Asking prices hit record high despite looming EU vote
- Housing market momentum pushes price of property coming to market up by 0.8% (+£2,320) to new high of £310,471
- Desire to buy and lack of supply lead to fall in time to sell to 57 days, the fastest ever measured by Rightmove
- Some signs of referendum-associated uncertainty with fewer new sellers coming to market:
– newly-marketed property numbers down 5.3% compared to average at this time of year
– most reluctant are owners of larger homes (four or more bedrooms), down 6.6% on the average
The average price of property coming to market has hit a new high of £310,471 with a monthly rise of 0.8% (+£2,320). There have been price rises every month so far in 2016, showing that the uncertainty associated with the EU referendum has failed to halt this year’s upwards price momentum. This is in contrast to the run-up to the May 2015 general election, when the electoral uncertainty resulted in a price fall of 0.1% in the month of the election. This year the first quarter buy-to-let surge has exacerbated the shortage of suitable property for sale, and with ongoing buyer demand fuelled by cheap mortgage money, there appears to be greater resilience. The result is that the average time it takes to sell a property is at its lowest level since Rightmove started monitoring it in 2010.
Miles Shipside, Rightmove director and housing market analyst comments: “In many parts of the country, the over-riding factor of supply outstripping demand has so far overcome buyers’ usual reluctance to make major financial decisions at times of political uncertainty. Most seem to be getting on with the certainties they can control, namely if you find a suitable property snap it up. Indeed the figures for average time to sell indicate that properties are being snapped up more quickly than ever.”
The average number of days to sell stands at 57 this month, down from 60 the previous month. At this time last year it was 65 days. While some prospective buyers are putting in offers within hours or days, this is an average for all properties and the timescale is from when a property is first marketed on Rightmove to when the estate agent marks it as “sold subject to contract”.
Shipside explains: “With today’s tighter lending criteria, marking a property as sold before you’re certain that the buyer has the means to pay for it could mean missing out on other more suitable purchasers. It takes time to check that a prospective buyer can get a mortgage, and ensure that all other buyers in the chain are also in a position to proceed. In spite of these extra delays and necessary diligence, the length of time to sell is the lowest we’ve ever measured. However, this does not mean that sellers can be over-ambitious on their asking prices, as buyers’ affordability is increasingly stretched and they’re shopping around so their budgets go further. If you set too high a price your property can become stale and be ignored by suspicious buyers even if later reduced to a more sensible figure. Given that housing markets dislike uncertainty, which could become a reality in the event of a Brexit vote, any dampening of buyer activity might mean that more realistic pricing would be an even more critical factor to achieve a sale.”
While most of these headline figures show few signs of pre-referendum distortion, there does appear to be uncertainty among those contemplating putting their properties up for sale. Fewer new sellers are coming to market, with this month’s numbers being 5.3% below the monthly average for this time of year since 2010. The most reluctant are owners of larger homes, those with four or more bedrooms, with 6.6% fewer sellers over the same time period. Given the well-documented structural shortages of housing supply any longer-term reluctance of owners to come to market would be a worrying trend.
Shipside observes: “If you’re debating whether to trade up and make a big financial commitment you naturally might hesitate before putting your property on the market just a few weeks before you know the vote outcome. With mere days to go the number of new listings is still about 95% of the norm for this time of year, so the drop-off is relatively small in spite of what many are calling the biggest vote of our generation. This could mean that people are struggling to assess what the impacts might be, or are choosing to ignore them until they become more apparent. A vote to Remain should mean that the housing market quickly returns to its previous norm, but a vote to Leave would create political and economic uncertainty, which historically has had more serious repercussions.”
Rupert Briggs of The Personal Agent in Surrey says: “The market is still very strong in our areas and we have more buyers than sellers. The market is definitely a lot more price sensitive, and properties need to be marketed at the correct price to achieve a good level of interest. There is a little uncertainty regarding Brexit but in general it has not affected the market in our areas.”
Kai Logan of Bradleys Estate Agents in Somerset, Devon and Cornwall says: “Activity in the market place remains strong with figures on instructions, viewing and offers all very positive. There appears to be a slight hesitancy with buyers committing to a purchase, particularly on higher priced properties. We expect to see heightened sales activity following the EU referendum when people know the outcome, regardless of the result.”
Prices fall this month in London but no other region
- The price of property coming to market falls by 0.2% (-£971) this month, the only region to record a fall
- Why is London bucking this month’s national and regional upward price trend?
– Capital’s +55% rise since 2010 means the other regions at average of +24% still have price momentum
– Effects of more punitive property tax regime for higher-priced or second homes still a major drag on activity and prices
– Uncertainty around EU referendum and possible effects of a Brexit greater in London than elsewhere
Breakdown by London Boroughs
National Report, 2015
London Report, 2015