In its property market snapshot for June, Leaders Romans Group (LRG) looked at activity across its divisions including Mortgage Scout, First for Auctions and its estate agency brands.
The group said rising mortgage rates and the anticipation of further increases had impacted its sales and mortgage divisions.
Kevin Shaw, national sales managing director at LRG, said homeowners who had a “good fixed rate” agreed in principle were willing to move before the offer expired.
Sarah Thompson, managing director at Mortgage Scout, said: “We have had an exceptional Q2 with the number of new mortgages and remortgages, and have been pleased to be able to provide reassurance to our clients and guide them through this tricky mortgage market.”
Across its sales business, the group saw sales rise by 11 per cent compared to May and new instructions were up by eight per cent on the previous month. Compared to June last year, there were 12 per cent more instructions completed.
The number of valuations undertaken increased by six per cent year-on-year, and by five per cent compared to May.
LRG registered 41,342 new buyers in the first half of the year, which averaged more than 1,600 each week.
Shaw added: “Despite the interest rate rise and other challenges, we have seen an increase in activity for valuations, instructions and sales agreed, indicating that there is still significant potential in the market. June’s sales are more positive than May’s and we hope that trajectory continues throughout the summer months.”
He said there had been a “realignment in house prices” which encouraged people back into the market as they could not buy larger properties with smaller loans.
Shaw said: “We haven’t seen a spike in fall-throughs despite the mortgage rates rise. Over 20 per cent of people purchase a property without a mortgage and many more have very low loan-to-value rates, making the interest rates rise less significant for them.
“There have been some delays on exchange due to sale prices being renegotiated, but despite this our net sales, by volume, are up compared to May.”
Good impact on auction sales
The uncertainty and rise in mortgage rates have had a positive impact on the auctions market, LRG said, as buyers looked to speed up purchases before rates rose further.
In its June auction, LRG’s subsidiary First for Auctions recorded a 68 per cent success rate. The company has made £31m in sales so far this year.
Daniel Gale, head of auctions at First for Auctions, said: “In a market laboured with interest rate rises and protracted economic uncertainty, our auctions in Q2 showed promising signs of stability, receiving interest from over 3,500 potential buyers.
“Due to household budgets remaining under pressure from high inflation, the trend since the start of the year has been for vacant residential freehold property, still regularly outperforming occupied investments as buyers look for more flexible, competitively priced opportunities.”
Gale said the business’ online auction format also helped by allowing sellers to access a wider audience.
LRG said its new homes division was busy in Q2 and sold more than 150 plots, which was comparable with the same period last year. So far in 2023, the value of new homes sold has reached more than £120m.
In Q2, the New Homes team added 21 new sites to its books and these are set to launch later this year. There are now 295 more plots added to its stock which are ready to be sold in 2023.
Tim Foreman, managing director of land and New Homes at LRG, said the group’s developer clients were getting more “imaginative” to attract buyers including assisting with moving costs or offering part exchanges to complete chains.
He added: “Considering the turmoil in the mortgage markets and the general slowing of construction, sales figures are looking very positive. Our average sale price for new homes has remained almost identical to last year, which is positive considering that house sales overall are being reduced in price to a greater extent than this time last year.
“This is partially due to the increased popularity of new homes thanks to their greener credentials and lower running costs.”
Its corporate sales team, which provides part exchange sales, assisted sales property disposals, asset management and property portfolio sales, saw a rise in activity.
Valuations in the first six months of the year were up by 60 per cent compared to last year, while new instructions rose by 68 per cent and net sales increased by 16 per cent.
Paul Johnston, head of corporate sales at LRG said: “We are continuing to see considerably greater demand from part-exchange clients and while we are seeing some investors wishing to exit the market, we also have new clients who wish to either enter the market or expand their current portfolios.
“Overall, we are finding that even with the current economic outlook, property continues to be a sound investment for the long term and whilst builders are building, sellers are increasingly coming to us for local expertise to move part exchange and assisted move transactions forward.”
No big changes for now
For the rest of the summer, Shaw said he did not expect there to be any “significant change” to property sales.
He added: “Sellers and purchasers who are motivated to move by Christmas will need to bear in mind the slightly slower market and start planning for the move imminently. Typically, it takes three weeks to get the sale underway and then four months for conveyancing.
“We expect further interest rate rises in the next couple of months to result in a similar pattern. But interest rates may begin to decline in the new year as the government and the Bank of England tackle inflation and try to encourage a more buoyant economy in the run-up to next year’s general election.”
