National average asking prices of newly-marketed property rise by 0.7% (+£1,981) this month. This is consistent with the recent norm for this time of year which saw an average 0.6% February uplift over the previous two years. However, as we enter the traditionally more buoyant spring market the average annual rise of 0.2% (+£714) is the most subdued that Rightmove has recorded at this time of year since 2009. As a result, and with average wage growth now running at an annual rate of 3.4%, buyer affordability is improving at the fastest rate against average new seller asking prices since 2011.
Miles Shipside, Rightmove director and housing market analyst comments: “Longer daylight hours and green shoots appearing in gardens herald the start of the traditionally more buoyant spring market. Sellers’ subdued pricing is now being outstripped by higher average wage growth, meaning that buyer affordability is on the rise at the fastest rate in nearly eight years. Buyers are also being given the leg-up by cheap mortgage rates, if they can meet lenders’ criteria and lay their hands on a large enough deposit. In theory the scene would be set for an active spring if it were not for the uncertain political backdrop. As it is, the extent of that activity will depend on the degree of hesitancy among sellers to try to sell and be realistic on price, and buyers overcoming short-term uncertainty and taking a medium-term view that this is a good time to buy. As always those decisions will also be influenced by local market dynamics.”
While seller pricing power is generally diminished compared to previous years, spring buyers should again note the north/south divide that is a regular feature of the UK property market. New sellers in all northerly regions, including the Midlands, have sufficient pricing power that they can ask for modest increases compared with a year ago. Six of these seven regions are seeing annual asking price growth in excess of 2%, with Yorkshire & the Humber as the highest riser at 3.6%. Scotland is the poorest performer year-on-year, but new seller asking prices are still 1.6% higher. In contrast, all southern regions fall below that figure, with three having average prices cheaper than a year ago (London -2.1%, South East -1.4%, and East of England -0.2%). Conversely, buyers will be encouraged to act by having more fresh-to-the-market choice in all northern regions bar Wales, whilst all southern regions are seeing hesitancy to come to market with fewer new sellers than at this time a year ago.
Shipside observes: “Prospective buyers in three of the four southern regions are seeing new seller asking prices cheaper than a year ago, indicating that buyers have the upper hand over sellers when it comes to negotiating a price. This has obviously been a factor for some owners in those regions deciding not to come to market. Market conditions are more favourable for sellers further north though agents say that it’s still a very price-sensitive market where asking too much at the outset scares off buyers.”
The number of sales agreed by agents in January was 4% behind the previous January, so despite the political turmoil numbers are holding up reasonably well. Assuming that wage growth continues to be greater than house price growth, it will still take some time for improved buyer affordability to work its way through to more activity. Cheap mortgages help buyers, and lenders seem to be competing hard to lend with plenty of attractive fixed rates available to mitigate the risks of any future interest rate increases.
Shipside concludes: “A first-time buyer in London recently enthused to me that she and several of her friends were now buying properties. She was aided and abetted by a five-year fix of 1.7%, meaning that she could live cheaper on her own than sharing a rented property, since she was fortunate enough to be able to find the money for a deposit. Sellers’ greater willingness to negotiate because of the political uncertainty also helped her cause.”
Nick Leeming, Chairman at Jackson-Stops, comments: “As our uncertain market becomes the ‘new normal’ both buyers and sellers are coming to the conclusion that now is as good a time as any to make a move while interest rates remain relatively low. Prominent lenders such as HSBC are cutting their mortgage rates, including their 10-year fixed-rate loan products, which is particularly welcome news for first-time buyers and those looking to remortgage their properties over the next few months. Although a decade long fixed rate mortgage may seem like a big commitment, particularly to those new to the market, locking themselves in could provide the assurance they need while the UK navigates through Brexit, and the wider uncertain political and economic landscape. Given that we currently have no clearer idea of our position outside of the EU with so few weeks to go until Brexit day on the 29th March, it’s not surprising that some parts of the market remain hesitant. However, for those looking to make a move the best advice we can give buyers is to do their research. There is a limited supply of stock coming to the market currently, so if a property ticks all of the boxes in terms of price, location, access to key amenities and good transport links, we would advise them to really consider purchasing the home.”
James Scollard, owner of Clifftons Independent Estate & Letting Agents in Bournemouth said: “In our area we saw an exceptionally positive sales month in January, and the rental market remains strong. There is fundamental uncertainty in the wider economy, which is affecting confidence, but essentially the housing market where we are is solid. Home owners and first-time buyers are enjoying record low interest rates and as this is likely to continue, certainly in the short term, now is a good time to buy a home.”