House prices surge into the new year
The latest Rightmove house price index has revealed that new property coming to market has risen in price by 0.5% (+£1,509) - the second highest rise at this time of year since 2007.
First-time buyers are also seeing a 6.6% year-on-year increase in the number of fresh-to-the-market homes in their target sector of two bedrooms or fewer, the highest since 2007. Additionally, the monthly price increase in this sector is at a near standstill (+0.1%, +£209), attributed to a keenness to attract buy-to-let investors before the April tax deadline.
Miles Shipside, Rightmove director, commented: “Upwards price pressure remains, with the second-highest rise seen at this time of year for nine years. The early snapshot of home-hunter visits in the first week of 2016 is up by 21% on the same period last year to 27.8 million visits, showing demand is not letting up either. Encouragingly for first-time buyers there’s more fresh choice with more property coming to market in their target sector. With their asking prices pretty much the same as a month ago, perhaps the knock-on effects of the more punitive landlord tax regime have arrived early and they now face a dilemma over whether to buy now or wait to see if prices drop in this sector over the next few months.”
Adrian Whittaker, Sales Director, New Street Mortgages, commented: “Today’s figures from Rightmove show that house prices continued to rise over what is typically a quieter period, as a lack of supply coupled with rising demand squeezes the market.
With this imbalance between supply and demand, the speed of a mortgage application could make the difference between having an offer accepted and losing out to another buyer. This makes it is even more important than ever for advisers to choose a lender that has the right technology and processes in place to offer a service that meets the demands of this fast-paced environment.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, added: “This monthly increase in house prices is unusual for this time of year, and we expect house price inflation to climb further over the course of the year. The lack of supply is making the market more competitive and an expected increase in demand in the coming months is likely to exacerbate this issue. The government and housebuilders must work together to address this problem by building more properties of the right size and in the right places to accommodate those looking to buy.
The government must also look to encourage more efficient use of current housing stock by helping more people to ‘rightsize’ through tax incentives and cuts in stamp duty. This two-tiered approach will help to reduce the current imbalance between supply and demand and make homeownership a more achievable goal for many.”