going on sale in April. Yet their buyer had to pull out later because of complications securing a mortgage. Liz, who runs a human resources consultancy, says;
It wasn’t anyones fault, but we’ve lost £2,000 in abortive fees. We even had to cancel the removal men, as we lined up to buy a county house in Lincolnshire. The fall through means we’ve had to put the next stage of our lives on hold.
The couple have now put their home back on the market for £1.63m.
It may be little consolation, but the Gaston’s find themselves in good company. Quick Move Now, a firm that purchases hard to sell homes or those owners who need to move quickly, says fall-throughs at all prices ranges are 10 per cent up on a year ago.
The big problem for this group is that, if they want a mortgage, they must provide more – much more – information than before.
We may complain about the amount of personal data that is ending up on servers in California, but anyone who wants to step onto or move up the housing ladder is being forced to reveal more about their finances and their way of life than they have ever done before, event to a priest.
As a result, financial issues can cause complications weeks after an offer has been accepted. In the past month, Roy Brooks, the southeast London estate agency handling the Gastons’ sale, has seen one buyer forced to reconsider her purchase when her mortgage offer was slashed by £137,000, and another deal delayed because a lender’s offer was cut by £80,000.
Miles Shipside, market analyst at the property portal Rightmove, says;
Chatter on the street is that quality buyers are thinner on the ground. Many committed and motivated people have already bought, releasing pent-up demand and contributing to the slowdown.
The only upside is that the strong sellers’ market seen across much of London, the southeast and a few other hotspots is beginning to turn in the buyers’ favour for the first time in two years.
The banks may be tricky, but house-hunters can be pickier. The agency Express Property Activity Index – an estate agency insiders’ monitor of the market – shows that new listings of homes on sale soared by 21.9 per cent June alone.
That Wilkinson grant email warning to clients makes a particular point about how slow local-government searches have become. In Exeter, for example, the agency says:
A few weeks ago these took about seven days. They are now taking about 5 weeks and its possible that in coming weeks they may well take even longer.
This has led to some buyers pulling out, typically late in transactions.
Back in November, BHW Solicitors, in Leicester, warned house buying clients that council searches in the city were taking up to eight weeks – three times longer than usual – because of staff shortages. Many other local authorities now report similar delays
There has never been any love lost between the legal lot and estate agents, but now even high-end agents are demanding that conveyancers pull their fingers out.
Chris Charlton, head of residential in Nottingham office of Saville estate agency, says;
A number of solicitors only work Tuesday, Wednesday and Thursday, so nothing happens on the other two working days of the week.
His colleague Ed Myer, in Cambridge, says;
I advocate using a specialised solicitor rather than a one-stop shop. And use someone from the locality of the property. They will know the area and have the best contacts.
It is stating the obvious to say that the Mortgage Market Review has created delays and intrusion – how much do you spend at Starbucks, dear buyer? But lenders are also under attack for slow surveys and property valuations.
Adrian Anderson, director of the broker Anderson Harris, says;
One lender is taking 16 working days to underwrite a case, than a further 16 to assess a valuation. It refuses to prioritise even when a buyer is in danger of losing a property.
That’s not the only bottleneck according to James Gordon, of Sherrards Solicitors LLP;
Valuers have been so inundated with work, it can take four to six weeks for the valuation survey to take place. As most lenders use the same firms for surveyors, changing lenders is unlikely to make a difference.
Whether it’s down to tougher lending restrictions, Sky-high asking prices or distractions such as the World Cup, something is deterring many buyers from borrowing at all.
Robert Gardner, chief economist at Nationwide, says;
Lending activity has slowed markedly in recent months, with mortgage approvals in May about 19 per cent below January’s high. Demand remains unclear and transactions remain some way below historic averages.
On the face of it, Britain’s house builders are sitting pretty – for now. Last week Taylor Wimpey reported an 11 per cent increase in homes built and 10 per cent hike in its prices, and this has been the trend across the sector as a whole.
The National House Building Council says 37,975 new homes were registered in the three months to June, about 4 per cent up on the same period last year.
But even this success story may stall in the autumn. Markit, a research consultancy studying the construction sector, says a shortage of skilled labour means new- build targets will be missed, and prices may rise later this year, further testing affordability for buyers.
The ripple form the slowdown has hit the people who pack and shift.
James Robertson, sales manager at the London-based removal firm Anthony Ward Thomas.
We’ve had three non-completions in a week – the number we’d normally get over an entire year. These are people who exchanged, but failed to complete, mainly because funds haven’t come through. It causes huge disruption, with owners having to put items into storage, then move to hotels. We may even have to move them back to their original home.
This problem is not restricted to those living on a financial knife edge – the firm has just moved back the owners of a £10m home whose onward purchase collapsed. When it comes to delays abn slowdowns, it seems even the wealthy cannot escape