House sales treble in UK hotspots

Signs of new life are emerging in the housing market. Autumn sales are running at double or even treble last year’s levels in some places, as buyers become more confident that values have bottomed out.

Estate agents have reported a sharp pick-up in activity in recent weeks, driven by improving prices, mortgage rates of below 2 per cent and fears that housing stock may dry up.

“The spring market didn’t really happen at all,” said Liam Bailey, head of residential research at Knight Frank. “But the number of sales has increased dramatically since, with rises of 100 per cent and even 200 per cent year-on-year, depending on location.”

The increase in sales has increased pressure on stock volumes. Knight Frank said available stock had fallen heavily in recent months and was now down almost 30 per cent year-on-year in parts of London.

Savills said that in spite of tight supply, sales were running sharply ahead of last year in some areas. “In prime south-west London, stock levels in August 2009 were down about 23 per cent on the average for 2005-07, but key demand indicators such as applicants, viewings, deals done and exchanges per property were on average 28 per cent higher,” said Lucian Cook, director of residential research at Savills.

Meanwhile, Chesterton Humberts said its central London offices had sold three times as many properties in recent weeks compared with a year ago.

The strongest rise in transaction levels is in central London but other areas are benefiting. Chesterton said the average number of deals done across its entire network was 2.4 times more than last year. “The increase is being driven by central London, then outer London, then the south-east and south-west,” said David Adams, head of residential.

Elsewhere, activity has been slower to take off. “The East Midlands and the North are still suffering,” said Adams. “And in the south-west the increased activity has not yet filtered down as far as Cornwall.”

However, Savills said that even in York and Lincoln, unseasonally high numbers of deals were done in July and August – nearly three times the average for 2005-2007.

Savills has also reported fierce bidding at its auctions. At one event this week, 92 per cent of lots were sold. One house sold for £405,000, compared with a guide price of £305,000.

The improved sales figures this year are set against a particularly bad market last year. Total transactions still remain low by historic standards – the Royal Institution of Chartered Surveyors said that while average sales per surveyor rose 10 per cent last month to 17 – far higher than the turn of the year – they were still a third lower than at the start of 2008.

Buyer interest is being fuelled by more positive data on prices as well as renewed competition in the mortgage market.

The FT House Price Index for August showed the fourth consecutive month of growth, albeit a rise of just 0.4 per cent on July. A recent poll by Chesterton showed that the top 20 per cent of properties by value have recovered fastest, with growth of 2.7 per cent in August.

At the same time, new mortgage deals are returning to the market. There are now 15 per cent more deals available than in April, when the total number of mortgages available dropped to a low of 1,209, according to Moneyfacts.co.uk.

The best rates are still reserved for borrowers with deposits of 25 per cent. Woolwich this week launched a one-year tracker rate of 1.98 per cent for customers with 40 per cent in cash or equity. This rivals HSBC’s 1.99 per cent variable rate, launched at the start of the month. HSBC said visits to the mortgage page of its website had doubled this month while call volumes had increased 80 per cent over July and August.