Asking prices up 0.7% at start of 2018 but market is seen as price sensitive

Average asking prices in the UK edged up 0.7% or £2,067 in January after a fall of 2.2% in the final month of 2017 and similar to the 0.6% rise recorded in the same month last year, the latest index shows.

But the report from property portal Rightmove warns that the residential housing market is still price sensitive with sales agreed numbers in the last quarter of 2017 down 5.5% on the same period a year ago and in all regions.

It suggests that sellers of properties suitable for first time buyers are set to have greatest chance of sales success following last Autumn’s stamp duty abolition for most people buying their first home.

The January month on month rise in prices being asked for new listings takes the average asking price to £297,587 and the index also shows that demand on the portal is currently running over 9% higher than a year ago, with an average of over 4 million visits each day.

Miles Shipside, Rightmove director and housing market analyst, said:

‘All regions are currently selling at a slower rate than a year ago, indicating choosier buyers. The total number of sales agreed was 5.5% down in the last quarter of 2017 compared with the same period in 2016.

‘Setting tempting asking prices and then quickly reducing them if there is little initial interest will be key to turning this promising level of buyer activity into actual sales, especially in the less active sectors and locations of the UK.’

The data also shows that annual rate of price increase in newly marketed property is 1.1%, although at a more local level prices are running 4% to 6% up in some regions, with only London seeing a fall with asking prices down 3.5% year on year.

Shipside also pointed out that while the 0.7% increase in asking prices of property coming to market this month is very similar to the 0.6% of the same period a year ago, both years are well behind the average monthly rise of 1.9% seen at this time of year in the faster rising markets from 2013 to 2016.

Shipside explained:

‘There is no sign so far of any rush to come to market and try to sell, with the number of new to the market properties holding steady against the same period a year ago at around 63,000. With no increase in fresh supply, and an overall average of 40% of properties on agents’ books already sold subject to contract, would-be buyers in some sectors and locations of the UK are seeing less choice to tempt them, fuelling some localised price rises.

‘While potential buyers are still busy looking, they are looking for good value and the right property. Price rises have had a good run and the return of the days of optimistic pricing is consequently some years away and contingent upon earnings increasing and interest rates remaining low. Sellers should get good local advice to ensure that their property price and presentation are suitable for their local market conditions.’

The boost given to first time buyers by the abolition of stamp duty for most of their purchases means that properties in that sector are facing higher demand and consequently more upwards price pressure, especially if supply is limited. Indeed their typical target sector of two bedrooms and fewer has seen the biggest rise of 1.1% in the last month, ahead of second stepper properties at 0.4% and top of the ladder at 0.8%.

Shipside believes that those selling to first time buyers are set to have a busier first quarter than those trying to sell in other sectors. ‘We expect that many first time buyers will act fast to satisfy their appetite to get onto the housing ladder and secure their property at today’s prices, before any stamp duty savings are eaten up by rising property prices,’ he concluded.


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