Asking prices fall across the UK, down for fifth month in a row in London

Asking prices in the UK fell in November, down 0.7% month on month in England and Wales and down 0.5% in Scotland, the latest index shows.

But year on year they are still up 2.6% in England and Wales and 1.1% in Scotland to an average of 3304.405 and £181.464, the date from the asking price index shows.

In Greater London asking prices slid for a fifth consecutive month, down by 0.3% and pushing the year on year fall to 1% and taking the average price to £531,503.

The strongest asking price growth as in the East and West Midlands with year on year growth of 6.4% and 6% respectively, although prices fell month on month by 0.3% and 0.6% to £225.043 and £237,860.

The North West and Yorkshire have also shown the best price performance for many years, with gains of 4.4% and 4.7% respectively year on year but as with the rest of the country the seasonal slowdown saw asking price drop by 0.7% and 0.6% to £194,304 and £187,898.

Indeed, asking prices fell in all the English regions and Scotland over the last month, which is consistent with the seasonal expectations, although Wales showed a surprising rise of 0.3% since November, indicating increased strength in the property market.

The index also shows that the typical time on the market for England and Wales increased to 93 days but two days less than in December 2016 while the total stock of properties on the market in England and Wales nudged up 1% year on year, suggesting that supply is perhaps beginning to outpace overall demand.

The index report also shows that the number of new sales instructions has jumped by 11% across the UK while the supply of rental properties has fallen by 16% in year on year.

‘Seasonal expectations come into play at this time of year and month on month declines are the norm. However, a worrying observation that is not consistent with seasonal expectations is a significant jump in new listings of property for sale, up 11% in November 2017,’ said Doug Shephard, director.

‘Indeed, should the trend continue, we warn that such a rapid rise in supply would lead to rising stock levels as demand becomes overwhelmed. Such an event would transform the current benign stagflationary conditions into a destabilising deflation in home prices,’ he added.

Shepard believes there is a chance that the decline in available rental properties may be due to landlords exiting the private rented sector in the face of a rapid increase in taxation and regulation in the sector. ‘The clear and present danger, of course, is that this initial trickle of increased supply becomes a flood,’ he said.

‘However, any such increase in supply is likely to be localised to low yielding properties that have, partly through Government intervention, become loss making. Hence, such areas will be restricted to marginal, overbought areas where yields can be as low as 1% or 2% and/or rents are in decline and voids are rising,’ he explained.

But he pointed out that the converse could be true of the UK’s most dynamic regional markets. Substantial rent rises over and above the rate of inflation are evident in both the East and West Midlands and the North West, up 9.6%, 4.9% and 5.5% respectively year on year.

‘Moreover, home prices are also rising fast. The combination of both increasing home values and rents, together with decreasing marketing times, indicates that these regions will continue to outperform and not suffer a wave of oversupply in the near future,’ Shephard said.

‘For the moment, the UK property market is stable and stock levels remain relatively low overall, although some regional variation does exist. We will be keeping a close eye on the typical time on the market, a key forward indicator, throughout 2018. In December 2016, the annualised rate of increase of home prices was 3.4%, today the same measure is 2.6%,’ he added.