Annual house price growth reached a four year low of 2.3% in January 2017, Rightmove’s House Price Index has revealed.
In early 2016 the market was boosted by buy-to-let investors rushing to beat the April stamp duty deadlines, making this year seem subdued by comparison.
Miles Shipside, director and housing market analyst at Rightmove, said: “While the prices of goods in shops are rising at a faster rate, the pace of price rises in property coming to the market is slowing.
“They’re still 2.3% higher than a year ago, but 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 surge in the cost of home-ownership highlights some of the issues referred to in the government’s recent Housing White Paper on fixing the broken housing market.”
Rightmove said slower price growth meant overpriced properties are at a greater risk of standing out as poorer value for longer.
Three quarters of estate agents said their local market is price sensitive.
The price of property coming to market is up 2.0% this month which is the smallest price rise at this time of year since February 2009.
Russell Quirk, chief executive of eMoov, said: “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.”
He added: “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.”
Keith Street, vice chairman of group lending at The Northview Group, said: “February can be one of the busiest times of the year for the property market, so a monthly rise in house prices is to be expected. Combine this with the ongoing lack of supply of housing and it’s no surprise that the market remains a highly competitive space.
“Due to such strong demand, it is important that brokers help those who may be struggling more than others to find a mortgage. Self-employed borrowers, contractors and those who may have suffered a credit blip need support from brokers and lenders alike.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “The housing market has always experienced monthly fluctuations in the price of property, so today’s results from Rightmove are no real shock, particularly as the annual figures continue to show house prices rising over the course of the year.
“After the fanfare surrounding the Housing White Paper, it is reassuring to see the government finally recognise and make plans to tackle the supply and demand crisis that is the root cause of the housing crisis. With a programme in place to address housing supply, it’s now time to get on with the job of building thousands of new homes, for all tenures, to create a fairer housing market for the future.”
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