UK asking prices reach new high, latest index shows

Asking prices in the UK have reached a new record of £286,133, pushed up by demand which has been exacerbated by a lack of sellers putting their homes on the market.

The figures from the latest Rightmove monthly index also show that asking prices are up 1.6% month on month in April although the annual rate of growth has fallen to 4.7% compared to 5.4% in March.

It also reveals that the property shortage experienced in many parts of the country has been exacerbated by a 2015 slump in the number of properties being put up for sale and by increased demand, with record spring search activity on Rightmove.

Indeed, the number of new sellers is down 4% so far in 2015 compared to 2014 and March was the busiest ever month on Rightmove, up almost 20% year on year to 115 million.

The supply issue is at its most extreme in the south of the country, with the price of property coming to market up by an average of nearly £85,000 or 27.5% since the last election in May 2010.

‘Record high housing demand and an under supply of homes have delivered a new all-time high in the price of property coming to market in the month before the election,’ said Miles Shipside, Rightmove director and housing market analyst.

He believes that as the high cost of housing is a big concern for many home hunters, so the contents of the respective party manifestos and well thought out sustainable solutions to the lack of affordable housing supply will be high on many voters’ agendas too.

‘While the annual rate of price increases may be dropping back, down from 5.4% last month to 4.7% this month, it’s of little comfort to buyers as even more modest increases stretch buyers’ finances into new territory with prices at record average highs. Furthermore, the rapid fall in general inflation means that the inflation-adjusted rate of house price growth remains high,’ he explained.

While the recovering housing market saw an 11% increase in new seller numbers from January to April 2014 compared to the same period in 2013, so far this year’s newly marketed property numbers have slumped and are down by 4% compared with 2014.

Conversely, housing demand continues to burgeon, with Rightmove recording its busiest ever month in March. Website visits were up almost 20% year on year, to over 115 million.

‘Failure to meet house building targets since the eighties, nineties and noughties to match forecast housing demand has been a major factor in upwards price pressure both in the property sales and private rented sectors,’ said Shipside.

‘In spite of the distractions and uncertainty surrounding the upcoming election, demand for the right roof over your head seems unchecked. If you’re setting up home, moving jobs or your kids need to be in a new school, your personal housing agenda is perhaps higher than the bigger-picture political one,’ he added.

‘However, while demand is at record levels, there is less fresh property choice to buy this year as fewer home owners are coming to market. Hesitation to sell and the use of property as a long-term investment are factors in this month’s new price record, and as we approach the election the highest ever cost of housing sets an interesting challenge for political leaders,’ he concluded.

The challenge is greatest in the south of the country, particularly Greater London, the south east, the east of England and the south west, where the average price of property coming to market is up by £84,874 or 27.5% since the last election in May 2010.

The high demand for homes in London and severe shortage of new supply fuel a large proportion of this increase, with a £195,420 or 49% price rise in the capital in the last five years. The favoured commuter belt south east region has also seen knock-on affordability issues with new seller asking prices up by £62,105 or 20%.

In contrast the north of the country has seen prices rise by an average of just £6,374 or 3.7%, falling behind the rate of inflation, although this overall average obviously masks many areas that have seen substantial increases and subsequent severely strained affordability.

‘With low wage inflation, the increasing cost of housing is another burden for many. The problem is especially acute in the south, particularly those areas influenced by the high demand for housing within reach of the capital,’ said Shipside.