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| 2010 Property Market as a Whole Better Than 2009 |
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Seasonal factors are believed to have played a significant role in this, but there also exists the possibility that renewed interest rate reduction in September had a slight positive impact.
On average, the sample of estate agents surveyed in the 4th quarter perceived residential demand to have strengthened very slightly after some previous quarters of decline. On a scale of 1 to 10, the agent demand activity rating rose from a previous quarter's 5.66 to a 4th quarter 5.79. Seasonal factors are believed to have played a significant role in this, but there also exists the possibility that renewed interest rate reduction in September had a slight positive impact.
The agents surveyed continue to point to apparent unrealistic pricing in the market. Estimated average time of properties on the market was still a lengthy 15 weeks and 6 days in the 4th quarter, which was slightly worse than the previous quarter's 15 weeks and 4 days. While this is well-lower than a stage of 2008 where the estimate neared 22 weeks, it would still appear far too long for an average, given that in the healthier market days of 2005/6 the average time was generally below 2 months. Furthermore, the percentage of sellers having to drop their asking price remained almost unchanged from the previous quarter's 81%, declining slightly to 80%, and the average price drop for that majority having to drop their prices was estimated at -11%.
The 4th quarter survey provides us with the complete 2010 picture as experienced by our estate agent survey respondents. Aggregating the results for 2010 it is clear that the agents surveyed perceived it on the whole to be a better year in many ways than 2009 as a whole. The average demand level rating for 2009 was 5.23, which improved to an average of 5.94 in 2010. The average time on the market came down from 17 weeks in 2009 to 15 weeks and 1 day average for 2010. Examining the composition of buying and selling in 2010, we saw 1st time buyers increasing moderately in significance from an average of 15.8% of total buyers in 2009 to 17% in 2010.
However, while the above stats point to an overall improvement in the market for 2010 as a whole, compared to 2009, 2010 remained a year where households still appeared focused on rebuilding the post-recession balance sheet. This meant a continued focus on essential buying, with primary residential buying increasing its share from 82.3% of total buying in 2009 to 89.8% in 2010, at the expense of buy-to-let buying, holiday buying and buying residences for relatives.
The balance sheet rebuilding appeared to be partly successful, with those sellers "selling in order to downscale due to financial pressure" declining as a percentage of total selling, from 28% in 2009 to 20.5% in 2010. Happily, too, it would seem that the World Cup's positive spin off on sentiment bore some fruit, with a further slight decline in emigration selling as a percentage of total selling, from 8% in 2009 to 7.5% in 2010 (following a 2008 shocker of 16%).
2010, therefore, in most ways was a more positive residential property year than 2009, according to our sample of survey respondents. However, the survey of agents' expectations suggested that it was not guaranteed that 2011 would se further gains.
The 4th quarter Estate Agent Home Buying Confidence Indicator showed a decline for the 3rd consecutive quarter, suggesting an average deterioration in the near term market expectations of the sample of agents surveyed. Therefore, as 2010 drew nearer to its close, it would seem that estate agent confidence gradually declined, after peaking in the 1st quarter.
Interestingly, whereas the 3rd quarter survey had agents citing positive consumer sentiment as the main influencing factor on their near term expectations, this positive sentiment, possibly very much world cup-related, has receded to 4th place in importance.
Low interest rates have once again become the number one influence on expectations, but very important in 2nd place is the negatively perceived factor of "tight bank credit criteria". The 3rd most important influencing factor for agents' expectations was that of "pricing and affordability. Here, the response appeared split between those who believed that properties were realistically price versus those who believed they weren't.
However, when read in conjunction with a different survey question regarding whether incomes had kept up with prices, one saw a steady increase in percentage of agents that believe that "incomes have got far behind price levels.
From a 2010 low of 43% for the 2nd quarter of last year, the percentage of agents stating that income levels were far behind price levels had risen for 2 consecutive quarters to 57% by the 4th quarter survey. This separate question does, therefore, suggest that survey respondents' perceptions of affordability have been deteriorating late in 2010, and this could thus contribute to weakening expectations of residential demand.
In a nutshell, therefore, agents believe 2010 to have been a batter year for the market than 2009. However, the group still points to a mediocre and unrealistically priced market, and does not paint a convincing picture for further gains in 2011.
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