April 2017

MARKET
INSIGHT
MARKET INSIGHT

You can’t always get what you want…

Asking to achieved splits the country

D eciding on the asking price for a home is fraught

with difficulties. Dealing with the expectations
of the seller as well as the valuations of competing
agents vying for instructions, make it sensitive work.
But it is even more difficult when the market is upset
by changes in regulation and/or at a turning point.
Measuring the proportion of sales that are sold
above the asking price is a good gauge of the start
of a change in the markets appetite for rising prices.
But it’s not a uniform thing. Regional markets move
differently. The North East stands out as its economic
and housing market circumstances are less robust.
Price growth in the South has raced away to be 64%
higher than five years ago, while in the North East
prices are just 9% higher than at the end of 2011. But
in the South of England, the fall in the proportion of
homes sold for more than the asking price shows the
increasing resistance to the pace of price growth.
That resistance is also more apparent among the
more expensive homes, especially above £1m.
Much of that is a symptom of the change in stamp
duty in 2014 causing buyers to negotiate the extra
tax into a reduced offer price. Although, weakening
expectations of capital growth after the huge previous
rises adds to the mix.

Change in proportion sold above asking price 2016-2017 Source: Countrywide Research

6%
4%
2%
0%
-2%
-4%
-6%
-8%
Wales West Yorkshire East South North East South London North
Midlands and The Midlands West West of East East
Humber England England England England England

Proportion of homes sold over the initial asking price Source: Countrywide Research

50%

40%

30%

20%

10%

0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Under £125,000 £125,000 to £250,000 £250,000 to £500,000 £500,000 to £1,000,000 Over £1,000,000

2 greene.co.uk
 APRIL 2017

Have a little patience… And you’ll get what you need

The time on the market before sale is another Finally, a fall in the proportion of the achieved price
indication of changes in the markets tolerance to as a proportion of the initial asking price tells us even
rising prices. And with low levels of stock, those not in more. Again, it’s generally a north/south story. Asking
a hurry have time to wait for the right offer. But while to achieved proportions have remained broadly stable
low stock levels can support prices, it won’t mean outside of the South of England. This chimes with the
they will always rise as quickly. Reflecting the same data on house prices which shows that the rate of
phenomenon of more resistance to higher prices in growth of prices is accelerating in the North, stable
the South – and the North East – time to sell has been in the Midlands but slowing – yet still rising – in the
increasing too. South. Even though the asking to achieved ratio is
falling, house prices are still rising, but at a slower
rate. Many homes still sell for more than the asking
Change in time to sell price and many more for prices higher than they would
14 have done last year, even if the sum is below the initial
12 asking price. So those selling their homes should take
10
comfort that they will have made money on their sale,
8
6
allowing them to move on in comfort.
CHANGE IN DAYS

4
2
0
-2
-4
North East England

East of England

South East England

London

East Midlands

Yorkshire and
The Humber

South West Endland

West Midlands

-6
North West
England

-8
Wales

Proportion of homes sold over the initial asking price Source: Countrywide Research

104% 12%
YOY HOUSE PRICE GROWTH (%)
ASKING TO ACHIEVED (%)

102%
10%
100%
98% 8%
96%
6%
94%
92% 4%
90%
2%
88%
86% 0%
London South East of Yorkshire West South East North North
East England and The Midlands West Midlands West East
England Humber England England England

2015 2016 2017 prices

© Countrywide 2017 3
MARKET INSIGHT
Economy
Stronger forecasts, but still lots of unknowns
T he Chancellor’s spring budget had very little in it
for the housing market specifically. Apart from
a tweak to the amount of tax relief on dividends
professional landlord companies can claim, there
was nothing to change the housing market status
quo – a relief after the turmoil of the last few budgets.
But what was interesting was the new set of
forecasts from the independent Office for Budget
Responsibility (OBR), which looked remarkably
buoyant. The OBR increased its 2017 forecasts
for GDP significantly, which might be surprising
given the likely shock to the economy of pulling
the Brexit trigger. But the jam of higher growth
in 2017 is taken away in subsequent years.
The OBRs expectations of property transactions
were even more surprising. It factored in a 7% rise
in activity compared with its November forecast,
but the jam isn’t taken away in the later years as
GDP Growth (%) Source: OBR
2.5
2.0
1.5
1.0
0.5
0.0
2017 2018 2019 2020 2021
Mar-17 Nov-16
4 greene.co.uk
with GDP. That is great news for a recovery in
sales, but there are still very large risks that could
affect these forecast outcomes significantly.
Because the Brexit trigger wasn’t pulled when
the forecasts were made, and because nobody
knows how the negotiations will play out, the
OBR has chosen to base its numbers on the same
assumptions as November. That was before
the government decided that the UK would not
only leave the EU, but also the single market.
While the strength of the growth and activity
forecasts are suggestive of an easier ride, it is clear
that there are substantial risks and that these
spring from the squeeze to household incomes. As
wage growth stays low and inflation picks up, we
are already starting to see the effect on consumer
spending, but the true test will be whether the
availability of credit and the potential for some easing
in austerity will smooth the way. Let’s hope so.
Transactions Source: OBR
1350
1300
1250
1200
1150
1
2017 2018 2019 2020 2021
Mar-17 Nov-16
 APRIL 2017

Sales

Copycat neighbours

A for sale board going up in a street is often a sign

that change is on its way. As neighbours talk
to each other and estate agents knock on doors,
the increased popularity of a locality or a revival
in market activity, but it also affects neighbour’s
expectations of what their own home is worth.
the first board is frequently followed by a second a The combination gives agents and sellers greater
few weeks later. The biggest jump in sales comes confidence that they will secure a deal quickly.
on terraced streets where it’s easiest to compare
one house with all the others. And where a record Copycats are most prominent in the North East
price is achieved, the effect is bigger. Last year, where price growth has been slowest since
streets where a sale set a record price there were the financial crash and in some parts, have not
68% more homes sold in the next three months returned to their pre-crisis peak. The number of
compared with streets with more modest sale prices. sales on a street rose 77% in the three months
after a record price was achieved in the North East
It seems that a record price on the street affects in 2016. That could suggest that the neighbours
the neighbours’ expectations of what they were surprised at the new price and realised the
can achieve and encourages them to try it for growth in equity on their own home provided an
themselves – quite quickly. The greatest uplift in opportunity to move that wasn’t previously there.
activity is in the first three months after a record
sale price nearby. The record price can reflect There are fewer copycats in London. As prices in
the capital have risen dramatically over the last
few years, expectations of future price growth have
2016 uplift in the number of sales on a street in been strong, so potential sellers are less surprised
the three months after a record price is achieved
by record prices. In addition, as London prices are
North East 77%
well above their pre-crisis peak, homeowners have
Wales 74%
not been prevented from moving by a lack of equity.
North West 72%
Looking ahead however, expectations of future price
Yorkshire and The Humber 70%
growth in London is slipping. That could mean an
South West 67%
increase in copycats as a new record price may now
West Midlands 66%
be seen as a market peak, encouraging those who
East Midlands 65%
want to move to do so sooner rather than later.
East of England 55%
South East 54%
London 43%

2016 uplift sales

Six months following any sale 77%
Six months following a record sale 74%
Three months following a record sale 72%
Source: Countrywide

© Countrywide 2017 5
MARKET INSIGHT

Lettings

Rental growth stalls

F or the first time since November 2010, rents

in Great Britain are lower than the same time
last year. Data from Countrywide’s lettings index
shows that rents fell nationally 0.6% over the
last year to stand at £921 per month, £5 less
than in February 2016. But rents are still 14%
more than in their previous peak in 2007.
The fall was driven by London and the South East
where rents fell 4.7% and 2.6% respectively.
But it has taken seven months for falls in these
regions to bring national rental growth below 0%.
Apart from London and the South East, every
other region of the country saw rents continue
to rise, albeit at a slower rate than last month.
The slowdown in rental growth was caused
by a fall in the number of tenants looking for a
home combined with higher numbers of homes
available to rent in London and the South East.
While in Great Britain overall there were 5% more
tenants looking for a home than at the same
time last year, London and the South East both
had fewer tenants looking than February 2016.
However, the surge in the number of homes
available to rent following the rush to beat the
stamp duty deadline is now beginning to subside.
Overall there were 10% more homes available to
rent in February than last year, but this is likely
to fade over coming months. Early signs point
towards 2017 being a rare year where rents rise
faster in the north of the country than in the south.

Supply and Demand Source: Countrywide Research

YOY change in homes to let YOY change in registered tenants

London 18% -3%
South East 15% -5%
South West 12% 2%
East of England 10% 8%
East Midlands 5% 9%
West Midlands 5% 3%
North West 5% 8%
North East 6% 4%
Yorkshire and The Humber 7% 7%
Scotland 6% 6%
Wales 3% 7%
Great Britain (ex London) 8% 7%
Great Britain 10% 5%

6 greene.co.uk
 APRIL 2017

Stat of the Month

Economic and Housing Indicators

UK GDP Growth is broadly stable-ish YOY House Price Growth Trend is slowing

2 25%
1.5 20%
1
15%
GDP GROWTH %

0.5
10%
0
5%
-0.
5 0%
-1 -5%
-1. -10%
5 -15%
Source: OBR Source: OBR

Inflation (CPI) Inflation rising sharply due to exchange rate Transactions (SA) Transactions picking up

6% 180,000
160,000
5%
140,000
4%
120,000
3% 100,000
2% 80,000
60,000
1%
40,000
0%
-1
Source: OBR Source: OBR

Earnings Earnings growth still relatively weak and

Growth (YOY) spending power threatened by inflation Ratio of Asking to Achieved

7% 99%
6% 98%
5% 97%
4%
96%
3%
2% 95%
1% 94%
0% 93%
-1% 92%
-2%
91%
-3%
-4% 90% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: OBR Source: OBR

© Countrywide 2017 7
Greene & Co.
e: clientservices@greene.co.uk
greene.co.uk

Johnny Morris Fionnuala Earley

Head of Research Residential Research Director

©Countrywide 2017. This report was published for the purpose of general information and Countrywide accept no responsibility for any loss
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