UK Real Estate Asking Prices on the Rise



rightmove logoUK property asking prices went up by 2% in January froth their December level, leading to a 2.4% year on year increase, as shown by Rightmove data. The property website forecasts that both prices and transaction numbers for real estate will moderately grow in 2013, based on their increase in traffic in the new year. Rightmove also reported that the average asking price of January was of £229,429, a mere 0.4% (or £999) under the highest January figure ever of 2008, £230,428.

While overall data show an increase, there is a regional devide, with a higher increase for property asking prices in London (3.6%), the South East (3%) and the West Midlands 92.6%). At the other end of dropping asking prices are Wales with a 3.5% decrease, East Anglia (2.5%), the North West (1.8) and the Northern region (0.1%). The only Northern regions reporting an increase were Yorkshire and Humberside.

‘Those coming to market this month have taken a pragmatic pricing approach and kept their asking prices pretty much the same as sellers in December. Sensible pricing will help buyer affordability, one of the factors needed to help warm up the market and encourage a recovery from the credit crunch freeze in transaction volumes,’ said Miles Shipside, director and housing market analyst at Rightmove.  ‘The thaw will also be helped by growing confidence that prices are more likely to go up than down. There is an increasing body of evidence suggesting genuine green shoots of recovery after a prolonged period of the housing market bumping along the bottom.’

According to the newly released data, the weekly run rate for new properties listing in January was 11,153, 22% higher than last years value. While overall it is still down 37% compared to figures from before the credit crunch recorded five years ago, this is still the highest level in the beginning of a year since 2008.

‘While the number of sellers financially fit enough to come to market is still well down on pre credit crunch levels, there appears to be an increased willingness among those that can to give it a go. With Rightmove breaking traffic records, the chances of selling are on the up for sellers whose properties match the price, location and finish requirements of the greater numbers who are searching for a property to buy,’ explained Shipside. ‘Agents in many parts of the country report that the market remains patchy depending on where you live and what type of property you are selling. However, they are all consistent in noting that it is the best finished properties that are the most in-demand, especially as buyers do not have the spare cash to improve their new home so are hunting for the finished article.’

Rightmove’s latest data also showed that those who are going to put property on the market throughout 2013 are primarily driven by discretionary factors. 7 in 10 sellers are in this situation and not forced into the sale by factors such as the three Ds of death, debt and divorce.  Moderately greater mortgage lending might be in play for this year to support the increasing transaction volumes. According to the latest mortgage statistics released by the Bank of England, approvals were up by 3% from November 2011 to November 2012, the highest number of approvals recorded in November since 2007.

‘Those on the wrong side of the minimum deposit borderline are still marginalised, but those that have the funds and earning capacity to trade up will find some lenders offering fixed rate deals at their most attractive ever levels. Lenders are also courting buy to let investors as some areas offer a low risk combination of historically cheap purchase prices and attractive rental income. Rightmove research of professional landlords shows that 74% of those surveyed intend to buy and increase their portfolios within the next 12 months,’ Shipside explained further. ‘A further sign of market recovery is when investors look to property to achieve good returns. The majority of professional property investors appear to have spotted that now is the time to increase their investment, and they are obviously confident that prices are not going to get cheaper.’

While Rightmove comes with a bright forecast for property transactions and the real estate field in general for 2013, not everyone shares their enthusiasm. Nick Hopkinson, director of property company, PPR Estates, painting a very different picture.

‘Seller numbers, whilst up on last year, are still around half the numbers needed in a functioning market with an average of only 64 properties per agent in December 2012. Buyers still require huge deposits going into 2013. Typically they still average 20% according to the latest industry data and, of course, a perfect credit score remains essential for any borrowing. Also, potential buyers are not so easily excited about house prices and actual buying prices remain slightly down at best, excluding the London bubble, when you look at the most recent completion statistics,’ he said.