Price rises are slowing down in response to rising supply and the average asking price for a flat has actually dipped slightly since July to £161,956, ending a 14 month rally, according to the latest asking price data from Home.co.uk.
Less affected by supply issues are detached, semi and terraced properties and asking prices are continuing to rise for the time being overall but home prices have dropped back during the last month in some regions.
The relatively strong regional markets of the South East, South West, East Anglia and Yorkshire have seen asking prices fall by 0.1%, the first time this has happened this year and is regarded as further evidence of a cooling market.
Greater London posted a more muted month on month asking price rise of 0.3%. Price rises in other English regions, Scotland and Wales since July were all similarly modest at 0.2% or less with the exception of the East Midlands where asking prices increased by 0.5%.
It means that the average annual appreciation for England and Wales fell by 0.3% to 9.3% as the dynamics in the residential property market show signs of changing. The increase in supply was particularly high in Greater London, up 39% compared with a year ago.
‘Record prices in Greater London have tempted many more potential vendors to sell. Supply is up 39% but we must remember that it is rising from an ultra-low level. Some 14,720 properties entered the market last month which is 31% less than the 20,615 properties that were placed on the market in August 2008. Such is the demand in London that supply would need to much more before price stability was seriously threatened,’ said Doug Shephard, Home.co.uk director.
‘If we look at the wider supply dynamics across the rest of the country it is clear that buyer demand is certainly lower than it was before the financial crisis of 2007, but supply remains very low indeed. On the demand side, mortgage lending is working and interest rates remain very favourable for the time being,’ he pointed out.
But he added that on the other hand supply has increased by just 6% over the last 12 months across the UK. Outside of London, the largest rises in supply were found in the West Midlands and in Wales with 9% and 8% growth respectively year on year.
‘Such modest increases, from what is a record low level, are hardly likely to cause a crash any time soon, but they will help tame price rises and that will both help stabilise the market and be welcome news for aspirant buyers,’ said Shephard.
The report also reveals an end to the improving trend observed in the slower markets in terms of marketing times. In August 2013, only four regional markets, London, the South East, East Anglia and the South West, had a typical marketing time of less than 100 days.
Now, in August 2014, this group has been joined by the East Midlands and the West Midlands, with typical marketing times of 89 and 92 days respectively. The North East, the North West, Yorkshire, Scotland and Wales all have typical times on market for unsold property in excess of 100 days. The North East remains by far the longest at 142 days.
Shephard concludes that the increase in supply should not be overplayed. ‘Higher prices have encouraged more vendors to enter the market but certainly not at sufficient numbers to cause significant distress to home prices. Overall, the UK property market is rebalancing, and price rises going forward are likely to be positive but more subdued,’ he said.
