Asking prices for UK property on the rise
Asking prices for property in the UK rose 5% higher than a year ago in June, up from a 4.3% annual gain in May, according to the latest report from real estate website Rightmove.
Rightmove though is warning that the property market’s recovery could stall this year as there is evidence to suggest it is struggling to maintain momentum as new sellers asking prices give an early indication of the mood and future direction of the market.
Rightmove reported an average June asking price of £237,767 and said prices had increased by 0.3% during the month on an unadjusted basis, slowing from a 0.7% monthly gain in May.
Commercial director Miles Shipside said a continued dearth of mortgage availability and a recent surge in sellers were weighing on the market. ‘These factors are likely to put an end to this year’s recovery in house prices,’ he said.
The latest quarterly property report from real estate agents Winkworth also predicts a cooling even though the year started well. Winkworth’s transactions for the first five months of 2010 are 91% higher than the comparable period last year and although supply remains tight, it is improving. New instructions doubled year-on-year in February and March.
The report also shows buyer numbers are up 23% on last year, reflecting renewed confidence in bricks and mortar. Property prices are rising as buyers compete, up from £497,000 to £537,000 in London, and from just under £409,000 to £441,000 nationally between January and May 2010.
Rental supply has dwindled, with available stocks down over 40% in April and May year-on-year. Many accidental landlords have disposed of properties as the sales market improved. With tenant demand strong and available properties letting quickly, new supply is needed to avoid shortages during the peak summer season, it says.
The prime central London market is described as positive, with sales agreed up 17% and properties selling in around seven weeks. Purchasers regard prime real estate as an attractive and safe long-term investment compared with other asset classes, despite some worries over capital gains tax changes, the report adds.
Overseas purchasers view prime central London market positively as an investment and for residence. Winkworth reports strong interest from Italians, representing 32% of foreign buyers, with the French amounting to 11% and Spaniards to 4%. It is also a favoured location for buyers from the United Arab Emirates with 17% and the US and Russia both at 10%.
‘Following a strong start to the year, recent activity in the property market has been marked by uncertainty following the creation of coalition government. In terms of transactions, however, we expect the second half of the year to reflect a more normal level of business, moving towards an annual level of some 750,000. This compares with a long term average of over one million transactions and only 600,000 last year,’ said Dominic Agace, Winkworth chief executive officer.
‘Having seen prices recover over the last 18 months we anticipate that a greater availability of properties and less mortgage availability will cause some prices to fall back from April levels,’ he added.