Strong half year, but signs of fragility

UK home sales rose 12% in the first half of 2006 compared with the same period last year, according to estate agent group Your Move.

However the firm points out the market has been volatile, being affected by a number of one off external events including:

The timing of Easter, resulting in fewer normal viewing days in April
May was the rainiest month of many years
Stock market jitters, affecting consumer confidence
June’s transactions are down 11% on May, having been additionally affected by the World Cup. Sunday’s (25 June) England v Ecuador match resulted in a 38% drop in viewings that day compared with the average of the previous month’s Sundays.

New buyers registering are still increasing with a marked 24% increase in June over May, suggesting that viewing activity will increase again once the World Cup is over.

David Newnes, managing director of Your Move said: "The market has been undoubtedly strong this year, but has experienced volatility month on month due to a number of external factors including the weather, stock market downturns and the World Cup."

"The current campaign by the Conservative Party against Hips has also not helped the market in June as it is undermining confidence in the future health of the housing market."

"Hips may not be a perfect solution to the inefficiencies in the housing market, but it is an important step in the right direction. It will help reduce both buyer uncertainty and failed transactions for the benefit of all parties involved in the house buying process."

"After an initial transitional phase there is no doubt that the health of the UK housing market will be better as a result of the introduction of Hips."

"It is important that the Bank of England does not upset the apple cart with an interest rate rise. The market has been strong, but it is also fragile! Interest rate rise and continual scaremongering over Hips could tip the balance and reverse the recovery we have enjoyed so far this year."

Regional

The southern regions have been consistently performing very well, with strong levels of buyer activity and transactions. However, this has resulted in a shortage in supply which is likely to result in less growth and transactions over the coming months. "Sustained demand from new buyers will undoubtedly put upward pressure on house prices for the rest of the year," added David Newnes.

London, a victim of its own success

Viewings per property in London are the highest in the nation, but this is due to a critical shortage of homes in the capital, rather than an improvement in the total of number of viewings, said the firm.

This shortage is a direct result of a very strong market over last few months, with a rise in new buyers and transactions. The current strong markets in the South East and East Anglia are also likely to see a shortage in supply in the upcoming months as buyers race out to buy homes in a tightening market.