Seasonal price trimming gives Christmas cheer to house buyers
11 December 2006
Average national asking prices dropped this month by 0.3% (£582), according to rightmove.co.uk.
However, it should not be assumed that the expected slowdown in prices in the second half of 2006 has finally arrived, or that the two recent interest rises are starting to affect the housing market. This small reduction is more likely due to seasonal factors. Sellers putting their properties on the market in the run up to Christmas are usually highly motivated to sell, and price their properties attractively to appeal to festively distracted buyers.
Nevertheless, there is good news for stretched buyers in most parts of the country this month. The prices sought by sellers have fallen in 7 out of 10 regions. Over the last 7 years, as house prices have risen, the winter months have always proved to be the best time for buyers to negotiate hard, and pick up a relative ‘bargain’.
Miles Shipside, Commercial Director of Rightmove comments: “Everyone was forecasting a slower rate of growth from June onwards as rising household bills hit buyers’ ability to pay record prices. However, the strength of the housing market in 2006 has exceeded everyone’s expectations, and we’ve seen further growth this autumn, which is only slowing down now that Christmas is on the horizon. For buyers, the small fall this month may indicate that sellers will talk turkey on their prices over Christmas”.
In spite of the monthly fall, the annual rate of increase has risen from 12.4% last month to 13% this month, the highest annual rate since October 2004. This is a gain of £25,570 in the last year, the largest nominal increase since September 2004.
London continues to pull up the national average. The annual rate of increase now stands at 23.6% (£67,730). This is the highest percentage increase ever recorded in London by the Rightmove index, which was launched in August 2002.
Commenting on the extraordinary London figures, Miles Shipside said: “For many, City bonuses are expected to be 25% higher than last year. As money appears to be no object to the fortunate recipients, this is feeding through directly to property prices. They are not the only ones to gain however. Their increased buying power has been cottoned onto by sellers who are pricing up to reflect that some areas are now more sought after than ever before”.
Rightmove forecasts average national asking prices will rise by 6% in 2007. As the current rate of growth slows, sellers will need to adjust their expectations according to local market conditions. Demand is likely to continue to outstrip supply in parts of the south leading to a continuation of strong growth, whilst the north will still be in positive, but far more modest territory.
Miles Shipside comments: “A shortage of supply of the right properties in the right locations means that upwards price pressure will continue. This is fuelled by demand from the everincreasing number of households, and with increased prosperity more people seeking to buy larger homes. A considered and carefully managed relaxation of planning policy is required to meet our current housing needs and aspirations, or prices will continue to spiral to unhealthy levels”.
Rightmove welcomes the recommendations of the Barker Review of Land Use Planning, as it is essential that the Government takes positive action to improve the supply of new housing rather than relying on influencing the housing market via taxation and monetary policy.
