Prices hit all-time high but number of sales agreed down 5% on 2017
- New-to-the-market sellers push their asking prices up by another 0.8% (+£2,343) to a record high of £308,075
- Seven out of 11 regions achieve their highest ever asking prices, with year-on-year price increases of over 4% in East Midlands, West Midlands and Wales
- Record visits to Rightmove indicate strong interest in property, but uncertainty and stretched affordability have dented sentiment leading to more hesitant buyers and sellers in some areas:
- Number of sales agreed by estate agents so far in 2018 is down 5.4% on the same period in 2017
- London and commuter belt down most, with the number of year-to-date sales agreed versus 2017 down 8.5% in the South East, 7.8% in the East of England, and 6.9% in Greater London
The asking price of property coming to the market has hit a new national record with a monthly increase of 0.8% (+£2,343) pushing the average up to £308,075. Seven out of 11 regions have hit new price records this month. However, different markets are still operating at different speeds, and the overall picture is one of a less buoyant market both in terms of price growth and number of sales agreed.
Miles Shipside, Rightmove director and housing market analyst comments: “After six years of continual year-on-year price growth the current market is becoming increasingly price-sensitive, with new-to-the-market sellers being limited to an average asking price growth of just 1.1% over the last year. This is in spite of there being plenty of historically cheap mortgage products around for buyers who meet lenders’ criteria. Sellers need to pitch their price at a tempting level to entice buyers, as while there are signs of strong demand there appears to be hesitation among some buyers to commit.”
Lack of stock on the market means that agents in some areas report that the right property at the right price is still selling briskly. Indeed Rightmove has seen record visits in the first four months of the year showing that interest in property remains robust. Annual rates of asking price growth in excess of 4% are still to be found in the East Midlands (+4.8%), the West Midlands (+4.3%) and Wales (+4.3%). All other regions also remain positive year-on-year except London at -0.2% and the South East at -0.1%.
Shipside adds: “The last time the South East recorded an annual price fall was in 2011, indicating that the softening in the London market is now spreading to its commuter belt, while there are signs that Inner London may be closer to a price recovery. While this gives buyers in the South East the opportunity to negotiate prices down, in some of the more buoyant areas of the country the options to do so are more limited by a shortage of suitable properties on the market.”
Some London and commuter belt markets are in a period of price and activity readjustment. The number of sales being agreed by estate agents so far in 2018 compared to the same period a year ago has fallen most in the South East (-8.5%), the East of England (-7.8%), and Greater London (-6.9%). Nationally sales agreed numbers are down by 5.4%.
Shipside observes: “One of the goals of the Mortgage Market Review four years ago was to stop markets over-heating or becoming unstable. The combination of the restrictions on what buyers can borrow brought in by the Financial Conduct Authority and stretched buyer affordability are having their desired effect and are limiting price growth with a knock-on effect to sales agreed numbers. So while the current lending environment has its downsides, it is there to guard against painful boom and bust scenarios. People still need and desire homes, but need their wage rises to outstrip house prices. This has started to happen, but needs to carry on for a sustained period.”
Estate Agent’s View
Liz Brown, Divisional Managing Director at Connells says: “Both East and West Midlands continue to do well with strong price growth of 4% and good activity from both first-time buyers and home-movers. Prices in these areas hold steady – never seeming to suffer the excessive ‘peaks and troughs’ of other regions. Birmingham is in the throes of massive regeneration with HSBC relocating here, HS2 coming, lots of city centre residential developments to buy, rent and invest in and other Midlands cities – including Wolverhampton, Derby, Leicester Worcester – are all following suit and enjoying high demand. It’s not before time, London may have lost some ground for now, so it seems the Midlands is where the next smart money is going.”
Inner London closer to recovery as commuter belt falls
- New seller asking prices rise by 1.5% (+£9,707) this month, but London still remains marginally negative year-on-year with annual fall of 0.2%
- Some signs that Inner London may be closer to recovery with monthly price gains in Zones 1, 2 & 3 resulting in monthly rise of 3.1% and annual rate of decrease at just 0.3%
- In contrast Outer London, which first saw year-on-year falls in new seller asking prices only nine months ago, records a monthly fall of 0.2% (-£1,197)
- South East region, favoured heavily by commuters to the capital, sees year-on-year prices fall by 0.1%, the first time in annual negative territory since 2011
New seller asking prices rise by 1.5% (+£9,707) in London this month, but the capital still remains marginally negative year-on-year with an annual fall of 0.2%. There are some signs that Inner London may be getting closer to price recovery with monthly price gains in TfL Zones 1, 2 and 3 resulting in a monthly rise of 3.1% and annual rate of decrease at just 0.3%. In contrast Outer London may be further away from a price recovery. It first saw year-on-year falls in new seller asking prices only nine months ago, and this month records a fall of 0.2% (-£1,197).
Miles Shipside, Rightmove director and housing market analyst comments: “The price of newly-marketed property is up by 1.5%, nearly enough to pull London prices back above where they were 12 months ago. It is the largest monthly rise at this time of year for four years, though comparisons can be misleading with Easter falling at different times of year and distorting flows of property coming to the market. The figures have been boosted this month by strong rises of 4.2% in Zone 1 and 2.2% in Zone 2. These two zones typically have higher-priced properties coming to market which can buoy average prices, but after the annual price falls that began nearly two years ago this could be a sign of Inner London new seller asking prices trying to stage a recovery. It is encouraging to see sellers of more expensive central London homes testing the market rather than staying put, though buyers will still be looking to negotiate lower prices.”
The more expensive property markets in Inner London have been struggling for longer due to previous over-heating and being hit hardest by political uncertainty and stamp duty tax increases. Outer London and the popular South East commuter belt initially benefitted from an exodus of movers from Inner London, and indeed Outer London only saw annual price decreases from September 2017. This month Outer London records a fall in new seller asking prices of 0.2% (-£1,197). In addition the South East region, favoured heavily by commuters to the capital, sees year-on-year prices fall by 0.1%, the first time it has fallen since 2011.
Shipside adds: “While there are signs of continuing strong demand there appears to be hesitation among some buyers to commit unless they judge that the price and property are a really good deal. There have been some substantial re-adjustments in Inner London that have been underway much longer than in commuter locations further out. Many owners have benefitted from substantial house price inflation but after a good run of year-on-year growth, price sensitivity is now spreading further afield.”
Transport for London zones
Average time to sell – London
Borough data is now based on a three month rolling average and can be used as an indicator of overall price trends in each borough over time. It is not directly comparable with the overall London monthly figures.