Residential asking prices in England and Wales down 1.1%
The asking price of property coming onto the market in England and Wales fell by 1.1% in November but it was a smaller drop than the 1.8% average over the last six years showing signs of a resilient market.
The figures from the latest Rightmove residential index also show that prices are still 4.5% above a year ago, taking the average to £305,670.
But first time buyers are paying more for a home with the data showing that the asking price for homes with two bedrooms or less up by 1.7% this month meaning that compared to a year ago those people starting out on the housing ladder are paying 8.2% more, almost £15,000 and twice the growth rate of other sectors of the property market.
The price of a typical second stepper home has fallen by 0.6% this month but is up 5.6% compared to a year ago while the asking price of a top of the ladder property is down by 3.1% but still up 2.6% since November 2015.
It has been a roller coaster year for asking prices which ended 2015 falling by 1.3% and 1.5% in November and December respectively. Prices then increased steadily until July, just after the country voted to leave the European Union. They fell by 0.9% in July and by 1.2% in August before rising 0.7% in September and 0.9% in October.
‘Overall, house prices continue to hold up well. This is the smallest drop in average November asking prices since we saw the same figure in November 2011. Furthermore, the average time to sell of 65 days is one day quicker than at this time last year,’ said Miles Shipside, Rightmove director and housing market analyst.
‘However, price resilience is not good news for cash strapped aspiring first time buyers, and in spite of the more subdued time of year the smaller properties that they typically target have increased in price this month, the only market sector to show an increase,’ he pointed out.
New Rightmove research shows that the two groups most pessimistic about their housing situation both contain potential first time buyers. Those living with parents and those aged 21 to 24 ranked highest in negative sentiment, in stating it is a ‘bad time to buy’.
Shipside explained that while there are Government backed schemes to help entry level buyers, including the equity loan Help to Buy scheme running until 2020 on new build homes with the average age of a first time buyer being 33 and this scheme being limited to new build only, there is a chance for the government to help more people and a younger age group in the Chancellor’s autumn statement next week.
‘As well as helping people’s home ownership aspirations, activity at the bottom rung of the ladder helps the rest of the market to move and through that boosts the wider economy. Short term options that might be top of a first time buyer’s list would be a stamp duty holiday exclusive to them,’ said Shipside.
‘However, there are dangers to increasing demand unless this is matched by policies to improve supply, and more radical steps need to be taken to remove some of the barriers preventing more affordable homes to buy and rent from being built in the right locations,’ he added.
He also explained that one of the ways to make the price of the end product more affordable is to make the land element cheaper, though it is essential that this feeds through into cheaper new build property and is subject to quicker building programmes. Ideas that have been mooted include releasing suitable public land at below market value, speeding up and relaxing planning, and offering tax breaks to further incentivise landowners to sell up.
‘Some would say that we should try all of the above to quickly address a backlog now estimated at over two million dwellings across a mixture of tenures. Building two million extra homes in the short term is not going to happen, so the immediate goal must be to meet the current 230,000 annual target for house building and to include more affordable options,’ he said.
‘This needs a co-ordinated approach to create an army of appropriately skilled workers to include small and medium size developers and to massively increase capacity and output. This has to be facilitated by more innovation, creative funding and overcoming some vested interests. Local Authorities or Housing Associations have a major role for both social rented housing and the ownership ladder, perhaps allowing renters to build an equity stake that leads to gradually increasing shared ownership,’ he concluded.