While Rightmove’s index shows sellers’ prices are now 2% up on August 2007, the month before the UK economy faced the run on Northern Rock, they have fallen considerably in real terms when compared to retail price inflation over the same period.
In spite of sellers’ current record price aspirations, in real terms they are still an average of 13% lower.
London is the only region where there has been an inflation-busting increase over the same five year timescale, with asking prices 3% ahead of RPI.
The new asking price record is driven by a more robust market in the south of the country, with new regional price records set in London and the South East this month.
Miles Shipside, director at Rightmove, said: “While the national average price of property coming to market has set new records in each of the last three months, sellers should not break out the bunting in celebration until they have done their homework.
“It remains a very local market ruled by property style and location, and a few minutes study will reveal whether your property is hot or not.”
Agents report a two-tier market where those who can afford to price realistically are selling, while those who are equity-poor are struggling to sell as they often have to price up to make any prospect of a move viable.
At £477,440, London is up 1.7% (£8,126) on the previous average asking price high set last month, while the South East is 0.5% (£1,662) above its previous record set in October 2011.
The South West too is only some £300 off an all-time high.
Removing London’s record-breaking performance from the dataset demonstrates the extent of its impact on the national average.
Stripped of all the capital’s properties, the average asking price across the rest of the country would still be more than 5% adrift of its peak recorded nearly five years ago in August 2007.
Shipside added: “In these uncertain economic times, lenders feel safer to lend to those with a cash-cushion and those sitting on that cash often feel more comfortable with it invested in tangible assets, including bricks and mortar.
“The better properties in the better areas remain in short supply, giving sellers of sought-after stock, and their agents, the confidence to come to market at a higher price.
Greater London is the only region where the average asking price has outpaced inflation and is 3% ahead over the period.
The other nine regions of England and Wales have seen double-digit percentage falls in new seller asking prices when adjusted for inflation, with Wales the worst performing where real prices are now 24% lower than August 2007.
Shipside said: “Property has a track record of being a hedge against inflation and continues to be seen as such.
“However, whilst it has fared better than many investments in the last five years, it has failed to hold its own in real terms in most parts of the country.
“This reduction in real house prices would be great news for home-movers if their wages had kept pace with inflation and the return of mass-market mortgage finance was just around the
corner.
“However, the reality is wage freezes, rising costs of living, and continuing tight mortgage funding have squeezed affordability for many buyers.
“From a seller perspective, in spite of new record prices, most are still worse off in real terms than they would have been selling five years ago.
“The more property-affluent Londoners are the exception, and in the capital the more common rule of thumb is that the rich have got richer.”
