Asking prices reach new peak in 11 regions in the UK
Asking prices in the UK rose by a modest 0.4% in April, taking the average to £305,732, a new national peak, the latest index shows.
Some six out of 11 regions covered by the Rightmove index hit new average asking price peaks, however the property portal warns that a subdued annual rate of growth indicates that many buyers are price sensitive.
There were a record number of monthly visits to the portal in April, suggesting that there is strong interest in the market.
The data also shows that on average sellers are achieving 96.7% of their final asking price, a gap of just over £10,000 on the current national asking price, though this varies by region, location and property.
‘Home buyers are seeing average asking prices at their highest ever level with upwards price pressure getting stronger the further away you move from London. However, higher prices stretch buyers’ willingness to pay or ability to afford them,’ said Miles Shipside, Rightmove director and housing market analyst.
‘This month’s increase of 0.4% is the lowest at this time of year since 2008, though the subdued figure could partly be a re-balancing from the seasonally large 1.5% rise the previous month,’ he explained.
The North West has the strongest annual rate of asking price growth at 4.3%, a new peak for the region. While The East Midlands, up 4.2%, Yorkshire and the Humber up 2.7%, the South West up 2.6%, Wales up 2.4% and the East of England up 1.2% also hit new highs.
The index also shows that typical first time buyer properties with two bedrooms or fewer are up by 2.2% average year on year, while the sector favoured by second steppers, mainly comprising three bedroom properties, rose by 2.7% rise.
In contrast, the more expensive top of the ladder category, typically detached with four bedrooms or more, has a more muted annual rate of increase of 0.9% and is still behind its peak set in October 2017 of £542,347.
‘In the more popular locations and for the property with the right specifications, buyer demand is helping to push prices higher. A lack of choice is nudging prices up to test the ceiling of what the market will pay,’ Shipside pointed out.
‘It’s not rampant price inflation, and buyers can easily spot a speculative price and ignore a property that is out of line with others nearby, and is also likely to be out of kilter with their pocket,’ he added.
Rightmove analysis shows that the actual selling price being achieved nationally is 96.7% of the final asking price. Based on the current new seller asking price of £305,732, this would mean an average difference of over £10,000 or 3.3%, indicative of some sellers demanding unrealistically high asking prices. Nationally this percentage gap has increased from 2.8% to 3.3% over the past two years, evidence of a more challenging market in some locations.
In the West Midlands, the price achieved has risen from 96.4% of the final asking price in 2014 to 97.5% in 2018, making it the strongest region outside Scotland for achieving near asking price. In London, sellers were achieving 98.9% of the asking price back in 2014, and that has fallen to 95.6% this year, meaning a current difference of over £27,000 on the new seller average asking price in the capital of £628,039.
Scotland has the smallest difference with sellers achieving 99.4% of the final asking price, but its different selling system is an influence here, Shipside pointed out. ‘We stress that these are just averages and should not be treated as a rule of thumb that buyers should expect off any property up for sale. Many properties still sell for the asking price or even over if sought-after or attractively priced in the first place,’ he said.
Danny Belton, head of lender relationships at the Legal & General Mortgage Club, said that vendors and buyers must realise that the figures reflect average asking prices rather than completed transactions.
‘Actual house price inflation continues to rise at more sustainable levels that sit in line with wage inflation. That, and schemes such as shared ownership and Help to Buy are helping buyers looking to make their first step onto the ladder, so it’s no surprise that the number of first time buyers reached a 10 year high earlier this year,’ he explained.
‘There are still issues to address as supply remains an ongoing problem that needs careful attention from the Government, but it has undoubtedly been a strong start to the year for the mortgage market, and that can only be a good thing for prospective buyers,’ he added.