The percentage of homebuyers who are first timers has been falling steadily throughout this year says the latest survey from the National Association of Estate Agents (NAEA).

Only 14% of all agreed sales during the month involved first-time buyers, down from 18% in April. The figure is the lowest since 2001, and sharply down on the 21% of sales to those taking the first step on the property ladder reported at the beginning of the year.

During 2002, typically 25% of sales agreed were with first time buyers.

General housing market activity this year remains flat.

Estate agents reported an average of 12 new sales agreed in May and nine exchanges of contract. Whilst these levels of activities have been roughly constant over the past five months, they are over 40% down on the typical ‘20 plus’ sales agreed and ‘14 plus’ exchanges reported throughout most of 2002.

House price rises have been moderating sharply.

The May survey reveals national house prices have on average risen by 8% over the last 12 months, a figure that has been declining steadily this year (In the January survey this figure was 18%).

While housing market activity remains low, the supply and demand relationship shows signs of improving, suggesting that sustained house prices rises may be seen later this year. In May, estate agents reported an average of only 48 properties for sale, down from 60 last month; the average total number of buyers on their books was 403 of which 126 were taken on during the month.

It is now taking an average of seven weeks from instruction to sale agreed, and nine weeks between sale agreed and exchange. Estate agents are reporting that sale prices are currently 95% of asking prices (last month 96%).

Melfyn Williams, President of the NAEA comments:

“Clearly the present absence of first time buyers suggests that many homes are unaffordable for most young prospective buyers. However reports from our members suggest that the young are not staying at home with their parents, but are choosing to rent instead. The lettings side of many estate agents businesses has been booming this year.”

“We are clearly in a quiet phase in the housing market cycle, with the numbers of both sales and exchanges a long way below their 2002 levels.”

“However, we believe there is no possibility of a housing market crash – indeed, with many commentators predicting interest rate falls in the coming months, there is a likelihood of stronger house price rises later on this year. This view is supported by the improving demand from buyers.”

“Whilst the housing market looks flat at present, we are optimistic and expect activity levels to continue to rise. We won’t see overnight recovery, but our agents report an ever improving market and there is no reason why this shouldn’t continue.”