Estate agents toast `feel-better factor'
Housing revival: Lowest interest rates for 30 years and belief that costs have bottomed out have rebuilt market confidence
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They are calling it the "feeling better factor". As estate agents across Britain took on extra staff this weekend in anticipation of an Easter influx; they declared it was finally spring-time for the housing market.
The first quarter of l996 has seen an average 1.2 per cent rise in house prices and an increase in sales, against the lowest interest rate in 30 years. The front-runners in the recovery are south-east England, the West Midlands and London.
A study by the Royal Institute of Chartered Surveyors (RICS) reveals that two-thirds of English and Welsh estate agents have had a 10 per cent increase in viewing and valuation requests this year. They are struggling to find enough properties for sale to supply the renewed demand.
In Manchester this weekend, estate agents were confident of further signs of life. "The months from Easter are when you traditionally expect to fill the `sales pending' drawers," said Jonathan Dines, an agent and surveyor.
He added: "The weather is good, there are a lot more viewings, a lot more offers and, we'd hope, a lot more sales. This is the turning-point weekend, when people put the kids in the back of the car, drive to the areas they are interested in, note down the numbers on the For Sale boards, and visit agents."
The intense competition between lending institutions, aimed most intensely at first-time buyers, combined with the record low interest rates, have finally started to eclipse the financial insecurities of buyers, according to the industry.
Harvey Williams, national housing spokesman for the RICS, said: "From April we are seeing all the financial benefits coming out of the sausage mill at last. We are seeing tax savings coming into the purchasers' pockets, on top of the ferocious competition to lend them money. The first thing many people will do is consider the roof over their head."
Despite the optimism, agents are anxious to stress that the market is still fragile. In Hythe, Southampton, Paul Dettner, a partner in an independent agency, described it as a "convalescence period".
Mr Dettner said: "Things are getting better, but if someone has a major operation you don't expect them to get up afterwards and run a marathon. People assume someone is going to flick a switch and we will be back to a normal market, but it takes longer than that."
However, economists are convinced the confidence from Kenneth Clarke, the Chancellor, is not unfounded. While interest rates have been cut three times in the last five months, and taxation dropped this month, consumer confidence has been building.
Ian Shepherdson, UK economist for HSBC Markets, said: "It's blindingly obvious the market is recovering, from higher mortgage applications, more sales and a move in prices. The question now is how long it lasts."
He added: "We have seen a rebound from1995; what we haven't seen yet is real progress. Our view is we will, but it's not a boom because the consumer balance sheet has too much debt on it.
"There simply isn't the scope to push house prices up by much more than five per cent. But what we'll have is a deeper market that will be stronger."
Among the areas already seeing the greatest signs of renewal is Croydon. Bob Hay, a partner in Streets Ahead, said the firm was struggling to satisfy the demands of a pent-up market, but said sales were up 25 per cent on the same quarter last year.
Mr Hay said: "We are seeing both first-time buyers and buyers who want to move up a level from a two-bedroom house. That's where the shortage is, in the three- and four-bedroom houses for the mid-pounds 100,000s.
"A lot of people who want to move up a level don't have anything to go and see."
It is a similar picture in Scotland. Homeowners in Aberdeen are gradually building up the confidence to put their properties on the market, having seen prices drop to record lows, and an invigorated interest from buyers.
Ken Anderson, director of Anderson Pitt and Co, said: "Flats are selling very healthily, but the market is short of three-bedroom traditional homes. I'd like to see more of those coming up for sale."
The lending institutions are already considering reviewing their forecasts for 1996 in the light of the renewed demand.
The Halifax, the largest building society, has predicated an overall rise of 2 per cent in house prices for 1996, but said if the current recovery is sustained it will be "somewhat higher".
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