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‘Records tumble: national nears £250k, London passes £500k’

Records are tumbling this month, with property coming to market setting a new record national  average asking price.

This month’s 2.1% (+£5,135) rise has left the national average just shy of a quarter of a million pounds at £249,841, surpassing the previous high by £3,606. London, the South East and East Anglia have also hit all-time highs, with buyers in the capital facing new sellers’ average asking prices in excess of £500,000 for the first time.

Miles Shipside, Rightmove director and housing market analyst comments: “The tumbling of records is being driven by the equity-rich generation with a definite southern bias, though agents in most parts of the country are reporting strong demand for well-priced and decent-quality stock. Despite a new national record, it’s not ‘green-shoots of recovery’ across the board, especially for the deposit-strapped mass-market. They must wait patiently until January when the Help to Buy scheme extends to the resale market, unless new homes developers can increase building dramatically this year.”

The average price of property coming to market has risen by 9.1% (+£20,852) so far in 2013, the strongest start to a year since the 10.5% recorded in 2004. This is the fifth monthly rise in a row, with all regions in positive territory this month. However, sellers in two northern regions, Yorkshire & Humberside and the East Midlands, are still unable to come to market at higher prices than this time last year. With London sprinting past the £500,000 milestone for the first time with a 3.1% monthly rise to £509,870, a typical home in the capital is more than twice as expensive as the national average. Outside London and some southern hotspots agents report that the market remains sensitive to price and quality, with buyers willing to take their time to find their ideal home.

Shipside cautions: “The recession appears to have precipitated a change in buyer behaviour which has left them more choosy and less willing to settle for second-best. Not only are they looking for value and wary of paying over the odds, prospective buyers are also giving thought to ease of resale, a sign that the pain of this financial crisis has left them more mindful of the liquidity of their assets.”

Lenders are ‘cherry-picking’ in efforts to improve the quality of their future mortgage book by offering some tantalisingly cheap mortgage rates to those with decent deposits, courtesy of the Funding for Lending Scheme. There are fixed rates from 2.34% with a minimum 25% deposit, and even interest only options at 2.19% for those with a 50% deposit of at least £300,000 to put down. The availability of cheap money is key to driving positive sentiment and, with 84% of respondents to Rightmove’s latest Consumer Confidence Survey stating that they felt prices would be the same or higher in 12 months’ time, this seems to be feeding through to home-movers. However, the pent-up demand is still being frustrated by the restricted supply of fresh property. Rightmove has recorded 3% fewer properties coming to market when comparing the first five months of 2013 to those of 2012. This helped exert the upwards price pressure resulting in this month’s new record asking price.

Taking the pulse of different players in the industry allows us to offer the following insights:

– Record Rightmove search activity in April: “We’ve seen record traffic levels in April, up more than 20% on 2012. With choosier buyers and a lack of decent property for sale in some areas, those searching for property and researching the market got through a record 1.25 billion pages last month. Nearly 400 million of those pages were viewed on mobile devices, such as smartphones or tablets, a clear sign that home-movers are fully embracing the benefits of being able to search anytime, anyplace, anywhere and access listings the minute they are added to Rightmove.”
– Busy surveyors mean more mortgage approvals on the way: “We’re flat out carrying out mortgage valuations, we’ve not seen this for several years” is the feedback from a leading surveyor. While the latest Bank of England mortgage approval statistics for March were just 3% up on February’s five year low, there is an ‘off-radar pipeline’ building up.
– London upwards price pressure continues: “Last year’s activity was crazy, this year’s is ridiculous. Multiple offers and sealed bids are the norm” is the market summary of one busy London agent. A shortage of fresh stock for sale and a flurry of deposit-gifted first-time buyers trying to get on the housing ladder before prices ratchet up even more, is keeping both viewers and agents even busier than the hectic activity of last year.

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