Asking Prices for New Listings in the UK Down by 2%

According to the latest index from Rightmove, asking prices in the UK were down by 2% in August, although this is something that is not unexpected at this time of year.

During the past few months buyer demand has been boosted by the continued economic recovery, low interest rates, and the government’s Help to Buy scheme. However the article in Propertywire points out demand does need to be balanced through the construction of new homes and more supply from sellers, if excessive house price inflation is to be avoided. Property prices have risen by an average of 8.8% since the beginning of this year, and there were record asking prices for apartments in August. IT is anticipated that demand will rise even more once the Help to Buy scheme starts helping people purchasing previously owned property, something that is due to happen at the beginning of next year.

Rightmove thinks that even though the recovery is steady, that as demand begins to outstrip supply, the Help to Buy scheme should be oriented towards people thinking of selling, as well as buyers in order to help balance the market. The number of property transactions this year has increased by 5%, but in comparison the number of properties coming onto the market has increased by just 0.2% which is one of the reasons why apartments are fetching record prices. The slight dip in prices for August is quite typical, and during the last five years this dip has been more than 2%. So far the average asking price of the property in the UK has increased by more than £20,000 this year. August is traditionally quite a volatile month, and asking prices have fallen in this month for every year recorded since 2007. Fewer people choose to put their property on the market as everyone is more focused on vacations and is prepared to wait until the fall selling season. Those sellers who do choose to market their property in August tend to be less able to wait, and consequently have to price their properties accordingly.

The concern now is that the property supply should improve as otherwise there are worries that there could be an unsustainable increase in property prices. Not surprisingly apartments are in high demand by first-time buyers as well as buy to let investors, and prices for this type of property have hit an all-time high due to the lack of supply.