Gap reduces between asking and purchase price
The size of this gap is closely correlated to the pace of house price inflation and is a good leading indicator of future house price performance.
The recent narrowing of the gap suggests that house price growth will gather pace across England and Wales over the rest of country before the end of 2013.
Hamptons International has calculated that on average achieved prices were just 2.9% lower than asking prices across England and Wales in the 3 months to October this year, down from 3.4% last year and now the smallest it has been in six years.
The narrowing gap between asking and achieved prices is evident in almost every part of England and Wales. The only areas in which it hasn’t narrowed are in the North East and Wales.
Unsurprisingly, the gap has narrowed most in London where achieved prices are now on average 98% of the asking price.
Fionnuala Earley, research director at Hamptons International, said: “Increased confidence in the housing market as the economy begins to recover, coupled with stimulus from the Government’s Help to Buy scheme, is encouraging previously nervous or frustrated would-be buyers into the market at last.
“This new demand, in combination with relatively low supplies of property for sale, means that there is less room for negotiation on asking prices. The gap between asking and achieved prices has now fallen to its lowest in six years and shows that the balance is clearly moving in favour of sellers.
“Paradoxically this is good news for both buyers and sellers. Further price rises, as predicted by this measure, should encourage more people to put their property up for sale and an improvement in supply will foster a more liquid and therefore a more stable market.”