Various residential property indices published by banks and mortgage lenders have shown that UK house prices have been increasing for some months, however the latest survey from Rightmove shows that property asking prices have actually declined over the summer although it is predicting an autumn surge in uk property prices.
The Rightmove report says that there was a summer slowdown in residential property prices as discretionary sellers were distracted by the heat-wave and have been waiting to market their properties.
Those property vendors who were unwilling to wait had priced properties more aggressively and asked an average of £3,704 (GBP) equivalent to 1.5% less for their property in August compared with the previous month’s asking prices.
These tactics meant that the number of new vendors dropped by 9% to the lowest level since February this year but the drop in new listings and a rise in search activity has prepared the way for an autumn surge in uk property prices.
Miles Shipside, Rightmove Director said: “New seller activity has fallen again this month and the lower volumes of property coming to market over the summer have resulted in price drops that seem counter intuitive given that buyer demand is holding up. Improving buyer activity appears to have become even further out of sync with sellers’ appetite to come to market during the summer heat wave. Overall Rightmove measured 96,330 properties coming to market, the lowest monthly total since February. Fewer people choose to put their house on the market during the summer holiday season and those that were not willing or able to postpone marketing until the autumn appear to have priced their properties to sell quickly. Whilst it is not unusual to have a price fall during the summer months, with new residential property sellers have dropped the asking price for residential properties in five of the last seven Septembers, it might have been anticipated that the more active market we have seen recently would lead to sellers bucking the trend. Residential property sellers have yet to respond en masse to increased buyer demand, with the summer heat wave distracting home owners from the recovering market and increased chances of finding a buyer and moving home. This shows that potential sellers are still cautious and a return to a volume market remains elusive. Those that think the housing market is nearly back on its feet are missing the fact that the confidence and ability to take on extra debt have a considerable time lag, and many potential sellers require green stalks of recovery rather than just green shoots. Volumes of buyer transactions have begun their recovery, with the latest year to date transaction and mortgage approval statistics up by 8% and 16% respectively on the same period of 2012, new seller numbers have yet to react and are just 0.5% up so far this year compared to last. This month’s latest fall in fresh property supply against a backdrop of increased willingness and ability to buy is likely to result in a price surge as the “in before Christmas” market gathers pace. However, this surge will be most marked in areas and property types where demand is strongest, and properties in less sought after areas may still struggle to find a buyer. Weekly analysis shows evidence of the start of an autumn upturn as new seller asking prices bottomed out at the end of August and started rising two weeks ago with the end of school holidays and the return of cooler weather. Potential sellers should note that there is the possibility of this autumn’s market being a better time to sell than 2014 if you are trading up. The price gap to trade up might be smaller now and there may be more competition from other sellers next year if January’s second phase of Help to Buy unlocks the housing market”
Rightmove have now increased their 2013 forecast upwards from 4% to 6% as the residential property supply and demand imbalance widens, ready for an autumn surge in uk property prices.
The data also shows that despite a slight fall, the average price of new to the market residential property has increased by 7.2% or £16,506 (GBP) so far in 2013.
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