Property prices up in England and Wales, but at lowest level for February for years

Property asking prices in England and Wales increased by 2% since January to an average of £305,231 but the annual rate of growth has fallen to 2.3%, its lowest level since 2013.

But overall demand in the market remains strong, according to the report from property portal Rightmove which also says that getting the price right is the key to selling in the current housing market.

It points out that a slower rate of price increases makes it riskier for sellers to over price their property and they are 40% more likely to sell if priced right when they first come to market at a time when the monthly rise is the smallest for February since 2009.

Prices increased slightly more month on month in Greater London with the capital seeing home values rise by 2.6% to an average of £641,116 but it does depend on location. Inner London saw prices rise by 5.2% while in outer London prices fell by 0.1%. Overall prices are down 0.4% compared to a year ago.

According to the report London’s most expensive borough, Kensington and Chelsea, highlights some of the Inner London challenges and re-adjustment at the very top end of the market with a 14.6% annual fall and over £360,000 chopped off new seller asking prices.

A breakdown of the figures show that prices increased across England and Wales month on month apart from in the South East where they were unchanged. The biggest monthly rise was in Wales with an increase of 8% to £177,556 and prices are up 3.5% year on year.

The North East saw prices rise 4.1% month on month to £145,195 but are up just 0.1% year on year while in the North West prices increased by 2.1% month on month and 3.8% year on year to £180,984.

Prices increased by 3.5% month on month in the West Midlands and by 4.6% year on year to an average of £208,477, in the East Midlands they were up by 1.7% and 4.9% to £196,415 and in Yorkshire and Humber they increased 3.5% and 2.4% to £174,759.

In the East of England prices increased month on month by 1.5% but at £337,009 are 4.8% higher than a year ago, while in the South West they increased by 2.5% month on month and year on year to £291,885. But in the South East prices were stagnant month on month at £404,951 but are 3.1% higher year on year.

Miles Shipside, Rightmove director and housing market analyst, believes many buyers are unable or unwilling to pay what sellers are asking given the negative combination of rises in the cost of living, tighter lending criteria, and Brexit uncertainty.

He also pointed out that it should be remembered that in early 2016 the housing market was boosted by buy to let investors rushing to beat the April stamp duty deadline which makes this year look subdued by comparison. However, he added that demand remains strong with visits to Rightmove up 3% compared to January 2016, at new record levels for the first full month of the year.

‘Despite the slower momentum of price increases, the number of properties that estate agents are selling is holding up well in comparison to a year ago. Sales agreed are down by just 3.1% in January, with the bottom rung of the ladder understandably being the drag with a fall of 8.9%. This sector, comprised of properties with two bedrooms or fewer, also saw fewer new listings, down by 10.3% compared to the overall new supply drop of 6.1%,’ Shipside said.

‘While seller pricing power appears to be on the wane overall, the numbers of deals done is very robust, scarcely lower than during last year’s tax saving rush, although understandably quieter in the investor sector of two beds or fewer and in parts of London,’ he explained.

‘The slower pace of price rises means that overpriced properties are at greater risk of standing out as poorer value for longer, diminishing the interest of potential buyers. If prices are rising quickly then they will catch up with an overpriced property sooner, making it less obvious that it is more expensive than local comparable properties,’ he pointed out.

With buyer affordability increasingly stretched, some 75% of agents surveyed by Rightmove report that their local market as price sensitive and that an asking price more than a few percent too high will harm interest levels in the property.

‘With the annual rate of price increase now at 2.3% a property that is overpriced by more than 5% will have to wait more than two years for the market to catch up with it. Some sellers may have thought there is no price to pay by starting high and reducing the asking price later,’ Shipside said.

‘Overpricing loses you that vital initial interest and impetus, and buyers often have reservations about a property that has not sold as quickly as others or has had a price reduction,’ he added.