London (PRWeb UK) October 19, 2009
Rightmove, the UK's number one property website, today publishes its October 2009 House Price Index and reports a rise in average asking prices of 2.8% (£6,188). This is the largest October rise for 6 years and the average asking price for property in London is now at a record high. The price increase is driven by a lack of new properties coming to market with new stock down 36% on 2007 levels.
Sellers' markets are associated with high volumes of buyers ready, willing and able to proceed. The number of buyers who can fulfil these criteria remains well below historical norms, yet this month's statistics from Rightmove show a 2.8% rise in new sellers' average asking prices. This is the largest rise seen during October in 6 years, a highly unusual time of year to see such a strong sellers' market emerge, especially given the current economic backdrop.
Miles Shipside, commercial director of Rightmove comments: "It's a little bit crazy to have a sellers' market given the time of year and the warnings of imminent fiscal austerity by all the main political parties. Estate agents in the north as well as the south are reporting that quality properties are often selling within the week. Buyers are ready to pounce on new instructions and are willing to proceed as they believe prices have bottomed, and more are finding the ability to put down the larger deposits required to access the best mortgage deals".
Further evidence of the improvement in buyer sentiment comes from the latest Rightmove Consumer Confidence survey, which will be released at the end of the month. Analysis to date shows that only 1 in 10 of Rightmove's sample of over 30,000 respondents believes prices will be lower one year out, a massive turnaround from the beginning of the year when nearly 7 in 10 were of that opinion. Indeed, more than half expect house prices to be higher, rather than just levelling off.
As well as the largest rise seen in October since 2003, 2.8% is the biggest rise measured in any month since February 2008's 3.2%. A rise of this magnitude is more commonly seen in spring, when market optimism combines with demand fuelled by winter inactivity. Following last autumn's acute shortage of transactions, the market has seen gradual recovery throughout 2009. Mortgage approvals have grown year-on-year from circa 32,000 a month to 52,000, yet the supply of properties coming to market has not seen corresponding growth, resulting in upwards pressure on prices. This month sees national average asking prices at a higher level than a year ago, the first time Rightmove has recorded a year-on-year increase since June 2008. The 0.2% rise is led by a strong recovery in London, where property shortages and increased buyer demand see asking prices now the highest Rightmove has ever measured. They are 0.8% above their peak of November 2007 and 5.2% higher than this time last year. Lack of fresh stock is the driving factor behind this record high, with 16,808 properties coming to the market this month, failing to keep pace with the 19,890 coming off.
Shipside adds: "Political uncertainty can cause a period of slower activity in the housing market, and there appears to be a lot more at stake at next year's general election to make would-be movers pause for thought. Now could be a good time to sell, as the spring market could be curtailed by pre-election paralysis, with the post-election market dampened by the next Government having to implement its austerity package".
Despite signs of apparent stability, ministers and shadow ministers returning to Parliament following the party conference season must think very carefully about the likely impact on the housing market of short and medium term decisions:
- Stamp Duty and VAT - Stamp duty holiday due to end, and VAT due to rise on January 1st, giving aspiring and existing home owners less funds for house purchase
- Election - Hesitancy in housing market activity before and after election
- HIPs - Sellers may decide to hold off marketing if they anticipate a change of Government will reduce the requirements and costs for Home Information Packs
- Austerity - The effect of post-election fiscal tightening on people's housing decisions and needs
Shipside concludes: "The combination of economic hardship, pending taxation decisions and an imminent general election could stamp out the early stages of a housing market recovery. There are some tough calls over the coming weeks in terms of taxation. We will then see political uncertainty around the election posing a further challenge to the housing market. This time round the slowdown could be complicated by the need to cut back spending and the major differences between the parties on the future of Home Information Packs."
For further statistics and to download the Rightmove October 2009 House Price Index please visit - http://www.rightmove.co.uk/news/house-price-index or search for local house prices at http://www.rightmove.co.uk/house-prices.html.
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