Something a bit worrying is happening in the housing marketing and we are not hearing a lot of noise about it – however it is potentially a cause for serious concern.
Home owners everywhere should be taking notice…
In many parts of the country, it is taking longer to sell homes.
Nothing too dramatic is happening, but there is a clear trend overall.
The slow down is not occurring everywhere in the country. As with most things to do with property, there is not a single market picture but several.
However the dominant trend is one of properties taking longer to sell.
Taking longer to find buyers
According to research by CEBR (the Centre for Economics and Business Research) commissioned by Post Office Money, homes are taking 6 days longer on average to sell compared to 2017.
It was hardest to sell in Blackpool where homes took on average 131 days, over 4 months, before a buyer was found.
In London, where prices are currently falling very slightly, the average is 126 days. For properties over £1m it takes 177 days to sell; with cheaper properties it takes 99 days.
If London figures are compared to 2016 the deterioration is marked. According to the City Rate of Sale report for 2016, it took 89 days on average for a property to sell in London (compared to 126 days now).
The top current performer is Edinburgh where properties are sold in an average of just 39 days. The average for Glasgow is a little higher at 48 days.
These figures are evidence that Scotland is experiencing good growth, with Scotland and Northern Ireland being the best performers in terms of house price growth at the moment according to the latest RICS market survey.
Properties in Bristol and Luton are taking longer to sell – 10 and 14 days longer respectively compared to last year.
In contrast properties in Belfast and Swansea are selling faster – 17 and 14 days faster respectively.
The countrywide slowdown by just six days, does not seem a game changer. However, the slowdown is building on a fall-back from 2016 to 2017 and the clear trend is that homes are not selling as quickly.
Houses are taking significantly longer to sell in London and the South (where prices are generally weak) compared to the North and Scotland (where prices are generally strong).
That is further evidence of a two speed property market commentators are increasingly identifying.
What is happening?
The fact that houses are taking longer to sell can be seen as yet another early warning signal of trouble for the housing market (think slower lending, fewer sales, less properties coming onto the market, the retreat of BTL landlords, fewer house starts, growing land banks, warnings from developers and of course the daddy of them all, Brexit).
The optimistic response is to conclude that the slowing is not great but the fact that some areas are not slowing means there is no cause for concern overall.
However it is hard to find reasons not to subscribe to the school of thought that says where London leads others follow.
The London picture is one of:
- Big price falls (circa 15%) in prime central London over the last few years
- Relatively few properties coming on the market
- A capital-wide price fall of just under 1% this year so far
- Homes taking longer to sell since the 3% stamp duty charge from April 2016 and the tax hike against BTL landlords.
There is a lot of talk at the moment that the rest of the country is going to close the price gap on London. There are undeniable signs of that currently but whether it will continue is debateable.
NO MONEY PROPERTY OPPORTUNITIES
Grab a free property! (ways you can own properties at zero cost)
No money down purchases (buy a property then clawback the cost)
Lodgers giving away properties! (how lodgers can give you free properties)
The ripple effect
The ripple effect suggests London’s woes will spread north at some point, perhaps sooner rather than later.
If history is anything to go by, the negative outlook in London today seems certain to reach the north tomorrow – whenever tomorrow is.
If there is a disorderly Brexit, which seems increasingly likely, tomorrow could be sometime next year.
One big unknown is whether the Northern Powerhouse is strong and entrenched enough to resist the negative drag of London more than in the past.
Is the house price cycle of the North uncoupling itself from the South? Is the North now in charge of its own property destiny?
There are many suggesting that could be the case but for others such a contention is completely barking.
What is very clear is a slowing of house price growth in all but a few parts of the country.
The North has outperformed the South in recent times but the current picture is one of slower house price growth in the country as a whole, including places like Manchester and Liverpool which have been seen as star performers.
That could well be a precursor to prices falling significantly into negative territory in places like London, some parts of the South East and under performing parts of the North such as the North East.
Is it going to be bad or very bad?
The biggest question is how far prices will fall – with the South leading the way. Uncertainty is larger than usual with the momentous unknowns of the Brexit drama.
Viewing things through the prism of the 18 Year Property Cycle, we are apparently at the “mid-cycle wobble” stage so we are due for a downturn but not a crash.
With the last crash in 2008, the next crash seems around 9 years away. There seems no need for panic.
Of course Brexit could seriously disrupt the cycle.
Things could be very different after the 29th March 2019 – Brexit day.
Are properties taking longer to sell in your part of the country? What’s your take on what is happening? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com