Spicerhaart boss Paul Smith has called the top of the housing market, saying there is “trouble in paradise”.
The market, he said, peaked in April. He is the first mainstream, or indeed any, agent to state the claim, which was clarified by EYE in a series of emails yesterday.
He made the remark after HMRC announced a huge slump in housing transactions.
Based on evidence from his own haart network, Smith said that buyer demand slumped by 46% last month, and warned that current house prices are unsustainable.
Smith said: “We believe the nation has now neared the limit in terms of price rises.
“Our data is already showing a slowdown in both house price growth and transaction levels.
“In order to maintain healthy sales levels, sellers need to be much more realistic with their asking prices. Properties are in danger of being over-valued and these homes will struggle to sell.
“They could also be at risk of lenders refusing to grant high LTV mortgage applications based on these too high valuations.”
While spokespeople for Smith initially argued that his remarks did not mean he was calling the top of the market, later EYE was told that Smith said that EYE could accurately state his view that the market peaked last month.
Housing commentator Henry Pryor called the top of the market at the end of last month, having successfully called it in 2007.
Meanwhile residential property sales fell hard in April, right across the UK, and on both a monthly and an annual basis, according to HMRC.
Even the best efforts of “seasonal adjustment” could only disguise some of the extent of the fall: the annual drop was 14.5% when seasonally adjusted, and 18.7% when not.
The monthly fall was 45.2% when seasonally adjusted, and 59.2% when not.
While the monthly fall was much bigger than the annual drop, it is perhaps the annual drop that is the more significant: last April, the market slowed as the general election approached, while this year the housing market was slower still, with the EU referendum two months away.
Nor can the huge monthly fall be blamed only on property investors putting a brake on buying second homes ahead of the Stamp Duty deadline.
Last month, there were 60,080 housing transactions in England, compared with 73,700 in April last year; in Scotland there were 6,250, down from 8,050; in Wales there were 3,070, down from 3,800; and in Northern Ireland there were 1,290, compared with 1,610.
The UK total of 70,690 “actual” transactions for April compared with 86,970 in April last year.
On a monthly basis, the figures are starker: 60,080 transactions in England during April, compared with 151,870 in March; 6,250 in Scotland, down from 11,100; 3,070 in Wales, down from 7,120; and in Northern Ireland 1,290 in April, compared with 3,340 in March.
The UK total of 70,690 for April compares with 173,430 transactions in March.
The figures are from HMRC which observed: “The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016.
“However, whilst April 2016 is lower than April 2015, it should be noted that the total for March and April 2016 is still substantially higher than the corresponding period last year.”
The Council of Mortgage Lenders last week reported that mortgage lending fell 29% between March and April.
* HMRC reported record revenue in April, received in Stamp Duty Land Tax from March’s transactions, of £1.2bn – the most ever received in a single month.
Great news. If the industry spends all day trying to digest this mass of numbers and not focused on trying to keep the market alive,”Paul’s call” will come true.come on folks we all know that longer term it’s perfectly safe to invest in property,so let’s not add the the doom and gloom of “out of industry” commentators who may have agendas that a property crash could suit.
i agree with Paul that with a shortage of stock having prevailed for some time, valuations are being pushed and vendor expectations unrealistically inflated, but let’s work the market,educate our sellers and put some oil on the cogs to get the market moving. I’m all for being realistic,but talking doom and gloom is not the way forward.
But all that said,if Paul’s Call” comes true,I would not like to be in the “on line only” camp. Could send a bit of an earthquake their way!!
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oh great guru, tell me who will win the Derby, the Euros, next years premier league, the champions league in 2020 and this saturdays euromillions numbers while you are at it…
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I can confirm ( foretell) that nobody will win the euromillions this Saturday however Friday or tonight stands a chance!
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Mr Smith is actually making a ‘prediction’ based on past performance.
I will therefore confidently ‘predict’ that as last night’s EuroMillions draw did not result in a winning ticket, there will be no-one buying a mansionette in NW1 with the proceeds and thereby reversing the slump Mr Smith is ‘calling’.
It’s proper easy when you know how – this ‘property spokesperson’ malarkey!
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So who else is going to kid themselves about this?
its not doom n gloom, it’s true, there is more stock available which means prices will dilute and eventually drop to sustain a market and this is better then the debacle of 1988 and is good news for everyone as they will get better value in a more realistic market but for that to happen the market needs every est. agent to be honest to the public and themselves and it won’t happen across the board because you wags out there will exploit others integrity and corner the market with overpriced homes, hey neither the world nor est agency is perfect so I’ll desist at this point.
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Oh come on !!!!
I didn’t need a databank or nuffink other than common sense.
We know foreign buyers are not buying much these days, we know the domestic market (particularly south east and London) cant afford top end prices so we know there is a correction of some sort on it’s way.
I have speculated London and South East will probably be in the doldrums for the next few years but with no significant price increase or decrease. The only caveat to this is unless something dramatic happens that would change this.
So question:
What could be dramatic enough to make the market suddenly change in either direction.
Well if you listen to our politicians we have: third world war (I agree that would certainly put a dent on house prices), brexit, and er! No sorry that’s all our political’s ever talk about.
Anyone with other ideas ?
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Oh, well… it must be right then.
What do I know – the fact that we put 17% of our available register under offer last week (which unless I am wrong was in May) means nothing, I guess.
But, then – it has often been said on here that I’m ‘unique’…
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Fairly buoyant in our neck of the woods too, Pee Bee. Are we actually talking about London and the Sarfffff here? There’s no Spicerhaart’s anywhere near here.
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17% of 7 properties is 1(ish)
I hope you have more than 8 properties listed.
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One sale in a week would be welcomed by many Agents, Property Paddy – especially, according to Mr Smith it seems, those Dahn Saaarf.
I can however assure you I have more than one ‘filler’ in my window display as a result.
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why is it u lot from everywhere but London assume we all talk with a London accent that lacks the market vocabulary that is in your eyes required yet something in your **** take u fall well short of impersonating, chumps
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Oh, I dunno – maybe we just like soliciting dumb@$$ responses from people who blame their poncy iPhone for their lack of basic diction skills.
What ‘u’ fink, me old ****-sparra?
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errr hasn’t the top of the housing market always been that way? Housing market has always been ups and downs and the top end is a limited market and volatile. It is the bread and butter house prices which reflect the true market.
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Woodentop: “It is the bread and butter house prices which reflect the true market.”
With or without Marmite ?
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It was bound to go quiet in April for two reasons. The first being the ridiculous rush in March to beat the stamp duty deadline. The second being an early Easter so people not out looking at properties over the Easter break because most of us were caught out by it being so early. It’s very busy here in the North East. We have just opened a record number of files. I’ve noticed prices going up as well. On the Northumberland coast the prices have shot up and whatever comes into the market is moving very quickly. It’s the same in Newcastle.
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I agree Jacqueline. You cannot take one month and extrapolate predictions with any reliability, particularly after March when Buy-to-let landlords were rushing to beat the stamp duty surcharge.
As for liquidity, I know lots of landlords are planning to sell ahead of the tax burden caused by the tied removal of tax relief on mortgage payments from 2017. This will increase supply of stock. It could also result in prices falling and rents increasing.
As for prices rising in the North, tut, tut.
You do know that the housing market is entirely based on what happens in London and the South East 🙂 The majority of the UK are a trifling irrelevance to many commentators.
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House prices are largely controlled by 2 mechanisms.
1 income multiples versus salary ie; disposable income
2 job security
Not interest rates or Paul Smith or the chancellor.
We have seen a massive increase in FTBs and mortgage applications and the partial demise of BTL investors.
We have also seen a little increase in Landlords dumping property.
What i have not seen is the situation in 07 when income multiples were 5x and we were pushing 30 year terms to get the loans required. I do remember doing the usual countrywide budgets in the oct prior to the crash and talking to a wall of agents saying the markets were strong and next year was going to be a boom.
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