Latest report from Rightmove shows asking prices still rising in May
Property asking prices in the UK increased by the modest amount of just 0.4% in May, taking the average price to £308,151, according to the latest index figures from Rightmove.
While the biggest increase in the price of property coming to market compared to a year ago in the typical first time buyer sector is in Croydon in Greater London, up by 18.6%. In regions outside London, but still very much in commuter belt territory, Dartford in the South East has recorded an 18.5% jump, with Luton in the East of England up by 18.4%. Agents report that all of these areas were the focus of considerable buy to let investor activity.
‘If you were expecting a long period of price doldrums at the lower end of the market following the mass exit of the buy to let brigade, this month’s 6.2% price rise will come as a big surprise,’ said Miles Shipside, Rightmove director and housing market analyst.
‘Properties at the lower end of the market were the most common target for the investor community, and the immediate aftermath of the tax deadline saw new seller asking prices drop in this sector for just one month. The 1.4% fall reported in April’s index appears to have been a very short lived knee jerk, with an average price surge of £11,298 this month for properties coming to market with two bedrooms or fewer,’ he explained.
‘It remains to be seen if these prices can be achieved and there may be some over pricing in the market; it is also a reflection of better quality property coming to market in this sector which is now targeting owner-occupiers rather than landlords,’ he added.
‘First time buyers are still eager to secure some of the very limited suitable supply in many parts of the country. Estate agents have perhaps been focused on getting investor sales through to completion before the tax hike, and some may have been surprised by the continuing momentum and scarcity of stock to meet ongoing demand,’ said Shipside.
‘The net effect is eye watering increases in asking prices in some towns, and is further stretching first time buyers’ affordability even though they are competing against fewer buy to let investors in the market,’ he added.
The country’s top price rise hotspot is Croydon, where Londoners priced out of some other parts of the capital have sensed a combination of convenience and value, aided by some serious regeneration,’ said shipside.
‘Dartford has also been a very popular and affordable area for London buyers prepared to commute from the South East region and also good for rental yields for investors. With 5% less property coming to market in Dartford in the last four weeks compared to the same period in 2015, limited fresh supply is also a big factor. Luton has been a low priced town for some time with easy London access, and has now come into play in the past 12 months,’ he added.
Conversely, six out of 10 regions contain some towns which have seen falls in average asking prices, with the largest drops in Llandudno at 7.5% and Darlington down 3%.
‘Not all towns are seeing these annual hikes, for example a typical first time buyer home in Llandudno is down 7.5%, and Darlington is now 3% cheaper. The health of local economies have a big influence on demand and affordability, and consequently the amount you can ask for a property,’ Shipside concluded.