Its monthly index set a new national average asking price record of £249,841, as new sellers raise prices by 2.1% or £5,135 this month and the firm said it is the strongest price start to a year since 2004.
The south of the country has led the price surge with London, the South East and East Anglia hitting all time highs. In London the average price has passed £500,000, leaving the typical property in the capital more than twice as expensive as the national average and having risen by 3.1% in May compared with April.
But not all parts of London are seeing price increases. While Camden saw average prices increase by 7.2% and Brent by 5.9%, in the south west of the city Kingston-upon-Thames saw prices fall by 0.5% and in the east, Greenwich prices were down 0.1%.
‘The tumbling of records is being driven by the equity rich generation with a definite southern bias, though agents in most parts of the country are reporting strong demand for well priced and decent quality stock,’ said Miles Shipside, Rightmove director and housing market analyst.
However he pointed out that despite a new national record, it’s not a case of green shoots of recovery across the board, especially for the deposit strapped mass market. ‘They must wait patiently until January when the Help to Buy scheme extends to the resale market, unless new homes developers can increase building dramatically this year,’ he explained.
Two northern regions, Yorkshire and Humberside and the East Midlands, are still unable to come to market at higher prices than this time last year. Outside London and some southern hotspots agents report that the market remains sensitive to price and quality, with buyers willing to take their time to find their ideal home.
‘The recession appears to have precipitated a change in buyer behaviour which has left them more choosy and less willing to settle for second best. Not only are they looking for value and wary of paying over the odds, prospective buyers are also giving thought to ease of resale, a sign that the pain of this financial crisis has left them more mindful of the liquidity of their assets,’ said Shipside.
He believes that lenders are ‘cherry-picking’ in efforts to improve the quality of their future mortgage book by offering some tantalisingly cheap mortgage rates to those with decent deposits, courtesy of the Funding for Lending Scheme. There are fixed rates from 2.34% with a minimum 25% deposit, and even interest only options at 2.19% for those with a 50% deposit of at least £300,000 to put down.
Shipside said that the availability of cheap money is key to driving positive sentiment and, with 84% of respondents to Rightmove’s latest Consumer Confidence Survey stating that they felt prices would be the same or higher in 12 months’ time, this seems to be feeding through to home movers.
‘However, the pent up demand is still being frustrated by the restricted supply of fresh property. Rightmove has recorded 3% fewer properties coming to market when comparing the first five months of 2013 to those of 2012. This helped exert the upwards price pressure resulting in this month’s new record asking price,’ he added.
Feedback from clients show that demand exists. There was record Rightmove search activity in April, up more than 20% on 2012. ‘With choosier buyers and a lack of decent property for sale in some areas, those searching for property and researching the market got through a record 1.25 billion pages last month. Nearly 400 million of those pages were viewed on mobile devices, such as smartphones or tablets, a clear sign that home movers are fully embracing the benefits of being able to search anytime, anyplace, anywhere and access listings the minute they are added,’ explained Shipside.
One leading surveyors told the firm that it has been flat out carrying out mortgage valuations and with the latest Bank of England mortgage approval statistics for March up just 3% up on February’s five year low, there is an ‘off radar pipeline’ building up.
One London agents said that the upward price pressure continues. ‘Last year’s activity was crazy, this year’s is ridiculous. Multiple offers and sealed bids are the norm,’ he pointed out.
‘A shortage of fresh stock for sale and a flurry of deposit gifted first time buyers trying to get on the housing ladder before prices ratchet up even more, is keeping both viewers and agents even busier than the hectic activity of last year,’ he added.