Asking prices in England and Wales down 2.1% month on month
Residential asking prices in England and Wales fell by 2.1% this month compared to November but the decline is in line with the usual seasonal rates, according to the latest index to be published.
Prices of properties now coming onto the market are still 3.4% higher than they were a year ago with the average asking price now £299,159, according to the data from property portal Rightmove.
The firm is predicting that prices will rise by 2% in 2017 which will be the seventh consecutive year of price growth with supply likely to keep growth in positive territory.
The data also shows that sales have increased strongly, up by 5.2% month on month and with fewer properties coming onto the market this is likely to help the mark remain buoyant in the coming year, the report says.
All regions except London are selling at higher levels than a year ago, with three regions having increases of over 10%. In Yorkshire and the Humber at sales are up 15.4%, in the North East up 13.3% and in Wales up 11%. While London is down by 7%, it is a considerable improvement on the 18% decline measured in October, according to Rightmove housing analysts Miles Shipside.
‘Given the immediate post-referendum state of shock in July, these sales agreed figures are quite remarkable, with nine out of ten regions ahead on last year. While not unexpected in the north of the country, it also includes all southern regions except London,’ he explained.
‘Demand for mass market housing remains undimmed, though buyers’ budgets are restricted and agents report that over-priced property is being shunned. Cheap and available mortgage money is a big factor in driving demand, and continuing market buoyancy next year will depend on banks remaining willing and able to lend,’ he added.
Indeed the 4.3% fall in asking prices in London is the largest decline in December for six years although there are signs of a pickup in activity with sales agreed compared to a year ago only 7.2% down in November compared to 17.6% in October.
But there will be considerable variation in the market in different areas. Rightmove is forecasting that the inner London is likely to remain weak and prices to fall by a further 5% in 2017 while outer London is predicted to record a similar increase to this year of around 3%.
‘The price of property coming to market in 2016 is currently up by 3.4% compared to a year ago, so while a forecast rise of 2% in 2017 is a lessening of the pace, it would still be the seventh consecutive year of rising property prices,’ said Shipside.
‘As well as prices moving out of reach for some buyers, Brexit uncertainty hangs over the market, an unknown factor that may or may not have damaging consequences for the economy and confidence. There was a bout of jitters with the unexpected referendum result, albeit now seemingly short lived, but more may arrive after Article 50 is invoked,’ he pointed out.
‘For the time being any nervousness is being over ridden by high demand for the short supply of suitable homes for sale in the lower and middle market in many parts of the country,’ he added.
The report also says that supply remains tight compared to a year ago, in terms of both new to the market listings and available stock for sale. Fresh supply is little changed, being only 2% above last year, failing to keep pace with and replace the 5.2% increase in sales agreed. Consequently, the number of available properties for sale per estate agency branch is down by around 5%, dropping from an average of 59 to 56.
‘Demand from first time buyers looking to buy rather than rent will continue, fuelled by monthly mortgage repayments being cheaper than rent, and rents forecast to rise further. Second-steppers’ family needs for more space and the right school catchment areas will help that sector, especially as their ability to trade up is assisted by lenders keen to attract their quality business,’ Shipside explained.
‘The upper end of the market, where transactions are often more discretionary, will still hang back as the cost of trading up is often a big jump for less perceived gain than in cheaper sectors. What is certain is that we will not have a skewed first quarter like this year’s, which was driven by April’s buy-to-let stamp duty deadline, and that may result in transaction numbers in 2017 being slightly down on 2016,’ he added.