Have we neared the limit in house price rises?

According to the latest report from haart, house price rises over the last year are not sustainable and sellers need to be more realistic in their asking price in order to achieve a successful sale.

Related topics:  Property
Warren Lewis
25th May 2016
house prices up

Paul Smith, CEO of haart, the UK’s largest independent estate agent comments: “We’ve seen a roaring month with the average house price up 1% on the month and 12% on the year, a record high. Sales also increased 14% over the last 12 months.

However, there is trouble in paradise, as we are also starting to see a big slump in buyer demand with registrations down a huge 46% across the UK in just one month. This has been compounded by buy-to-let investors pulling out of the market following the new stamp duty surcharge which came into effect on the 1st April.

We believe the nation has now neared the limit in terms of price rises. Our data is already showing a slowdown in both house price growth and transaction levels. In order to maintain healthy sales levels sellers need to be much more realistic with their asking prices – properties are in danger of being over-valued and these homes will struggle to sell. They could also be at risk of lenders refusing to grant high LTV mortgage applications based on these too high valuations.

Despite the general fall off in new buy-to-let demand, we are continuing to see high levels of investment from Europe – there is still a huge appetite to invest despite the upcoming EU referendum. While there is a certain level of uncertainty in the property market which will further reduce demand in the short run, in the longer term, this will simply be a slight blip in an otherwise powerful property market. Regardless of the result, the UK and in particular London, will remain a global safe haven for property investment.”

The average UK house price increased 1% on the month and 12% on the year in March to reach a record high of £234,069. This is a continuation of the stable positive trajectory seen over the last couple of month.

The number of new buyers entering the market dipped dramatically between March and April, down 46% on the month. This comes as a result of buy-to-let investors exiting the market, following the new stamp duty reforms. Meanwhile, the supply of new homes has risen 1.9% on the month and 2.7% on the year.

Sales surged by 14.1% on the year in April and increased marginally by 0.8% on the month. At the same time, buyer viewings declined 1.9% on the month and 3.9% annually.

First-time buyer house prices have dipped 0.2% on the month but have increased 10.5% on the year to reach an average of £159,455. In conjunction with this, the average first-time buyer deposit has fallen 1.2% on the month but rose 7.4% annually. In line with the rest of the market, demand from first-time buyers has fallen 45.1% in the last month alone.

The average property price in London has increased by 7% annually, less than the average house price growth for the UK as a whole. However, in North West London, house prices have seen a huge 23.3% increase over the last 12 months. Demand for properties in London has seen a 14.6% fall on the month and the number of new first -time buyers registering has declined 11.7% over the same time period. However, the number of new properties coming onto the market has risen 1.2% on the month and 2.5% on the year.

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