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Naea April Survey


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As someone pointed out last month, the bottom of the NAEA survey shows the average position with regard to sales/purchases from BTLs.

Right at the end:

NAEA survey

Average number of properties sold for buy-to-let: 0.96

Average number of former buy-to-let properties put on sale: 1.47

So, net net, for every two properties sold for BTL last month three BTL properties came on to the market to be sold (this time last year there was a net 1.5 bought for BTL). And this is an average position across ALL NAEA estate agents.

This has happened for AT LEAST three months in a row now while (obviously) BTLs were (heavy) net buyers last year.

Interesting that despite all the BTL protestations (from Paragon etc) that they are all "in it for the long term" the NAEA data suggests otherwise.

Whether it is smarter money bailing out while it can or failed amateur BTLs giving up is not clear but I think BTL net buyers becoming BTL net sellers does not bode well for the bulls.

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The number of BTL is probably still getting bigger after all how many of the "put on sale" 

are actually getting sold. :)

Indeed.

I know BTLs all tell us it is no problem but the results do seem to point in a certain direction.

CML tells us the number of BTLs is still rising but not nearly as fast as last year. RICS etc tell us the number of properties for sale is rising faster than demand.

NAEA tell us BTLs are net sellers. BBA etc tell us mortgage approvals are down significantly. Pretty much everyone tells us sale prices are flat or falling.

If I didn't know it is all different this time I'd start to think the BTL boom that drove prices up to silly levels has peaked and started to [email protected] out... and like any other market when the source of massive recent demand suddenly stops demanding more and starts to become the source of supply then there is a pretty serious problem to be addressed.

And as ever this supply/demand imbalance will be addressed through the pricing mechanism.

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I reckon BTL will take some time to unwind as they will sell towards the end of tenancies which last 18 months on average. Lets say reality is now sinking in that capital gains are looking like losses this means an interesting 12 months.

Those with highly leveraged portfolios may well have a problem in that they cannot afford to cut prices to get a quick sale without their guarantees kicking in.

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...previously-let properties returning to the market as many amateur landlords become disillusioned with the buy-to-let arena.

I wonder why they characterise BTL's who are selling-up now as disillusioned amateurs. It would seem to me that they’re anything but amateur. They are selling at - or very close to - the top of the market and stand a fighting chance of converting some of their much lauded paper profits into the kind that you can actually spend down the pub.

If the defining trait of the professional is that he is content to watch his precious equity wither away whilst continuing to subsidise his tenants’ lifestyles for the foreseeable future, then I wouldn't be in any rush to turn pro if I were them. Seems that this may be the only game where the amateurs make money and the pro's don't.

Japhy

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