There is a two speed market for house price growth

Michael Lloyd

May 20, 2019

Prospective buyers in Wales, the West and East Midlands, and the North West are being confronted with all-time highs for the average price of property coming to market, the Rightmove House Price Index has found.

Buyers looking in Wales are faced with newly-marketed property prices that are 4.1% higher than 12 months ago, the West Midlands is at 3.0%, the East Midlands at 2.5%, and the North West at 2.1%.

Miles Shipside, Rightmove director and housing market analyst, said: “Agents in these areas say that Brexit concerns are not really on the agenda of home-movers; they are more concerned with satisfying their housing needs.”

These increases are the result of a combination of strong demand, buyers’ affordability headroom, and a continuing shortage of suitable properties.

Compared to the rest of the UK, property owners in the regions which have reached new record prices seem to be overcoming hesitancy to come to market.

Shipside added: “Activity breeds activity and a greater choice of fresh properties in these record-setting regions helps to spur buyers into action, especially if they have a property to sell.

“This in turn adds another new listing that might then tempt another buyer, in a virtuous circle. And in much of the rest of the country, despite the ongoing political uncertainty, agents are reporting that the lure of the right property at the right price still attracts good interest.

“In spite of some of the challenges in the market, interest in property remains very high. People’s ongoing desire to satisfy their pent-up housing needs means that on average someone contacts an agent on Rightmove every second.”

Upwards price pressure and positive sentiment in Wales, the West and East Midlands, and  regions are overcoming hesitancy to come to market, with average number of new sellers in the year to date only falling by 0.3% compared with same period in 2018.

In contrast the same comparison has seen new listing numbers in the remaining seven regions down by an average of 6.5%.

While the national rate of increase is virtually flat at 0.1% compared to a year ago, these regions have considerably higher prices than at this time last year, with Wales breaking through the £200,000 barrier for the first time.

By contrast, London and its commuter belt, the South East and East of England regions, have seen year-on-year falls.

Prices of newly marketed property have increased by an average of 0.9% (£2,841) this month.

This is buoyed by the spring market and consistent with the previous two-year average of 1.0%. Despite Brexit uncertainty four out of 11 regions are have set new asking price records for newly-marketed property.

Shipside said: “Price increases are the norm at this time of year, with only one fall in the last ten years, as new-to-the-market sellers’ price aspirations are under-pinned by the higher buyer demand that is a feature of the spring market.

“Indeed the 0.9% monthly rise is consistent with the previous two years’ average rise of 1.0% over the same period.

“What will seem inconsistent to some, given the ongoing uncertainty of the Brexit outcome, is that four out of eleven regions have hit record highs for new seller asking prices.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Asking prices are not selling prices, which explains why some of these figures do not match results from other recent housing surveys.

“Overall, although there has been little change, that masks some considerable regional differences. For instance, London is acting as a drag on the rest of the UK housing market and prices don’t include inflation so have risen or fallen further in real terms.

“The spring bounce is taking place but not reaching to the heights we would have expected and certainly not in the capital.

“Looking forward, we are not expecting significant changes one way or the other, at least until Brexit is clarified.”

Marc von Grundherr, director of Benham and Reeves, said the London property market is a ‘three-speed’ dynamic with outer, more affordable areas doing one thing, the prime market another and the ‘regular’ market doing something different again.

He added: “The top end of the market may take solace from a recent bump in the value of their homes, adding on average £74,700 to their notional bank balance, however, it is important to note that there is still a decent sized gap between asking prices and selling prices.”

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