New applicant enquiries and the number of houses available are considerably up on the same time last year, according to the latest survey of members at the National Association of Estate Agents (NAEA).

A traditionally slow time for the UK housing market, however, July remained true to form as the market was relatively quiet and NAEA members experienced a downturn from the previous month in a number of areas. The survey revealed that agents experienced falls in the number of house buyers on their books, the number of houses available and the number of sales agreed in July.

New applicant enquiries and housing stock up on last year

The number of enquiries from new applicants in July was 82 per agent, down from 90 per agent in June in a decrease of 8.9%. This figure is still up on the same time last year, however, when agents recorded an average of 68 new applicant enquiries, demonstrating an increased confidence in the market.

The number of new instructions taken on by agents in July decreased 12.5% from 16 to 14 per agent. Agents reported that the number of houses available for sale also dropped in July for the third month in a row, in a decrease of just over 30% from 79 to 55. This figure, however, is still 17% higher than the same time last year when the number of houses available was on average 47 per agent.

Buyers and sellers enjoy a summer break

The number of house buyers on agent’s books fell 7.4% in July from 378 to 350 per agent as potential buyers took a break from searching for property to enjoy the summer months. This figure is expected to rise again as autumn approaches.

Buyers take their time to decide

According to the survey the number of viewings undertaken before a sale was agreed increased from an average of 9 viewings per sale in June to 15 in July.  The July findings bring the figures back in line with viewing levels recorded earlier in the year, when the number of viewings per sale fluctuated between 14 and 16 from January through to May.

While viewing figures have remained fairly consistent in 2005, the average time taken to sell a property has been slowly increasing month on month since the beginning of the year. July, however, took a positive turn with the average length of time between instruction and exchange of contracts being 19 weeks, compared with 20 weeks in May and June. This falls in line with recent reports that consumer confidence rose in July*, particularly among speculation that the Bank of England would lower interest rates in August.

The July survey figures were also an improvement on the same time last year when it was taking on average 22 weeks to complete a sale.

First time buyers opt for the lettings market

According to a recent survey by mortgage lender GMAC-RFC, first time buyers are opting out of the residential property market in favour of renting in fashionable areas with their friends. The NAEA’s latest housing survey supports these findings with first time buyers only accounting for 8% of all sales in July. This is compared to over 20% in March and April when first time buyers were entering the market following the reduction of stamp duty thresholds. The number of first time buyers has tailed off over the last three months, however, indicating that the positive effects of the stamp duty reductions were short lived.

At the same time, NAEA lettings agents recorded a 30% decrease in the number of vacant properties between June and July, from 10 per agent to 7. The average time taken to rent a vacant property remained stable at 14 days.

Lower interest rates to aid market going forward

NAEA President Christopher Hall comments:  “At around this time every year we expect to see a slowdown in the market as summer takes hold and buyers and sellers head off on their holidays. We are confident, however, that the market will pick up again early in September.

“The last twelve months have been an uncertain time for homeowners, with five interest rate rises over the past year. However, the reduction of rates announced by the Bank of England in August should have dispelled some fears on the financial front. We anticipate that this rate reduction coupled with the gentle steadying of prices will inject some new life into the housing market, setting it up for an active run to the end of the year. That said, a further reduction in interest rates would be helpful in raising consumer confidence to a higher level.”