This followed a 2.9% contraction in August and it is the first rise at this time of the year since 2011. Rightmove says that it marks an earlier than usual sign of autumn activity picking up.
London also saw prices edge up by 0.9% over the month to reach £557,792 on average. Three regions have seen prices fall. They were down 1.8% in the West Midlands, down 1.6% in Wales and down 0.8% in the North West.
The report says that the indications are that pent-up demand remains in spite of a summer lull and enquiries to agents are up overall by 16% year on year, the second highest ever monthly level.
It also suggests that the upturn has been aided by holidaying home hunters being constantly in touch, with 45% growth in enquiries from mobile devices in August compared to last year.
However it adds that the current ‘window to move’ may be compromised by economic uncertainty if Scotland votes for independence with the referendum vote later this week as markets do not like uncertainty.
‘We usually see a price fall at this time of year as potential home movers are generally still in holiday mode. However, it looks like there are early signs of a bounce back in demand after the summer lull, leaving those estate agents with a shortage of stock at a potential disadvantage and therefore eager to attract new instructions,’ said
Miles Shipside, Rightmove director and housing market analyst.
‘While there is more property coming to market this year, it has been more than swallowed up by increased sales. There is already 10% less property available per estate agency branch compared to this time a year ago, and with enquiries by phone and email to agents up by 16% compared to August last year, and at near record levels, you can see why there has been an earlier than usual price pick-up,’ he explained.
‘The ability of potential buyers to remain on-watch and in-touch and react more quickly is also a factor. While you may be switched off from work during the summer break, many people’s mobile devices are still switched on to the internet to see what’s coming to market,’ he added.
But he pointed out that there is a risk of less certain consumer outlook for remainder of 2014. So far 2014 has proved to be the ‘year to move’, with consumer confidence buoyed by consistently low interest rates and improving economic data after several years of an uncertain outlook.
The number of housing transactions recorded by HMRC in England and Wales for the year is currently on course to be between 1.1 and 1.2 million, which would be a significant improvement on the 970,000 transactions last year and the 800,000 average of the previous five years. HMRC’s transaction numbers for completed sales in the year to July are up by 22% on the same period in 2013, and Rightmove has measured an average 12% increase in new seller asking prices over the same seven month period in 2014.
After a very hectic first half the momentum driving the rises in transaction volumes and house prices was bound to pause, as buyers, lenders, and regulators questioned value, affordability and sustainability. Whilst our latest data suggests the market is poised for a resumption of strong activity, albeit at a less heady pace, some analysts are forecasting a return to a less certain economic outlook should there be a vote for Scottish independence. Events that cause uncertainty have historically been a dampener on housing market sentiment and activity.
‘Even the very debate around Scottish independence and possible implications for the economic outlook for the rest of the UK could cause uncertainty in the minds of potential home movers contemplating a large long term financial commitment, said Shipside.
‘Speculation amongst economic forecasters on topics such as upwards pressure on interest rates, availability of wholesale funding for lenders, and the geographic location of major financial institutions are potentially destabilising influences on consumer sentiment. Should the independence vote win the day, then there could be months of uncertainty with the forthcoming general election causing further disruption,’ he explained.
‘From a buyer perspective when other home-movers are nervous it can be a good time to act, as harder bargains can be driven. Those who are buying and selling in the same transaction may have to drop their selling price but could be able to make up the difference by paying a lower price for their onward move,’ he added.
‘Locking into a fixed rate mortgage would help guard against any increased interest rate volatility. The other point to remember is that waiting and pin-pointing the best time to move can leave your life and future property enjoyment on hold for years, so if the sums stack up and the property suits your needs then it might be best to ignore the what-ifs and maybes,’ he concluded.
Tony Morris Eyton, Savills head of country house sales in the northern region, said that even if values aren’t rising, activity and general sentiment are much more positive than earlier in the year.
‘Buyers are still cautious and savvy but they are demonstrating far more commitment, particularly in the market below £400,000 and specifically in towns and more urban areas. Nottingham is as an example of a large regional centre in the Midlands where activity is thriving and in Shrewsbury the market has picked up significantly,’ he added.
Nick Hougham, Operations Director of haart in London, reports a surge in prospective buyers registering with the firm, alongside more properties coming to market now that people are back from holiday and children are back to school.
‘September is a key month for those who definitely want to move by the end of the year to act. There are still more applicants than sellers in many parts of London with some recent in-demand hotspots including Brixton, Streatham and Croydon, as well as Ilford and Romford. Areas at the end of commuter lines such as Stratford are also becoming more popular as new money and regeneration drives demand,’ he said.
Russell Quirk, chief executive of online estate agent eMoov, said that it is clear that the rate of increase in pricing is slowing and which indicates that sellers are becoming more realistic, especially in the capital.
‘This is a good thing. The media hyped increases in value over the past 12 months or so, especially in London, were completely unsustainable and this cooling will make for a more sensible balance in the short to medium term. It may even stave off an interest rate hike given the Bank of England’s prior warnings that an overheating housing market would trigger such a reaction,’ he explained.
He too believes that the Scottish vote could affect the housing markets. ‘All eyes are now fixed on Scotland ahead of the independence vote, which could see a house price shake-up north and south of the border. General economic uncertainty as a consequence of Scotland going it alone and discord over their currency position when they ditch the pound will hardly make for a robust dynamic,’ said Quirk.
‘In precarious times, one of the first things to suffer will be jobs. Unemployment means home repossessions and a downward pressure on home values as a consequence. The result for house prices north of the border is potentially catastrophic,’ he pointed out.
‘The average house price in Scotland is £160,000. A 20% drop in values, which we could easily see, would mean a £32,000 loss on the typical house price. Given that the Scottish market has not yet returned to its peak levels of 2007, we could see mass negative equity and severe hardship for many,’ he added.
