In July we reported an increase in the number of properties coming onto the market, which was unusual for the time of year. In August therefore we were not surprised to see the anticipated seasonal decline in new vendors across our UK network.

The largest falls were seen in our branches south of M4, but the strong increase in market appraisals in that region (reported below) suggests that the number of new vendors will again increase as we move into the Autumn.

In London we have seen continuing increases in new vendor levels during the last quarter, so it is perhaps not surprising to see this tail-off during the traditionally quiet August - but only by a nominal 6%. To further put this into perspective it should be noted that the volume of new instructions in London is 19% higher than this time last year. "More properties are coming onto the market," observes Regional Director Marc Goldberg. "We saw the supply:demand ratio continue to narrow in August, with stock increasing by 18% and applicants down 20% compared to the same time last year. This will undoubtedly help to stabilise prices." Goldberg predicts a busy autumn. "With more property to chose from and fewer purchasers to compete against, this autumn will be an excellent time to buy."

However, it should be noted that some of these new instructions we are seeing may be due to vendors listing with additional agents, as St John's Wood Manager Paul Sennett explains. "It is normal in July and August to see clients placing their properties with several agents rather than sticking with one. This displays an eagerness to sell, but unfortunately it comes at a time when most buyers are away."

However Central Regional Director David Adams believes that the majority of houses on the market currently are overpriced. "The reason that we are doing well in this market is that we are being highly proactive in finding purchasers for those vendors that are selling at the right price." Southern Region Director Mark Anderson agrees. "As new stock comes on in the autumn, those vendors that do not re-price their property in light of the current market fundamentals may see a widening of the gap between their expectations and the prices that purchasers are willing to pay."

Following the dramatic 20% increase in prospective vendors seen in July, in August these remain level across our UK network, although compared to August last year we note a 7% reduction.

Whilst this is in part seasonal, it suggests that many prospective vendors are adopting a 'wait-and-see' approach as we approach the autumn. Regional Director David Adams explains. "We have witnessed a typical holiday period in August, with more people away and thinking about their next move rather than making it, than we saw last year." Buckinghamshire Area Director Chris Moorhouse adds, "In the short term the market has been effected by time of year, the global stock markets and people waiting to see what will happen which, realistically, might be nothing more than a slight slow down brought on by unsustainable market growth."

In August our London branches also saw a decline (11%) in market appraisals. Regional Director Marc Goldberg believes that this is merely symptomatic of the August market and he remains optimistic about the prospects for the autumn: "Lots of people have been sitting on their hands over the summer, but despite the economic fundamentals confidence has been bolstered by continued low borrowing rates. With continuing signs of buyer confidence and increased stock - and therefore affordability - the quiet summer looks set to emerge into a buoyant autumn."

Wimbledon Manager John Richards has also seen clients sitting on the fence. "We suspect that it has something to do with the greater degree of caution being shown by potential movers, who are waiting to see what happens to the stock market which has taken such a battering in recent weeks and months. Many feel considerably less wealthy, having seen the value of their portfolios dropping so dramatically and some sellers may fell nervous that house prices in the area may now have peaked."

However, it should be noted that London has in fact seen the largest growth in prospective vendors during last quarter (up 7% on both the previous quarters as well as on last year), reflecting the increasing number of prospective sellers through the summer. This is due to a combination of factors influencing vendors, including:

• Economic uncertainty
• the sliding stockmarket
• increasing numbers of landlords finally putting their investment (rental) properties on the market

Some vendors, expecting a fall in property prices, wishing to sell at the top of the market. This is further confirmed by the substantial increases in new property coming onto the market in the capital during the summer.

Our country branches south of the M4 report a 9% increase in prospective vendors during August, suggesting that many vendors in the southern counties, which has seen the most erratic month-on-month swings in the ratio of vendors to purchasers, are again testing the water to consider selling in the autumn market.

However, some of the country regions are seeing a different picture. "With prices higher than ever, the cost of moving, combined with negative press reports, have conspired to bring on a lull," comments Buckinghamshire Director Chris Moorhouse. "September will get busier but I don't think we should expect miracles. Despite cheap borrowing people are becoming more cautious about over-stretching themselves, resulting in lots of people making the decision to stay put."

As we have reported over past months, vendor price expectations remain a barrier to selling for many. "The biggest problem facing the industry in September 2002 is misleading figures being reported on house price rises in the last year," suggests Central Region Director David Adams. "A lot of vendors are coming to the market with expectations that their house has gone up by 20% in the last year, which in many situations simply is not the case."

Sussex Country Houses Director Alastair Gravenstede (who markets properties over £1 million) agrees. "We recently sold a property for less that we did a year ago, pre September 11th, so prices at the top end have not risen by 20% as has been reported."

Following the strong recovery in the levels of prospective purchasers seen in July, this continued through August with the number of new applicants registering up by 3%.

New figures released by the British Bankers Association confirm that mortgage lending hit a record high last month, further suggesting the housing boom still have some way to go. However, BBA Chief Executive Ian Mullen doesn't see levels reaching the heady heights seen in the Spring: "Allowing for the effect of the Jubilee holiday in June and assessing the two months together suggests that demand, though buoyant, is not continuing to escalate from the peak seen in May."

Cotswolds Country Houses Director Steven Perks concurs. "In my opinion the market peaked in May. We are taking on a lot more stock, but viewing levels and new applicants are down. However, The Cotswolds is a rare animal and a shortage of good quality property means continued demand, so the top end of the market will remain buoyant."

However, compared to August last year the number of applicants registering is down (6%), most notably in London (20%), reconfirming the narrowing supply:demand ratio. For example Wimbledon Manager John Richards saw fewer new applicants than normal in August. "August was even quieter than usual this year with very few quality applicants registering until the last few days of the month."

But the tide is already turning in many areas. "We are already experiencing increased levels of purchaser activity in North West London," reports St John's Wood Manager Paul Sennett. "We expect that the market will stabilise and price remain level for the remainder of the year. This is due to the narrowing of the gap between supply against demand we have been reporting over recent months, as fewer applicants are registering and more properties are coming to the market."

Despite the quiet season our central region branches (north of the M4) actually report an increase in new applicants (8%). However, as Regional Director David Adams points out this is a result of proactive marketing rather than a market trend. "There is little doubt that the market has come off the boil as there are less purchasers around than the same time last year. In the Central Region however we saw an increase in new applicants due to proactive market initiatives, resulting in us winning market share."

There are always pockets where prices are settling that have been harder hit for other reasons, such as unemployment. For example, this has been observed in the Marlow area, where there have been many IT redundancies, and Malmesbury which recently saw the closure of a major local manufacturing plant.

In June and July the stock levels remained flat across our UK network, but we now report a slight increase (1%) and overall property stock is up 3% over this time last year.

Compared to last August our London Network shows an 18% increase in stock. Such a dramatic increase is likely to have a knock-on effect on prices, helping to stabilise them in the capital. As London often leads trends in the property market, this may well extend to the country regions in coming months.

However, not all areas in the capital are enjoying the boom in new stock, as Clapham Manager Fenella Russell-Smith reports: "Clapham is a very family orientated area. Our stock of properties is slightly lower than at end of July, with people taking properties off the market for August and not putting them on again until September when the schools go back."

St John's Wood Manager Paul Sennett agrees. "As soon as schools return in September the family house market traditionally gets busier. It is no surprise that parents feel that 'house hunting' could be unsettling to their children and delay this process until schools have gone back." Bath Manager Christine Penny observes, "Many buyers will become sellers, further increasing stock levels. If they like a property they will then put their property on the market. So many buyers are encumbered with a property to sell, so although deals are happening they are much harder to put together in the current climate." Sussex Country Houses Director Alastair Gravenstede agrees. "Every sale is a hard slog. We need to place the right buyer with the right property and hold onto them."

"It is now very much a buyer's market with people being a lot less gung ho!" echoes Cotswold Country Houses (£1million+) Director Steven Perks. "Buyers are more picky and sales are difficult to nurture through. There is a lot of caution around."

With an influx of new properties likely to come to the market in September this should stimulate buyer interest. If buyers see the same stock they have been seeing for months it tends to stagnate the market. "There is still a shortage of really good quality houses so there is still strong demand for the really nice country properties," comments Gravenstede. "We are now witnessing people having to reduce prices and this is resulting in renewed activity in the latter part of August. This bodes well for September."

Central Region Director David Adams points out that the fact that market appraisals are above the level of new instructions demonstrates that a lot of vendors are waiting to see what will happen and are having their houses valued in readiness for the market in early autumn. "This indicates that stock levels will rise in September," he predicts.

The increase in viewings we saw in July predictably diminished in August, but with a decrease of only 3%. Compared to last August viewings are down 11%, indicating that many purchasers are waiting to see what happens in the autumn market.

Cotswold Director Ursula Sadler reports, "We are now out of the summer lull and although viewing levels are down the buyers we have are serious. Many of these are Londoners coming here to get a better lifestyle and trading in their average sized London houses for larger properties which are still very reasonably priced in comparison. Viewing levels have already started to increase and we anticipate a busy September."

Hampshire based Director Chris Neve reports that although viewing activity is down compared to last year, anecdotal evidence from offices suggests a more positive autumn than the last three years. "Remembering that last year was September 11th and the previous year we had floods and the petrol crisis. It the days after the august bank holiday are anything to go by we will be busy in this region in September."

It is unsurprising that overall offers fell during the traditionally quiet holiday period, although our managers are reporting increased buyer caution. In addition, overpriced properties and a shortage of quality stock have played a part.

Bath Manager Christine Penny reports, "A lot of purchasers have been sitting on the fence during August and showing a reluctance to buy at the top end of the market. However, more stock in autumn will bring new buyers."

Interestingly in London offers were up in August, which reflects the ongoing market strength in the capital. City Office Manager Jon Byers reports, "Smart buyers have taken advantage of the summer lull and picked up some good deals from vendors who have not had the usual high volumes of people through the door but are eager to sell."

As expected we saw the seasonal decline in sales during August, down 14% over July. However, the continuing strength in the London market is highlighted by a 6% increase in sales in the capital, confirming the underlying strength in the market there, which is expected to build into the Autumn. Regional Director Marc Goldberg comments, "The sales level is similar to last year, showing that buyer confidence is still there. We can look forward to a buoyant autumn; buying conditions will be excellent, with less competition and more saleable stock. This will give buyers the opportunity to make competitive offers and encourage vendors to be more flexible."

In the country David Adams observes that prices are holding but overpriced properties will not sell and are likely to move from agent to agent. "We want to ensure that we are working proactively with vendors committed to selling rather than on properties which are stagnating on the market due to unrealistic price expectations."

We are please to report that the level of fall throughs (i.e. offers withdrawn before exchange) continues to improve by 9% over July. However, the level of fall throughs in London deteriorated by 20%, a result of the stock market and economic uncertainty, as well as increasing stock offering wider choice to active buyers. As Clapham Manager Fenella Russell-Smith comments, "We lost three sales from purchasers who lost money on the stock market."

Reflecting the improvement in the level of fall throughs in August, overall across our UK network exchanges remained level with July, when we reported an increase of 18% over June. Furthermore, it is interesting to note that in August exchanges are up 6% over last year's levels, demonstrating that buyers are committed.

Our Central region (i.e. branches north of the M4) reported the strongest increase in exchanges both year on year (19%) and over both June and July (14%).

It is interesting that this year many of our Managers have commented on the high numbers of people away this year - which includes solicitors so many long chains have not progressed through this month. Wimbledon Manager John Richards observes, "More and more families seem to be taking longer summer breaks." Sussex Country Houses Director Alastair Gravenstede echoes this view. "August has become over-holiday orientated, with lots of people going overseas for longer periods." St John's Wood Manager Paul Sennett agrees. "It appears that this country is rapidly heading in the same direction as the French, in that families seem to go away for the whole of August on holiday. This is even more noticeable this year than ever before. The majority of mobile numbers that we called in August were answered from an exotic beach somewhere!"

London saw a seasonal decline in the number of reservations for August, as Director of Sales for London developments Margaret Keenan comments, "This was expected, with the seasonal exodus from the capital over the summer months. However, those reservations which are being made are from serious buyers, demonstrating confidence in the new homes they are buying."

In contrast in the country the new developments market has been stronger than was anticipated for this time of year. "Reservations in August saw a 5% increase compared to the same period last year," comments Godfrey Winterson, Managing Director of Country Residential Developments. "But despite this there is a certain nervousness in the property market which has largely been generated by negative press comments on the buy-to-let market"

In London the lettings market has seen a slow but steady growth in applicant activity through July and August, but how long this will last is difficult to say.

As the summer draws to a close, serious applicants are now joining the market. "We are currently seeing a large number of graduates, young professionals and students joining the market, as they come to London to start back at university or begin new jobs after graduating and are looking for properties to share," explains Nina McDowall, Manager of Sloane Square lettings. "Despite tenants thinking that they can rent a property at a lower price, there are many others out there that think the same and so play the market to find themselves a "good deal".

The resulting competition means that some are losing out on the property of their choice. However Landlords are still having to remain flexible with offers, to achieve the best possible deal."

Good quality properties are being snapped up and there is a healthy demand for family houses in the capital. Fulham and Pimlico are especially buoyant areas and instruction levels remain high. Dayle Hodgson, Manager of the Pimlico office says that their properties are now walking out of the door. "We have been working with our landlords over the last few months to ensure that their property is now in its best condition and at a competitive price. Clearly that strategy is working."

The country lettings market has also seen increased activity. Many properties, which had previously been on our books for several months, are now finding tenants.

Stock levels are also beginning to decline as some landlords decide to take advantage of the current high property prices and cash in on their property investments. For example, in one branch a high proportion of rental properties coming up for renewal have not been renewed, as the landlords decide to sell instead.

But Jane Kirkcaldy, Director of Country lettings reports that we are seeing an increase in the proportion of British tenants, as the corporates are no longer providing the large section of our market as has been previously seen, due to economic and domestic circumstances.

But Kirkcaldy observes that the market also presents several challenges. "With the increase in activity has come several difficult deals. Several landlords put their property on the market with multiple agents when they saw that the market was looking slightly difficult. Now when an offer is put forward, the landlord has usually not informed the other agents and then waits for a higher offer from one of them, thus often guzzumping the first offer that appeared to have been accepted. Our negotiators are having to work very hard to make sure that this doesn't happen to our tenants."

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