ACTIVITY in the UK housing sector contracted in August, impacting an already stagnant property market, according to estate agents.
The August housing market report from the National Association of Estate Agents (NAEA) showed a slight decrease in both the supply of property and demand from prospective buyers.
Its members reported the number of available houses on the market decreased, moving from an average of 61 per branch in July to 60 in August. Similarly, house hunter levels dropped slightly from an average of 293 in July to just 288 in August per branch.
In response to these latest figures, the NAEA is calling on the new housing minister Mark Prisk MP to follow its 5-point plan to make it easier for first time buyers to get on the housing ladder, and less expensive for existing homeowners to move.
Mark Hayward, President of the NAEA said: “These latest figures emphasise the acute atrophy that continues to restrict activity in our housing market. While the ‘Olympic Effect’ did to an extent impact the level of demand and supply, as it did with a number of related industries, the underlying issue of lack of adequate funding mechanisms is still the stumbling block, preventing many prospective homeowners from getting onto the property ladder.
“This is a situation we have been striving to encourage the Government to change for far too long. Market confidence is in crisis. Concerns amongst potential buyers about job security, the size of deposits required and prohibitive levels of Stamp Duty mean that overall levels of home ownership are at their lowest rates for twenty years.
“We hope the new housing minister Mark Prisk MP will consider our action plan to bring a much needed injection of activity to help promote stability and growth in the market.”
The NAEA action plan calls on the Government to:
• Introduce government regulation of letting and sales agents
Estate agents and letting agents are currently unregulated, meaning anyone can set up an agency without appropriate qualifications or knowledge. The Government needs to develop a nationwide regulatory regime, to ensure consumers are protected across the UK.
• Comprehensively reform Stamp Duty, ruling out any new taxes on residential property.
The current ‘slab structure’ of Stamp Duty distorts the UK housing market and places a disproportionate burden on first time buyers. The Government needs to modernise the duty, moving away from this ‘slab’ structure to create a fairer, more logical system.
• Provide support for first time buyers looking to save for a deposit by increasing the annual limit for ISAs and set up a Government-backed saving scheme.
With 90 per cent of first time buyers now needing support from their family to buy a home, it is vital that the Government finds a way to incentivise people to save for a deposit earlier in life.
• Build significantly more homes to increase supply.
Housebuilding should be the top priority for the new housing minister, in light of the current crisis of supply of homes for sale and rent. The Government must examine alternative methods to increase supply such as transforming vacant high street property into much-needed housing in certain areas of the country.
• Work closely with lenders to ensure that lending criteria are appropriate.
While the NAEA recognises the need for responsible lending, this shouldn’t curtail sensible lending. Many first time buyers need to borrow substantial amounts of money to get onto the housing ladder, which is proving increasingly difficult and criteria becomes more restrictive.
The housing market report also found that the number of sales made by agents remained static for a record 6 consecutive months – The average branch sold 7 properties in August.
Similarly, the percentage of sales made to first time buyers remained static, making up just 18 per cent of overall sales in July and August.