We catch up with Benjamin Brain, Managing Director at Hannells, to get his take on what has happened so far in 2014 and what we can expect to happen with the property market going into 2015…

Can you provide a run down on how the year has panned out so far?

2014 has been a whirlwind year so far at Hannells. We’d noticed a steady upwards trend of activity over the previous couple of years but at the beginning of 2014 it was like somebody had just flicked a switch and almost overnight, the Derby market went into a frenzy.

Since January and right up to the point of this interview, we’ve not only been taking on record amounts of new properties, we’ve been selling them too.

It took almost every property related service completely by surprise and rather than drown, we invested heavily in upping our resources, increasing our local exposure, adding more staff and continuous training and development to make sure that we could not only cope with the surge in activity, but flourish.

 

And did this extra investment pay off?

Without a doubt.

The latest figures show that after almost ten years, we are still Derby’s top selling agent. We now sell 31.2 per cent of all properties sold in Derby which is over 300 per cent more than the next best agent. It’s an achievement we’re all incredibly proud of, especially considering the fact that there are so many competing estate agencies in Derby.

Another fantastic recognition and accolade which highlights all of our hard work was being shortlisted for the Sales and Marketing category in the Derby Business Awards 2014. Not only is this a particularly fitting award for an estate agent to be shortlisted for, we also beat some other high profile estate agencies in Derby.

We also receive fantastic feedback from our customers which is our proudest achievement. You can see a sample of what our clients think on our Testimonials Page on the Hannells website.

 

So where did this surge of activity come from?

If you think about what has happened to the property market over the last 6/7 years there is a logical explanation. It’s what a lot of property commentators and analysts are missing. Between 2007, when the market crashed and house prices bottomed, and 2012 half the number of people that would usually buy a property didn’t.

Now that the market has seen considerable signs of improvement, these buyers are now suddenly interested again and the demand that usually would have been spread over 5/6 years has instead been condensed into a very short period.

As a result, there’s somewhere in the region of 2.5 million buyers that have crammed their purchase into a much shorter time frame of one or two years.

There have been many other contributing factors too such as mortgages become much more available and the “Help to Buy” scheme.

 

What about first time buyers, they’re often at the bottom of a house buying chain and affordability has been a big issue in the past?

Absolutely, much of this market recovery can be attributed to the fact that there has been a huge increase in first time buyers. If you think about it, many property chains will start with a first time buyer and this kick starts the rest of the above chain. Without first time buyers, these house buying chains aren’t able to happen and the market comes to a standstill.

Nationwide, first time buyers accounted for 48 per cent of all house purchase activity in March 2014 which is a record high, well above the usual average of 38 per cent.

 

So was this largely fuelled by the “Help to Buy” scheme?

Whilst the “Help to Buy” scheme has certainly had a part to play in the number of first time buyers stepping on to the property ladder, it hasn’t had as large an effect as some people will have you believe.

For example, 12,853 Help to Buy mortgages were completed in the first quarter of 2014 which is equivalent to 9 per cent of the total approvals. First time buyers also accounted for around 80 per cent of Help to Buy loans to date.

However, the indirect impact of the introduction of the Help to Buy scheme certainly brought about some big benefits. Largely down to the fact that it played a part in encouraging lenders to introduce their own, more affordable mortgages which meant that buyers did not have to save for such high deposits.

 

What can we expect to happen for the rest of the year?

Demand for property is still high. Enquiries through Rightmove.co.uk are up 20% on the same time last year and on the months November 2013 to February 2014 sales volumes averaged at 72,080 transactions per month compared to 52,331 transactions per month from the same period a year earlier, according to the Land Registry.

Whilst some agents and media outlets may have agreed that activity was beginning to drop off at the half way point of 2014, there has been yet more positive news which suggests the opposite. The Bank of England reported that in June 2014, mortgage approvals had risen by 4 per cent on May 2014 – the first time approvals have increased month on month since January this year.

There were worries that the regulations brought in by the Mortgage Market Review (MMR) in April 2014 would have a dramatic negative impact on the housing market but it appears that these concerns have faded quickly. Although, consequently property transactions being funded by a mortgage are taking considerably longer to reach legal completion.

Whilst the property market is notoriously unpredictable, even short-term, I would suggest that for the rest of 2014 activity will remain steady and as long as properties are priced realistically, you should still expect to locate a suitable buyer with the help of a good estate agency.

There are news articles which are heading towards doom and gloom, but, as is usually the case, these tend to refer to the London property market which is an entity to itself. As we speak, there are articles on the Telegraph website with headlines such as “House prices stall as buyer demand drops for the first time in six months” and “You’d be crazy to buy a property right now”.

On first glance, these headlines would deter anybody from buying or selling property right now but as you start to read them, they’re clearly talking about the London property market and not taking into account what is happening across the rest of the UK.  This can be seen from the graph below. Whenever you hear talk of “huge house price inflation” and “property bubbles bursting”, you should always take these headlines with a pinch of salt as they are heavily based on and biased towards the market in the south:

 

And what about the proposed interest rate rise in 2015, what effect will that have?

Well there is the golden question. There are some reports that buyers are starting to lose confidence in the property market with a looming interest rate rise in the first months of 2015. In the Halifax’s most recent quarterly “Housing Market Confidence Tracker” the number of people surveyed who think that next year will be a good time to buy has plunged from 34 per cent to just 5 per cent. Just who is included in these surveys, I have no idea.

Much of this uncertainty is due to the unknown impact of the potential interest rate rise but the Bank of England has repeatedly confirmed its commitment to making very gradual and cautious increases to the base rate. In fact, just today Ben Broadbent, policy maker at the Bank of England has stated that he sees a case for the earlier increase in interest rates but has emphasised that any tightening cycle would be limited and gradual. 

Brian Murphy, head of lending at the Mortgage Advice Bureau advises that households are being given plenty of warning to consider how to absorb the impact on monthly mortgage repayments and the fact that repossession sales have significantly dropped is a sign of progress in the right direction which is good news for all.

 

So what would you say to anybody that is thinking of buying or selling at this moment in time?

As always, I would say do your due diligence.

If you’re considering selling your property, strike whilst the iron is hot. It only takes one person to purchase a property and you just never know when that one person is out there looking. There is plenty of activity at the moment and we’re registering hundreds of people looking to buy a property in Derby on a monthly basis. Price your property realistically, instruct a good local estate agent and you will not look back.

The same goes for buyers. Make sure you’ve shopped around to get the best mortgage for you and consider what you’re in-comings and out-goings are going to be on a monthly basis once you’ve paid your mortgage and household bills.

If anybody would like to ask any questions, all of the Hannells team are very friendly and experienced. Please feel free to get in touch with any of our local branches via our Contact Page or send an email to enquiries@hannells.co.uk.