Has the Basingstoke property market ground to a halt?

As we move into the traditionally slow summer holiday period, has the Basingstoke property market ground to a halt.

In the past week, two large estate agency chains have reported dismal results. Countrywide reported a decline in profits for the first half of 2017 to £6.5m from £28.3m the year before. Foxtons similarly announced a 64% decline in profit for same period.

There are many contributors to these results:

• The rush to purchase properties before the changes in stamp duty came into force in April 2016 which are reflected in the 1H2016 figures
• Continued uncertainty in the market due to the general election, Brexit and overall political uncertainty
• This has resulted in a continued slowdown in the sales market month on month during the first half of 2017

In the case of Foxtons who are largely London based, whilst their lettings business remained largely resilient to these market conditions, their sale revenue declined 29% and their sales volume by 33%.

By contrast, Countrywide who are well represented across the UK and outside London, also reported a decline is sales revenue of 20% (outside London), whilst their lettings business also remained resilient.

As previously reported in our newsletters, this (decline in revenue) is largely being driven by a decline in sales completions (e.g. the number of properties that complete their sale on a monthly basis).

We have seen a similar decline in Basingstoke with a significant fall in the first quarter of 2017 (due to the sales rush in the first quarter of 2016) and a continued decline in sales completions in Q2.

According to Rightmove data, sales prices are flat, but we would expect this as we enter into the summer period. In the chart above, it looks like the decline is less steep than last year, but remember July and August in 2016 were also heavily impacted by the Brexit vote.

As we reach the half-way point of 2017, the fundamentals of the housing market appear to remain robust a year after the shock referendum result. Interest rates and unemployment remain low, and demand for housing remains high, exacerbated by the shortage of available unsold property for sale. This means prospective buyers in many parts of the country are seeing a lot of sold boards on properties they would like to buy themselves. Indeed, the strength of buyer demand and lack of new build and existing property coming to market have resulted in over 45% of agents’ property stock being sold subject to contract.

However, in spite of high demand and lack of suitable supply, stretched buyer affordability continues to act as a price brake. Though all regions have seen year-on-year price rises, the national average stands at a relatively subdued +2.8%.

We see a similar trend in the traditionally strong market in the South:

According to Rightmove, the Basingstoke market has shown a 7% growth over the past 12-month period, with an average price of £296,257. However, the market in terms of sales completions has certainly slowed, and we expect this to remain the same until we emerge from the summer holiday period.