Asking Prices In UK Up Again
Asking prices in the UK increased by 0.7% or £2,277 in September after falling 2% in the previous two months, according to the latest index figures to be published.
This took the average asking price to £306,499 and up 4% year on year, the data from Rightmove shows. But in London prices increased by 1.9% or £11,565 recovering some ground after four consecutive monthly falls.
This month’s data is broadly positive with seven out of 10 regions recording either a monthly rise in new seller asking prices or a standstill, compared to eight out of 10 price falls last month.
But prices vary considerably in London with the annual changes in the most expensive and the cheapest boroughs highlighting an extreme divergence at play in the capital’s housing market.
In Kensington and Chelsea the average new seller asking price is £2,054,707, down 11.7% year on year while in Barking and Dagenham the average new seller asking price of £296,989 is up by 11% year on year.
Overall the index report points out that the nationwide rise is lower than the 0.9% recorded at this time of year in both 2014 and 2015, but it contrasts with the four preceding years, 2010 to 2013, which suffered marginal price falls.
Whilst a broadly positive picture at a headline level, the index report also illustrates the continuing affordability plight of first time buyers who typically dominate the lower end of the property sector. This sector of two bedrooms or fewer has seen an average increase in the price of newly marketed property of 3.3% or £6,240 this month and 10.5% or £18,450 over the past year.
‘Some of those trying to get onto the property ladder may have wistfully listened to speculation of lower prices in a post-Brexit Britain,’ said Miles Shipside, Rightmove director and housing market analyst.
‘While the referendum result has created additional downwards price pressure in some upper segments of the market that were already slowing, those who do not own a home and arguably have the greatest housing need are now finding it harder to achieve their goal in the post Brexit vote aftermath. In their favoured target sector with two-bedrooms or fewer average asking prices have jumped by over £6,000 in the last month as we enter the typically active Autumn market,’ he explained.
The report also details how the first time buyer property sector had already seen significant upwards price pressure this year due to a surge in buy to let sales before April’s additional stamp duty on second homes, and a subsequent shortage of available stock for first timer buyers in May.
This latest rise of 3.3% pushes the annual rate of increase to 10.5%. In contrast the next rung up the ladder, second stepper properties with three or four bedrooms but excluding four bedroom detached home, has increased by just 0.5% this month and a much more modest 5.2% year on year. The upper end top of the ladder sector with four bedrooms or more is up by 1.2% this month and just 2.7% in the last 12 months.
Shipside believes that aspiring first time buyers still have a strong desire to get onto the housing ladder rather than rent, fuelled by cheaper mortgage rates often making buying cheaper than renting, and are now seeing affordability become increasingly stretched.
‘The rising tide of prices is marooning more and more first time buyers, outstripping their ability to meet stricter lending criteria and afford the required deposits and monthly repayments. Increasing numbers are being cut off from home ownership altogether and while schemes are in place to help, the additional demand they create is not matched by available and affordable supply,’ he pointed out.
‘With an average rise of over 10% in prices of typical first-time buyer properties over the last 12 months, minimum entry prices in some locations will go above what lenders are able to lend to most aspiring first time buyers,’ he said.
‘Ironically the post referendum uncertainty has made some sellers of larger and higher value homes more willing to negotiate, making it easier for those already on the ladder to trade up. There appear to be no such positives at present for those hoping to get onto the property ladder, especially as agents report more investor activity attracted by better returns than available elsewhere,’ he added.
There has also been an uplift in Rightmove website visits, up 8% in the first full week of September, after the end of the holiday season, compared to the same period in 2015.
‘The market continues to shake off the effect of post-Brexit vote uncertainty, though more so in the lower end sector. Buyers are still looking and enquiring, but there are limits on their willingness or ability to pay over the odds so sellers should be wary of over-pricing unless their local market can really justify it,’ Shipside concluded.