Assetz® News - First-time buyers return to property

First-time buyers return to property

18th April 2005 |

The number of first-time buyers coming onto the property market doubled last month, the National Association of Estate Agents (NAEA) has said.

In February the proportion of new entrants to the housing market stood at a low of 10.1 per cent, but over March this figure jumped to 22.3 per cent.

NAEA linked this rise in first-time buyers directly to the Chancellor's decision to raise the threshold at which a buyer is forced to pay stamp duty from £60,000 to £120,000 in his Budget on March 16.

Slowing house price rises and the move to a buyers' market were also linked to the rise in the number of first-time buyers deciding to step onto the property ladder.

But despite the increase in new entrants to the market, prices remained on hold, with the NAEA reporting that house prices remain less than 0.5 per cent higher than they were at the start of the year.

This market stagnation, coupled with the increase in the number of available properties, has meant that buyers remain in a stronger position than sellers.

Over the last year the number of properties on the market has doubled, the NAEA said, while at the same time the average number of buyers on estate agents' books has fallen by a fifth.

This has led to the average buyer receiving a 4.5 per cent discount from asking prices, compared with last year when "sellers were able to almost 'name their price' in many areas", the NAEA said.

Richard Hair, president of the NAEA, commented: "Buyers remain the dominant force and are discovering they often have a wide choice of properties to choose from. However, with vendors starting to include realism in their asking prices, sales are back on the up."

The NAEA's view on vendors' attitudes contrasts starkly with a report out today by property website Rightmove.co.uk.

Rightmove found that asking prices reached a new record high in April, with sellers in denial over the state of the market.

"These record asking prices aren't reflecting the fact that we have been in a buyers' market for the last nine months," commented Miles Shipside, commercial director of Rightmove.

He added: "We've got a two-tier market where some properties are accurately priced to sell and others that are thousands of pounds more for a similar property in the same area.

"Some new sellers appear to be looking at other asking prices of similar properties around them, and are understandably using that as evidence to ask for similar figures themselves.

"This is not helped by some agents continuing to over-value properties to win instructions in an attempt to recover lost revenue following a bleak nine months."

Rightmove cautioned that the property market was now "trapped in a vicious circle of upwardly spiralling asking prices, not matched by buyers' actual willingness to pay".

Prices achieved are often ten per cent lower than those achieved in the boom of last spring, despite asking prices now being higher.

"The more ambitious sellers and their estate agents seem to be ignoring the reality that the market is not nearly as buoyant, or perhaps do not have the hard evidence to dissuade them otherwise," Rightmove noted.