The latest data from Rightmove has revealed that the price of property coming to market increased by a substantial 2.9% (+£8,324) this month, hitting a new record of £299,287 and surpassing the record set in October 2015 by over £2,700.
The price of property coming to market has hit a new record less than two months into the new year’s seasonal upturn. New seller asking prices have increased by a substantial 2.9% (+£8,324) this month, in spite of some improvement in the balance between supply and demand. There has been an encouraging 5% uplift in the number of new properties coming to the market compared to the previous year, which will help to meet some of the record demand from home-movers. New supply of typical first-time buyer homes has increased most, up by nearly 10% this month, a welcome boost alongside other initiatives for those looking to get onto the housing ladder in 2016.
Miles Shipside, Rightmove director and housing market analyst comments: “The new year’s market has hit the ground running in many locations, continuing last year’s momentum and resulting in the price of property coming to the market hitting a new high. Many agents reported high numbers of sales in November and December and properties selling more quickly, so it’s encouraging to see signs of replenishment of property, especially in the first-time buyer sector. However, in spite of the apparent veneer of market buoyancy, those thinking of putting their property up for sale need to avoid being too optimistic with their initial asking price, as most buyers are still understandably being very selective about their future home.”
Record prices and demand with some recovery in supply:
The previous record price high was set in October 2015 but this has now been exceeded by £2,738, pushing the average new seller asking price to £299,287. Demand for housing as measured by traffic on Rightmove and enquiries to agents is also at record levels. There were over 127 million visits to Rightmove in January, up by nearly 20% on January 2015, with phone and email enquiries to agents also at an all-time high of over 4.9 million in the month.
A continuing feature of the recovering market over the past few years has been the supply of property coming to market failing to keep pace with demand. There are now welcome signs of fresh supply increasing with the volume of new properties coming to the market is at the highest level since the credit crunch of 2008. However, it should be noted that this is patchy by region with only four regions above the 5% year-on-year average uplift, namely London, South East, South West and Yorkshire & the Humber. In the West Midlands new stock is actually down by 0.3% and Wales and the North West have seen an uplift of 1% or less, restricting fresh choice for buyers in these regions.
Shipside explains: “While more properties are coming to market there is little anecdotal evidence of tax-shy landlords selling up. It is more likely made up of additional first-time sellers who are either hoping to bag a buy-to-let investor before the April stamp duty hike, or joining others who are deciding that 2016 is their year to trade up. Those trading up are no doubt encouraged by the stable interest rate outlook reassuringly communicated straight from the Governor’s mouth.”
The Year of the First-Time Buyer
The sector seeing the highest volume of new properties coming to the market is the typical first-time buyer property with two bedrooms or fewer, up by 10% this month compared to the same month last year. 2016 could be the year of the first-time buyer encouraged by low interest rates, initiatives such as Help to Buy, and buy-to-let investors facing increasingly adverse taxes.
Shipside observes: “For the second month running the highest increase in supply of homes coming to market is properties with two bedrooms or fewer, typically the target purchase of first-time buyers or buy-to-let investors. There is a 10% uplift in new supply compared to the same period in 2015, meaning all regions have more fresh choice in this sector than at this time last year. Regions outperforming the national average with over 10% more newly-marketed homes with two bedrooms or fewer are London, East, South East, South West, West Midlands, and Yorkshire & the Humber, and if this trend continues the increased competition among new sellers may help to temper price rises. More and more agents are reporting a healthy return in first-time buyer numbers, and with the cards increasingly stacked in their favour 2016 could prove to be the year of the first-time buyer.”
Simon Woodcock, Managing Director of Robinson Michael & Jackson in Medway said: “Sales are up 12% this January compared to January 2015, reflecting the positive sentiment in our local market. 40 of our 153 sold properties in January went to first-time buyers, and we can only see a continuing surge in the number of first-time buyers entering the market, as more entry level homes and flats are being rebuffed by landlords. Buy-to-let investors are certainly feeling the effects of the forthcoming 3% extra stamp duty charge and this means they’re now overlooking homes that they would have previously snapped up. It’s a positive side effect for first timers. Many parents are remortgaging to release equity from their own homes to pass on to their children – many of whom are struggling to save a decent deposit.”
Robert Scott-Lee, Managing Director of Chancellors in Surrey, Bucks, Oxfordshire & Berkshire says: “January has seen a huge jump in demand that has surpassed the normal seasonal increase. Undoubtedly, this is partly fuelled by investors looking to take advantage of a quick purchase before the tax change in April, and sellers looking to secure a sale to an investor who is panic buying. Sadly, our expectation is that with lender and conveyancing delays many will miss the deadline of April and this will create some disruption with sales falling through or renegotiations on price being attempted by some purchasers. Talk amongst the savvy investor is already of waiting until after April to secure purchases that have failed to meet the deadline where sellers need to sell this spring. With good lender rates on offer we still expect demand to rise even past April, but perhaps without the panic factor we have seen through January and February.”
Simon Wilkinson of The Wilkinson Partnership in Leighton Buzzard says: “The January market has been far more buoyant than might have been expected, due in part to the mild weather. We have seen a sharp rise in homeowners asking for advice about selling and we are just starting to see signs of a modest increase in for sale stock. Buyers are out and about, but now with more research available, are much more savvy about prices, thus over optimistic pricing is stalling some house sales.”