20 Aug UK house asking prices leap by 5.5 per cent in a year
There is more upbeat news for the property market today as the UK’s largest survey of asking prices reveals they have climbed 5.5 per cent in the last year. The average asking price in August was £249,199 but actually slipped 1.9 per cent over the month from July’s £253,658 figure, according to Right Move’s House Price Index.
But the drop is more modest than usual for this time of year, an indicator that the steady market recovery is continuing.
“A holiday season price dip is the norm in August, with an average drop in the last five years of over 2 per cent,” said Miles Shipside, Rightmove director and housing market analyst. “Even with this month’s below par 1.8 per cent fall, the national average asking price is still up by more than £20,000 so far in 2013.”
Another survey published today also delivers positive news, revealing a huge increase in the number of new buyers looking for a property.
Haart’s Housing Market Monitor shows that the number of new buyers has climbed 27.9 per cent in the last year. Average prices at the estate agent’s 100 branches have climbed 3 per cent in 12 months.
“Confidence is creeping back with the number of first-time buyers up 76.2 per cent annually,” said Paul Smith, CEO of haart.
But he warned of a growing lack of supply, which could hit homebuyers’ plans. “Far too few properties are coming onto the market. Housebuilders either need encouragement from the centre to build or more homeowners seeking to buy need to instruct agents now to unclog the market.”
Mr Shipside also expressed fears about a growing lack of supply. “It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices,” he said.
The seemingly non-stop upbeat surveys – there were two last week from RICS and the ONS – is encouraging economists to increase their warnings about a potential housing bubble. A majority asked in a Reuters poll last week put the chances at 50-50 or higher over the next five years.
Mr Shipside said prices could be reined in from running away if the supply of property increases to meet rising demand.
“Developers’ reaction to the new-build Help to Buy scheme must start to address the structural shortfall of the last two decades and increase the number of houses being built,” he said.
“A second key success measure will be an increase in the supply of property to market from those who have put their housing needs on hold since 2007.”
He said that it is vital that the Government’s communication around the January extension of Help to Buy encourages sellers to take advantage of increased demand and put their property on the market, thus increasing supply.
He added that tougher lending criteria following the Mortgage Market Review will also temper some first-time buyer demand and guard against a lending free-for-all like the one that inflated the last property bubble.