Property prices at new March high
In the last four weeks house prices have risen £142 a day – the average house in England and Wales rising £3,969 in a month.
The March record comes amidst growing momentum in the market that should also see the number of transactions rise too.
Miles Shipside, Rightmove director and housing market analyst, said: “In today’s turbulent world where economic crises seem more likely to re-appear than disappear any market upturn will take longer to build home-mover confidence to the point that it starts to feed through to actual transactions.
“Even those who truly believe that the market has turned a corner may be unable to do anything about it due to lenders’ cautious risk profiling, a significant factor limiting the speed and strength of the recovery.”
The data revealed that 60% of home-movers believed prices will be “more or less the same” in a year’s time and a further 23% expected prices to be higher.
And a 12% increase in new seller numbers – despite the level of unsold stock remaining largely changed – indicates an increase in sales.
The index showed 83% of home-movers expected prices to be the same or higher 12 months from now, while 11% expected prices to be lower.
Shipside said: “Positive sentiment on the future direction of property prices is a vital element in motivating more people to buy including those looking to trade-up. If they feel confident that prices aren’t going to drop some will take the plunge while those who are predicting price rises often judge it wise to act sooner rather than later if they perceive delaying will mean they pay more.”
The average time a property spent on the market in March fell from 90 days last year to 80 days this year prompting Shipside to comment that property appears to be finding buyers more quickly.
He said: “Whilst it is too early in the year to make estimates about full year transaction volumes agents are reporting more properties being sold subject to contract.
“However these prospective buyers still have to complete the potentially treacherous journey through to successful completion.”
The research also showed that rents are delivering average gross yields of 5.9%.
With some remortgage finance available at lowest ever levels from as little as 2% for a 2-year fixed rate and 2.7% for a 5-year fixed rate there is the possibility of a straight arbitrage of immediate return on money borrowed against a main residence.
Shipside said: “There are blindingly good returns on the right buy-to-let investment with the Funding for Lending Scheme giving the possibility of an immediate and enticing profit gap between borrowing costs and available rental returns.
“With the prospect of capital growth in future years if you buy the right property you can see why investors are piling in to the rental market – why wouldn’t they when it can offer a much better return than money in the bank”
Ben Thompson, managing director of Legal & General Mortgage Club, said: “All the signs seem to be that we are starting to move towards a return to normality in house prices by 2017 and although we have a long path to tread we are on the way down it.
“The upward trend outlined by Rightmove is yet another indicator that this positivity is not misplaced. The hope is that the Chancellor will recognise the importance of the housing market to the economy in his Budget. Whether via mortgage innovation, mortgage insurance, a change in stamp duty rules or a combination of all three it’s crucial that Mr Osborne gives the recovery the support it needs to take root and grow.”