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Will this sellers' market last?
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Average asking prices for property in October saw a rise of 2.8% – the largest increase in that month for six years. But what's fuelling this rise, and is it sustainable?
The latest house price report from property website Rightmove.co.uk has revealed the largest increase in asking prices for this time of year since 2003. Average property asking prices are now £230,184 compared to £223,996 the previous month, making it a sellers' market.
London has seen an above-average rise, with asking prices rising by a staggering 6.5% in a month to £416,157, beating the previous record high of £412,731 in November 2007.
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Sellers’ market
Lack of stock has been the main driving force for this unprecedented uplift in activity in a traditionally slow period for sellers.
“It’s a little bit crazy to have a sellers’ market given the time of year… Agents in the north as well as the south are reporting that quality properties are often selling within a week,” comments commercial director of Rightmove.co.uk, Miles Shipside. “Buyers are ready to pounce on new instructions and are willing to proceed as they believe prices have bottomed out, and more are finding the ability to put down the larger deposit required to access the best mortgage deals”
According to the report, mortgage approvals have increased year-on-year from around 32,000 a month to 52,000, indicating a marked improvement in buyer sentiment. However, the amount of properties coming onto the market has not mirrored this growth in mortgage approvals, resulting in upward pressure on prices. It’s a clear case of supply and demand with a lack of stock driving sellers to hike asking prices to a record high.
The latest Rightmove Consumer confidence report, due to be released later this month, indicates improved confidence in the property market, with one in 10 of the 30,000 respondents predicting lower house prices in a year's time, compared with seven in 10 at the beginning of the year.
Pre-election nerves
With confidence in the market and buyer interest on the up, now could be a good time to sell: the report predicts that the usual buoyant spring market could be affected by “pre-election paralysis”.
Despite positive signs, Shipside warns sellers to proceed with caution. “Sellers in popular areas are back in the driving seat, though they should watch out for icy conditions ahead, as the market is likely to enter a pre-election freeze by spring next year.”
Transactions are still 54% lower than in 2007, suggesting that many homeowners are wary of moving in the current economic climate. Politics is also playing its part according to Shipside, with key decisions around stamp duty, home information packs and elections adding to the concerns of potential buyers and sellers.
“The combination of economic hardship, impending taxation decisions and an imminent general election could stamp out the early stages of a housing market recovery,” concludes Shipside.
It remains to be seen how long this asking price rise will continue.
Published 19 October 2009
