Downward price trend ends in January
This is according to the Rightmove House Price Index for January and follows substantial falls in asking prices amounting to 6.2% during November and December.
This month’s report provides some early indicators of potential buyer and seller activity, giving an insight into the property market patterns that may emerge in the year ahead.
New stock levels this month are at a two year low, and Rightmove expect this lack of property coming to market to assist an upward trend in new sellers’ average asking prices for the next three months as it coincides with the run in to the spring moving season.
Commenting, Miles Shipside, director of Rightmove, said: “The opening skirmish in the 2011 price battle looks to be going marginally in favour of scarcer sellers, especially in locations preferred by tooled-up cash buyers or those packing a hefty deposit.
“With the number of new sellers at a two year record low, prices are being under-pinned by muted new supply just managing to fight off the downsides of lender reticence. However, in less popular locations, the smokescreen of New Year price optimism is temporarily masking the collateral damage that the new era of tighter credit will continue to inflict.”
The national rise of 0.3% in asking prices, while small, is a timely positive sign for some new sellers as it breaks the downward spiral of falls in five of the previous six months, says Rightmove. It is not unusual for traditionally optimistic January sellers to ask more for their property, though 2008 and 2009, post the Northern Rock and Lehman Brothers collapses, did record falls of 0.8% and 1.9% respectively. Sufficient confidence had returned by January 2010 for new sellers to increase their prices by 0.4%.
However, there is clear evidence of the knock-on effects of two-tier mortgage lending. Prospective buyers of flats, terraced and semi-detached are, by definition, less likely to benefit from the higher deposits built up by detached property purchasers and therefore will be thinner on the ground. Consequently, Rightmove has recorded year-on-year asking price falls for flats, terraces and semi-detached properties of around 1%, while detached properties have increased by 1.6%.
Shipside added: “This month’s price rise will come as a welcome respite to prospective sellers as they had witnessed falls in five of the previous six. However, it is a two-tier market.
“Those areas and property types coveted by mortgage-ready buyers are likely to experience a supply famine that will help underpin their prices this spring. Wherever those deposit-rich choose not to wander, the on-going mortgage famine will ensure sellers in those areas will remain buyer-hungry and will continue to see downward price pressure.”