The national average asking price of a property coming to market is over a quarter of a million pounds for the first time.
The new record was achieved as prices rose 1.2% (+£2,957) in June, the sixth consecutive monthly rise this year. While London sets another new record of £515,243, continuing its upward trajectory, the biggest winner is the South East which sees a record price of £329,968 as a result of a whopping 14.8% increase over the first six months of 2013.
There is also early evidence of a wider recovery as asking prices in the north (North, North West, Yorks & Humber, East Midlands, West Midlands, and Wales) rose by 9.2% , almost keeping pace with the 10.6% seen in the south (Greater London, South East, South West and East Anglia) over the first half of the year. Given asking prices reflect the aspirations of both sellers and local estate agents they are a leading measure of market confidence. These increases, along with reports from agents and developers of a pick-up in transactions, suggest a wider and more sustainable recovery as the price buoyancy of the London market shows signs of spreading across the country.
Miles Shipside, director and housing market analyst at Rightmove comments: “While this month sees several new price records, it’s the South East that has really started to lift-off. On top of that, the first half of 2013 saw little sign of the traditional north-south divide with the first-half asking price surge in the north almost equal to that of the south. The good news is that this indicates a wider upturn, albeit at historically low but increasing volumes. The bad news for would be buyers is that it has helped propel the average price of a property coming to market through the quarter of a million quid milestone for the first time. It is worth remembering that while the asking price and the eventual sale price may differ by a small margin, the asking price is a very strong indicator of perceived market value and direction. It will take account of local supply and demand, as well as wider economic forces such as interest rates and consumer confidence.”
The national average asking price of a property coming to market is £252,798, beating the previous record of £249,841 set in May. Property market recoveries are traditionally led by London and, belatedly, the trend set in the capital now appears to be spreading as a broader housing market recovery is potentially on the cards. In price terms, this is the strongest start to a year since 2004, with both the south and north playing their parts with increases of 10.6% and 9.2% respectively. Unusually, London’s 10.9% (+£50,845) jump year to date has been surpassed by two northern regions; the North region at 11.0% (+£15,134) and the West Midlands at 11.3% (+£19,665). The South East is, however, the main beneficiary of the London boom, with the ripple effect contributing to a 14.8% (+£42,548) hike in the first six months of 2013.
Shipside observes: “London’s new sellers are asking an average of 30% more than they were four years ago compared to those in the South East who are asking less than 15% more. Although the South East has lagged behind the capital in recent years it is the biggest winner so far this year as, frankly, it has become ‘under-priced’. It offers real comparative value for buyers needing access to London but with housing needs or aspirations that leave them priced out of London itself. While some northern regions outpaced London this year, the price gap remains daunting for those looking to up sticks and head to the bright but dazzlingly expensive lights of the capital. The average price of a property in London is still more than three times higher than in the north.”
Several factors have contributed to such a strong first half of 2013:
– Consumer Confidence is key in the housing market. After a period of apparent economic stability internationally – or at least, less widely-reported turmoil and uncertainty – and some positive signs of an economic upturn in the UK, more home-movers appear willing and able to increase their financial commitments.
– Increasing competition among lenders, underpinned by the Funding for Lending scheme, has encouraged new and repeat buyers to enter the market as they benefit from both lower interest rates and deposit requirements.
– In real terms, national house prices have actually fallen over the last five years. While nominal asking prices are at record levels, adjusting for inflation shows that, bar London, they have actually fallen in every region since 2008.
– Search activity on Rightmove continues to grow. More than 6 billion pages of property were viewed on Rightmove in the first five months of 2013 – up more than 20% on the same period last year.
Shipside adds: “The true signs of a wider housing market recovery are an increase in transaction numbers and more new homes being built, not just increasing prices. Agents report that with Help to Buy for the wider market due in January, some buyers are pre-empting any potential scheme-induced price rises by doing a deal now. It seems like the bubbling south is being joined by some fermentation activity further north, perhaps encouraged by prospective buyers in the north seeing prices still well below their peak in nominal terms and nearly 20% down in real terms. We have seen a strong northern rebound in the first half of this year, virtually keeping pace with the southern regions in spite of the strong London market and price lift-off in the South East. It remains to be seen whether the northern momentum has enough legs to last the course for the remainder of 2013.”
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