Autumn price surge in UK asking prices predicted
Various indices have been showing that UK house prices have been increasing but the latest survey from Rightmove shows that new asking prices have actually declined over the summer although it is predicting an autumn price surge.
Its report says that there was a summer price slowdown as discretionary sellers were distracted by the heat wave and have been waiting to market their properties. Those who were not willing or able to wait for the autumn have priced their properties more aggressively and asked 1.5%, or £3,704, less in August compared with the previous month’s sellers.
These tactics meant that new seller numbers fall by 9% to the lowest level since February this year but this fall in new listings and a rise in search activity has prepared the way for a surge in asking prices in the autumn and the firm detected a rise a couple of weeks ago.
As a result Rightmove has increased its 2013 forecast again from 4% to 6% as supply and demand imbalance grows. The data also shows that despite a slight fall, the average price of new to the market property is up by 7.2% or £16,506 so far in 2013.
‘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,’ explained Miles Shipside, Rightmove director and housing market analyst.
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 sellers having dropped their asking prices 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,’ said Shipside.
He pointed out that 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. ‘It 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,’ explained Shipside.
He also pointed out that while 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,’ said Shipside.
‘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,’ he added.
August saw Rightmove’s traffic up more than 20% year on year and average property stock per estate agency branch has fallen from 72 properties to 70 as property coming off the market exceeds the amount coming on.
‘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,’ Shipside concluded.