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The number of property hotspots, where towns experienced a rise in sales, halved in 2011 in England and Wales, according to research from Lloyds TSB.
Just 40% of the 500 towns tracked were property sales hotspots that recorded a rise in home sales, the lowest proportion of towns experiencing an annual rise in sales since 2008, when all towns recorded a fall in sales and less than half the proportion in 2010.
Bilston in the West Midlands is the country’s leading home sales hotspot. Overall, there were 630,389 home sales in England and Wales in 2011, some 4% less than the 654,481 in 2010.
Towns in the north have seen the biggest increases in sales with 59% seeing a rise in home sales in 2011 compared with 41% in the south. This is a reversal of 2010 when southern towns accounted for the majority of the country’s property sales hotspots.
Regionally, the north of England and East Anglia had the highest proportion of property sales hotspots with 61% of all towns surveyed in both regions seeing a rise in sales. These regions were closely followed by the West Midlands at 60%. In contrast, London had the lowest proportion of sales hotspots in 2011 at 16%, having seen sales decline by 6% over the past year.
Three of the five towns with the biggest increase in property sales between 2010 and 2011 are in the West Midlands. Bilston near Wolverhampton up 30.7% and Rugeley in Staffordshire at 30.6% filled the top two spots, whilst the market town of Wednesbury was up 19.4%, the fifth largest rise in sales. Bootle on Merseyside completed the top three with 21%. The Norfolk town of Thetford at 18.5% recorded the biggest increase in southern England and was the only non-northern town in the top ten.
Eight of the ten towns with the largest declines in home sales in 2011 are in the south of England. Tower Hamlets recorded the largest fall, down 22%, followed by Potters Bar down 20% and Penzance in Cornwall down 19%.
But even in the hotspots growth is weak. Between 2010 and 2011, house prices rose by an average of 0.2% across the ten towns that saw the biggest drop in property sales. This is in contrast to the 4.5% fall in house prices among the ten towns that recorded the biggest rises in property sales.
House prices fell by 3.2% in Bilston, the town with the biggest increase in sales, and rose by 1.8% in the Tower Hamlets, the area with the biggest drop in home sales over the past year.
There were notable exceptions to this pattern with Bootle being the only town among the ten top home sales hotspots to record an increase in house prices of 5.1%.
Over the past year, supply conditions have generally been tighter in southern England compared to the rest of the country. This is likely to have helped to support prices in the south relative to the north, but also constrained the level of sales in the area.
‘The overall level of housing market activity across England and Wales has weakened over the past year, reflecting the concerns over the outlook for the UK economy. Additionally, consumers are experiencing difficulties in raising the necessary deposit, which is preventing many potential home buyers from entering the market,’ said Suren Thiru, Lloyds TSB housing economist.
‘Whilst a number of towns in the north have seen a significant rise in home sales, these increases have been from a historically low base. Generally, property prices in the north continue to be weaker than in the south,’ Thiru added.
The figures are a lucid example of the stark regional variations in the UK’s property market at the moment, according to David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains.
‘But it would be a mistake to take transactions numbers as a direct indicator of price movements. Although the figures suggest London contains the lowest number of price hotspots in the UK, prices in the capital have still performed more strongly than anywhere else,’ he said.
#Although the market was subdued in 2011, there are signs growth is returning. Our latest index shows transactions increased 13% in February this year and the Council of Mortgage Lenders shows mortgage advances increased by more than 4% in 2011 compared to the year before. This surge of transactions is likely to have continued into March as first time buyers rushed to complete before the return of stamp duty for properties over £125,000, but this doesn’t tell the full story,’ he explained.
‘There’s currently plenty of pent up demand in the market from buyers waiting for mortgage lenders’ deposit requirements to shrink before they can enter the market. If growing availability of mortgage finance improves, bolstered by the government’s New Buy scheme, we could see transactions continue to grow beyond the stamp duty spike,’ he added.
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