- House prices are up 2% from last month and 12% from last year – the highest rate of annual inflation for over a year.
- Sellers market: sale prices achieved are an average 97.7% of the asking price – the highest since 2002
- However transaction levels remain stable, not helped by the limited number of properties for sale.
- Percentage of first time buyers falls but remains higher than in 2003.
- Estate agents getting more bullish – 93% expect prices to rise further and almost two thirds are reporting higher price rise expectations than at the start of the year
Prices up but supply down
House prices jumped up again in March by 2% and are 12% higher than the same time last year. The rate of annual price inflation is now the highest since March 2003. However the number of transactions was stable at around ten per month, the same as the previous month and the previous year. The number of house buyers fell from the previous month, but the supply of properties available dropped even more, ensuring that demand continues to exceed supply.
First time buyers drop again
The percentage of sales to first time buyers dropped slightly to 16% after hitting a recent high of 20% last month. However this is still much higher than for the latter part of 2003. New buyers are not giving up on the market and are being helped by mortgage lenders offering even higher multiples of income to help them get on the property ladder.
London recovering after particularly weak 2003
House price inflation rates in London show that the capital is catching up again after a lacklustre year. Monthly rates of inflation of 1.83% are broadly in line with national figures (1.99%) however the annual rate of increase is only 7.94% compared to the national figure of 11.84%. However, London has the highest density of first time buyers (22.6%), with large city bonuses and generally higher incomes enabling new London purchasers to afford higher house prices than elsewhere in the country.
Market tightening up
There were signs that the market is tightening up with sellers achieving an average of almost 98% of the asking price. This high percentage, compared to an average of less than 96% throughout 2003, indicates that home buyers are willing to pay more for the property they want, in what is becoming a seller’s market.
Agents turning more bullish
Estate agents across the country are at their most confident ever with 93% believing that house prices will increase further over the year – three quarters believing that this rise will be more than 5%. Almost two thirds of the agents surveyed indicated that their expectation was higher now than at the start of the year. Historically low interest rates are the main reason for this (63%) with higher salary multiples on loans (13%) and more first time buyers (11%) also contributing.
Reason for increased optimism Percentage
-Sustained low interest rates 63.2%
-Higher salary multiples for loans 13.2%
-First time buyers coming back 10.5%
-Employment rates high 5.3%
Melfyn Williams, President of the NAEA, said: “This month’s survey shows that prices have continued to rise strongly both annually and monthly. Estate agents across the whole country are becoming much more bullish with respect to house price rises this year. In addition, buyers are having to pay even closer to asking prices to secure the properties they want, another indicator of house price rises to come.
“Recent reports of an imminent crash in the housing market have as much foundation as a house built on sand. These commentators are totally detached from the reality on the ground, where estate agents are united in predicting another year of strong price rises across the country.”
