- PRICES UP 2.9% MONTH-ON-MONTH – THE 2nd LARGEST MONTHLY INCREASE SINCE MAY 2002
- ANNUAL HOUSE PRICE INFLATION RATE RISES FOR THE 3RD CONSECUTIVE MONTH, TO 11.9%, FROM 10.0% IN FEBRUARY
- ACTIVITY CONTINUES TO GROW – NOW STANDING AT TWICE THE LEVEL IN DECEMBER 2003
This suggests that the buoyant conditions confirmed by both Halifax and Nationwide in their most recent indices are likely to continue for at least the next few months.
Average prices have risen by 2.9% over the month, from £174,506 to £179,570, the second largest monthly increase recorded since the ‘boom’ days of May 2002.
Since the beginning of 2004, asking prices have risen by a huge 5%, while Halifax and Nationwide have both reported rises in prices achieved of 3.8% over two months. Miles Shipside, commercial director of Rightmove, says: “All the indices are seeing the same thing: the market has rebounded with a vengeance this year, and for the moment there’s no sign of it abating. Those cautious commentators who had predicted 5% house price inflation for the whole of the year have clearly underestimated the strength of the market, since prices are already up by at least 5% - with estate agents in some areas reporting even larger increases.”
Annual house price inflation is also following the same upward trend, rising for the third consecutive month, from February’s 10.0% to this month’s 11.9%, the highest level since August last year.
2003/04 Annual house price inflation
Jan 03 26.5%
Feb 23.5%
Mar 22.5%
Apr 17.8%
May 15.6%
Jun 14.0%
Jul 13.2%
Aug 12.4%
Sep 9.1%
Oct 9.8%
Nov 9.9%
Dec 9.6%
Jan 04 9.9%
Feb 10.0%
Mar 11.9%
Miles Shipside continues: “Prices are storming ahead on the back of renewed interest from buyers, who have returned to the market strongly. Estate agents up and down the country are being run off their feet. Sellers are putting their properties on the market, but even more buyers are out looking for homes to buy, either previously owned or newly built. We’ve been seeing record site traffic on Rightmove.co.uk for the past two months and record email enquiries to agents, for all types of property in all areas.”
Stamp duty imbalance
The present average asking price for a home In England and Wales, of virtually £180,000, is almost three times the price at which the starting 1% stamp duty band applies (£60,000, below which no stamp duty is payable). Miles Shipside observes: “The original idea that most low-value first time buyer homes fell below the price at which stamp duty is payable has now completely gone out of the window: the average price of a property in England and Wales is hitting a massive three times the £60,000 stamp duty starting threshold. It’s not surprising that first time buyers are struggling to get onto the property ladder – not only are homes expensive, but also purchasers have to pay a swingeing tax to the government for the pleasure of buying.”
First time buyers returning
Nonetheless, there are signs that people are finding ways of purchasing their all-important first property. Miles Shipside continues: “First time buyers are now coming back, and are managing to do so in a variety of ways: some are joining forces with one or more friends, some are taking advantage of the very generous mortgage deals being offered by lenders, and some are getting financial help from their families.”
“Agents are reporting interest at all levels of the market, including the more expensive end which performed less well last year, and buy-to-let which remains buoyant. There’s about twice as much activity as there was in December, although this was of course a traditionally quiet time of the year. Since then, there’s been a sustained upward surge in the market, throughout January, February and into March, and this looks set to continue. Agents are bracing themselves for a busy few days over Easter, when many people traditionally begin house-hunting in earnest.”
Rightmove has registered rising asking prices in all regions of England. The largest rises were seen in Yorkshire & Humberside (+5.7%), the East Midlands (+5.3%), the South East (+4.0%), East Anglia (+3.8%), the South West and the North (both +3.1%), the North West and Greater London (both +2.0%). The West Midlands performed relatively less strongly (+0.5%), while Wales was the only region to register a decline (-0.7%).
The London market saw another solid rise, of 2.0%, on top of last month’s 4.1%, to break through the £275,000 barrier. The average asking price now stands at £275,459. “Year-on-year, the London market is beginning to move clearly back into positive territory, with prices now 6.4% higher than a year ago – in stark contrast with the negative annual house price inflation we saw in the capital as recently as January,” says Miles Shipside.
He concludes: “The housing market now seems to be back in full steam, with prices responding to the scarcity of homes on the market by rising strongly. Unless we start to see more properties coming onto the market, with borrowing costs still cheap and confidence sound, the only way for prices is up, and double-digit house price growth this year looks more and more certain.”
