The latest Rightmove house price index has revealed that the average house price in the UK rose by 2% – the lowest February rise since 2009.
According to Rightmove, the figure is well below the average 5% February uplift over the previous seven years, and has contributed to a further slowing in the pace of price rises, with the annual rate of 2.3% the lowest since April 2013.
The data showed that early 2016 was boosted by frenzied buy-to-let investors rushing to beat the April stamp duty deadline which makes February 2017 look subdued by comparison.
In addition, 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%.
Miles Shipside, Rightmove director and housing market analyst, commented: “Perhaps we’re approaching the territory where 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 a dose of Brexit uncertainty.
The housing market has had a long sprint since April 2013 when the annual rate was last below this level, so it’s not surprising that upwards price pressure is running on tired legs with average prices today being 23% or nearly £60,000 higher than they were then.”
Russell Quirk, founder and eMoov CEO, had this to say: “Judging by these latest figures the market seems to have been slow out of the blocks for 2017, but this isn’t the most transparent picture of current conditions for two reasons.
Firstly, the market will be very much finding its feet again with many sellers having abstained from their sale for the Christmas period. Thus, any slow down so early in the year is likely to be seasonal with the market getting a second wind heading into Spring.
Secondly, it is important to remember Rightmove’s data is based very much on asking price, not sold price, and gives us just a one month snap shot into one side of the property selling process.
What it does tell us for sure, is that the seller apprehension that remained prevalent throughout the back end of 2016, doesn’t seem to have quite subsided despite the market remaining strong. As a result, UK sellers seem to be adjusting their asking price in order to push through a sale in what they believe to be a weakened market.
Regardless of this trepidation, Rightmove reported a three percent annual increase in traffic levels, which suggests that demand on the other side of the fence remains strong. Not only are these early bird buyers likely to nab themselves a bargain due to the lower asking prices across the market, but this heightened activity will no doubt see this lull reversed when Rightmove release next month’s figures.”
Katherine Binns, research director, HomeOwners Alliance, comments: “We’ve seen the lowest annual increase in house price since 2013 and this could be a sign of things to come for 2017. The current uncertainty and the government’s looming deadline to trigger Article 50 before the end of March means that homemovers are taking a more measured approach when buying and selling.
Home sellers need to make sure their property is valued realistically and at the right price or they could risk losing out. Uncertainty can help savvy buyers push for deals and secure real value.”
Brian Murphy, Head of Lending for Mortgage Advice Bureau, added: “The data released by Rightmove today suggests that, whilst asking prices are still 2.3% up on average against the same time last year, buyers are now very much sticking to their budgets, with very little ‘wiggle room’. It’s likely that this is due to stricter lending criteria, and suggests that buyers are getting their ducks in a row financially before they start their property search in terms of applying for their mortgage to understand how much they can spend, meaning that agents are now finding it harder to ‘upsell’ properties and encourage applicants to look at properties that are out of their price range in order to encourage them to make an offer.
Therefore, in order to sell, vendors are having to price realistically. It’s interesting to note that Rightmove suggests that even overpricing a property by 5% could have a detrimental effect on the time it takes to sell a property in certain areas, which will no doubt ensure that agents are having to value far more accurately at the outset in order to ensure that vendor expectations are set at an achievable level.”