Overview of October edition of the Rightmove House Price Index

HOUSING MARKET GETS BACK INTO GEAR

The October edition of the Rightmove.co.uk House Price Index is now available, showing trends in asking prices up to 7th October 2006. Based on over half of the property market, the House Price Index is the leading indicator of residential property prices in England and Wales.

Average asking prices now stand at a new national record of £218,954, passing the previous high of £217,580 set in July 2006. The annual rate of increase has jumped back into double digits, reaching the highest rate seen this year at 11.5%. This represents a year on year rise of £22,606. Overall rises are very much driven by the strength of the market in the south and underpinned by the resilience of prices in the north.

The drop in asking prices over the summer months proved to be another false dawn for aspiring first time buyers and those struggling to trade up. The combination of a seasonal lull and a rise in interest rates caused a temporary pause. The underlying shortage of suitable property in the right locations and the benign economic conditions create an environment in which asking prices are likely to continue their upward trend for the foreseeable future.

To read the full article, please click here, The Rightmove, House Price Index, October 2006 Edition.

Overview of September edition of the Rightmove House Price Index

This month,s small rise of 0.2% (£526) in average national asking prices gives further evidence that the 2006 price surge is coming to an end. The property market appears to be adjusting prices of its own accord in reaction to increasing home ownership costs. A rise in interest rates would add an additional and unnecessary burden to stretched affordability.

Miles Shipside, Commercial Director of Rightmove comments: "Asking prices are at a virtual standstill. The market appears to be correcting affordability issues itself and does not need further intervention from the Bank of England. At this pivotal stage it is likely to do more harm than good".

First time buyers were the first to be edged out of the market as prices reached record levels. There are now signs that current prices and the increasing costs of home ownership are also affecting the ability of potential sellers to trade up. Consequently, fewer properties are coming to the market. Rightmove measured 123,000 properties newly marketed in the last month. This is the lowest number of new instructions we have seen since January. A shortage such as this would normally lead to substantial price rises, even in the traditionally quiet summer months. However, as stretched buyer affordability starts to bite, there is the unusual dynamic of falling supply with a price standstill as opposed to rises. Average unsold property stocks per branch fell from 65 in July to 63 last month, with estate agents reporting more potential sellers hesitant to place their property on the market.

Miles Shipside adds: "Sellers trading up have been sheltered from rising prices, as they were already on the property ladder. Now the price gap to the next rung has got even wider, some of those thinking of selling are delaying marketing until their own affordability improves. They are now in the same boat as many would be first time buyers".

The buoyancy of the economy and consequent lack of forced sales mean that most sellers can afford to wait for buyer affordability to improve rather than be forced to substantially drop their asking prices. The market partially re-adjusted during 2005 when average prices remained static. The result was greater sales volumes, followed by a London led southern mini boom. There is an ongoing financial challenge for buyers to meet their housing needs. They now face average asking prices 9.8% higher than this time last year. In addition, there is also the burden of paying increased energy, council tax and mortgage bills... plus the possibility of a further interest rate increase. We forecast the 2006 increase will drift back to circa 8% for the year, as sellers coming to the market price more keenly to sell before Christmas.

Miles Shipside concludes: "The pent up demand is there, both from first time buyers and existing home owners looking to move. As they are stretched, they are forced to be choosy and look for the best value. Sellers should price competitively and offer

To read the full article, please click here, The Rightmove, House Price Index, September 2006 Edition.

Overview of August edition of the Rightmove House Price Index

Average asking prices fell by 1.6% (£3,540) last month, bringing the annual rate of increase back into single digits at 9%. The rise in prices this year to record levels has been caused by a miniboom in the south of England. This drop in asking prices of 167,399 newly marketed properties gives the earliest indicator that prices are past their peak for 2006. Seasonal factors also play a part in the largest average fall since November 2004, as summer sellers have to trim their price expectations with many buyers on holiday. With the average asking price now standing at £214,040, the record average asking price of £217,580 set in July is unlikely to be surpassed again this year, especially in view of the changed interest rate climate.

Miles Shipside, Commercial Director of Rightmove comments: "Prices have passed their peak for 2006. The record price levels seen so far this year were driven by the south of the country. With that market cooling, and the signals from the Bank of England that interest rates may move up again, sellers may have to reduce their price expectations. This welcome dose of reality is good news for buyers, especially in the south of England, where many have been priced further out of the market by the strong growth during the first half of the year"

Stretched buyer affordability, exacerbated by the recent unexpected rise in interest rates, means the rate of increase seen so far this year is no longer sustainable. These factors, together with the traditional slowdown in August, have brought more realism to the market. Underlying demand for property remains strong and should mean that volumes of sales remain healthy during the autumn market. However, increasing costs of home ownership and moving up the property ladder, added to rising energy bills, have already stretched affordability to levels where volumes of sales could begin to suffer.

Miles Shipside adds "Activity in the property market virtually stopped dead after two successive rate rises in 2004 and took a year to recover. Prices are now cooling off and require no further intervention from the Bank of England. Lower prices help buyer affordability, but rises in interest rates damage it again. It,s a careful balance, but with more realism from sellers, we could be entering a period of stability again" The seasonal slowdown was further evidenced this month by average time on the market lengthening from 78 days to 81, and average unsold property stocks up from 64 per agent to 65. Longer times to sell and greater competition from other sellers are key factors in persuading sellers to market their properties at more competitive prices.

To read the full article, please click here, The Rightmove, House Price Index, August 2006 Edition.

Overview of July edition of the Rightmove House Price Index

The media speculate on the housing market as one of the key elements of the UK economy. Rightmove.co.uk has access to vast amounts of relevant data from its members; helping us to report in an independent and unbiased manner to remain a respected commentator - helping to support you and the industry in the long term.

• Average asking prices jump by £6,137 in July, the largest monthly increase Rightmove has seen in almost five years
• July,s increase of 2.9% pushes annual growth rate into double digits (10.6%) for the first time in 16 months
• An even stronger southern market sets the pace as demand continues to outstrip supply
• Stable interest rates and a strong economy combine with ready availability of mortgages to defy expectations of a second half slowdown.

Please click on the link below to view or download the FULL latest Rightmove UK House Price Index:

The average price for a property in London is at new record breaking levels. Not only have average asking prices reached an all time high, but also the annual percentage increase of 13.8% is at 3 year record high too. The last time it was this high was February 2003, when the year on year increase was 18.1%...

To read the full article, please click here, The Rightmove, House Price Index, July 2006 Edition.

Overview of June edition of the Rightmove House Price Index

Average national asking prices rose by 0.8% (£1,613) in the last month. The annual rate increased from 5.9% to 6.4%. This is in line with our revised 2006 forecast announced last month, up from 5% to 8%.

The mini-boom in prices continues to be led by the south of the country. Indeed, falls in many of the northern regions of England have now changed this from a southern-led boom, to effectively a southern-only boom. One result is the reversal of the four year trend of a narrowing gap between prices in the north and the south. In June 2002, average prices in the South were double those in the north. The gap is now widening again, having reached a turning point last September when the average property was only 46% more expensive in the southern half of the country. The southern regions are now over 55% more expensive as they return towards their long term supremacy. (See chart 1)

The average annual rise in the south of the country now stands at 9.4%.The south,s resurgence is led by increased demand for ,top end, properties, fuelled in part by cashrich buyers from both the UK and abroad. Access to sources of money other than mortgages based on earned income has meant that the south is less constrained by traditional affordability parameters. Economic migration as the south became comparatively more affordable and a shortage of suitable properties are also contributing to the rise. Increases have been most marked in the Greater London region, especially in the wealthier boroughs. Buyer affordability improved there after prices fell by 1.3% in 2003 while the north of the country was booming. Greater London sellers are now asking £33,106 (11.7%) more for their properties than a year ago. In contrast, the lowest rise in a region of England is the North where sellers can ask only £158 (0.1%) more.

Miles Shipside, Commercial Director of Rightmove comments "The buoyancy of the southern economy and demand for quality property by affluent buyers are having the effect of increasing homeowners, net worth even further. With hindsight, the best time to move from the north to the south and ,bridge the gap, was in September last year, when the difference was at a four year low of 46%. Parts of the north are now being left behind, as stretched affordability has limited sellers, ability to increase prices in most regions"

The average annual rise in the northern half of the country is 2.7%. With inflation currently running at 2.2%, prices are close to a standstill in real terms. Affordability seems to have reached its limits, and can only be improved by wage increases, a reduction in interest rates or a fall in real house prices. With the next move in rates anticipated to be upwards, housing activity in the regions further away from London could be hardest hit.

An upward movement in interest rates would come at a time when the pace of price rises is slowing due to seasonal factors, from 2% in May to 0.8% in June. This is a clear sign that the recent rate of increase is not sustainable, and will slow in the second half of 2006.

Miles Shipside adds "Demand and transaction levels are still healthy in the north despite the slowdown in prices. Any upward movement in interest rates could put this in jeopardy at a time of year when the market normally slows down."

To read the full article, please click here, The Rightmove, House Price Index, June 2006 Edition.

Overview of May edition of the Rightmove House Price Index

It was widely expected that affordability constraints would keep property price rises in 2006 broadly in line with inflation and average wage rises. Beginning of the year forecasts from the Nationwide, Halifax, Royal Institution of Chartered Surveyors, Council of Mortgage Lenders and Rightmove ranged between 0% and 5%. All of these industry expectations are set to fall short as continuing demand from new and existing households still exceeds the increasingly expensive supply of suitable property. In spite of the consensus of a levelling off of demand in the second half of the year, Rightmove is increasing its 2006 forecast from 5% to 8%. This would give an average national asking price of £212,025, representing a rise of £15,706 on the year.

Miles Shipside, Commercial Director of Rightmove, comments "The housing market is set to defy the downward pressure from increasingly stretched affordability with double the rise that was forecast by the industry just 5 months ago"

Average asking prices of nearly 126,000 properties marketed in the last month increased by £4,155 (2%) to a new record of £209,829. That represents an annual rate of increase of 5.9%, jumping up from 4.1% last month. As there were falls in prices of 0.8% in the latter months of last year, it only requires a 1.3% rise over the remaining 7 months of 2006 to hit an annual rate of 8%.

Miles Shipside adds "Demand is a lot more buoyant overall than at this time last year, so a rise of up to 10% in the faster moving regions, such as parts of London and the South, could be on the cards this year. It can,t keep rising like this but will flatten out rather than fall back substantially, as there are few "distress sales" from vendors who are forced to sell at any price".

There is increasing speculation of a rise in interest rates. Increasing the cost of borrowing will stretch affordability further, making it even harder for buyers to satisfy their housing needs. Increasing the supply of housing and aligning the mix of new build with buyer demand are the only practical long term strategies to make property more affordable. Subsidising some buyers gives only a short term relief as prices rise and benefit the seller. A rise in the cost of borrowing also has the effect of discouraging the private housebuilder as it potentially lessens the volumes of their buyer activity and increases their cost of capital. With the Bank of England having a single target based on inflation in consumer prices, there is a need for greater attention to be paid to house prices and availability when setting economic and environmental policies.

Miles Shipside forecasts "The cost of housing will continue to rise until this conundrum is solved. The supply and mix of new housing are failing to keep pace with demand in many parts of the country, pushing up prices"

The timing of Easter in close proximity to the May Day bank holiday also exacerbated the shortage of supply of new property coming onto the market. Home-hunters, who make up a large proportion of future sellers, failed to view property that might have subsequently tempted them onto the market. This pause in activity led to the stabilization of the average stocks per estate agency branch at 65. Time on the market is falling however, dropping from 75 days to 70 days in the last month.
"Agents are reporting more sales on new listings, as opposed to their older stock. If it,s not selling, a price drop or a makeover is the best course of action before the summer holiday slowdown arrives" advises Miles Shipside

To read the full article, please click here, The Rightmove, House Price Index, May 2006 Edition.

Overview of April edition of the Rightmove House Price Index

A solid return of confidence to the market has sustained the upward trend in asking prices that we have seen since the autumn. The average national asking price of 138,259 properties marketed by estate agents on Rightmove.co.uk in the last 4 weeks rose by 1.1% (£2,275) to a new record of £205,674. This is the 3rd successive month that a new record has been set.

So what is driving the national average ever upwards against a backdrop of falling consumer spending and increasingly stretched affordability? Following the spring trend, the market features heightened buyer demand and a shortage of property coming to the market. However, an increasing number of aspiring buyers are unable to afford to get on or move up the property ladder. This ,mini-boom, is actually driven by demand from buyers for higher priced property types and the more affluent regions in the southern half of the country, with local hotspots in higher net worth locations.

More affluent buyers are less likely to face affordability constraints and they therefore have the confidence, as well as the means, to move further up-market. Detached properties are consistently outperforming other property types with an increase of 5.7% (£16,043) over the past 3 months, compared with the overall market rise of 4.8% over the same period. The result is that prices are being pulled upwards by higher percentage increases in detached property than in lower value property types.

Also, the more expensive southern regions of the country outperform the 4.1% annual rise:

South West prices have increased by 8.5% over the last year, and by 2.3% in the month. One of the current hot spots is Bath where prices have increased by 9.5% over the last 12 months;
East Anglia prices are 5.2% higher than a year ago, and have increased by 2.5% in the month. Cambridge is one of their top performing areas with an increase of 13.5% over the last 12 months;
South East prices have increased by 4.2% over the last year and by 1.3% in the month - both just above the national averages. One of the desirable towns is Guildford where prices have increased by 7.1% in a year; and
Greater London prices have increased by 7.7% over the last year, and by 1.0% in the month. One of the sought after areas is Hammersmith and Fulham where prices have increased by 16.3% over the last 12 months.

Miles Shipside, Commercial Director of Rightmove comments: "Good locations in the south of the country have always commanded a premium price. Now quality properties are in short supply in these areas and some buyers have both the confidence and the ability to pay more for the right property; resulting in an ,affluent area mini-boom, which is masking affordability constraints and driving national average prices to record levels".

From a national perspective there are indications that the spring surge is losing some momentum. The annual rate of increase of asking prices has fallen slightly from 4.3% to 4.1%, the first decrease since December. Time on the market has stood still on the month at 75 days. If the entire market was as buoyant as detached properties and the southern regions, this figure would be falling in the run up to Easter. In addition, average property stocks per estate agent have risen from 63 to 65. Whilst estate agents report both a shortage and quicker sales on new instructions, there appears to be a sizeable rump of ,stale, unsold properties increasing overall supply.

Miles Shipside adds: "Easter is the traditional time to sell, and buyers appear to be snapping up property coming to the market if it is sensibly priced. However, in areas or price brackets where more property is sticking on the market, pricing below other competing properties will be critical if you want to sell before the quieter summer months".

To read the full article, please click here, The Rightmove, House Price Index, April 2006 Edition.

Overview of March edition of the Rightmove House Price Index

The media speculate on the housing market as one of the key elements of the UK economy. Rightmove.co.uk has access to vast amounts of relevant data from its members; helping us to report in an independent and unbiased manner to remain a respected commentator - helping to support you and the industry in the long term.

The continuing ability of buyers to pay record prices is one of the conundrums of the current property market. In the absence of a surge in the supply of new build, the need for housing continues to drive demand.

Asking prices reach a new record of £203,399, though the pace of monthly rises slows to 0.9% (£1,799)

The national average asking price of 132,123 properties put on the market in the last 4 weeks rose by 0.9% (£1,799) to a new record of £203,399. Consequently, increasing numbers of both first time buyers and those moving up the housing ladder find themselves caught in a pincer movement between rising prices and the stamp duty trap. As a result, homemovers will follow the Chancellors forthcoming budget statement with great interest.

Buyers are caught in a pincer movement between rising prices and the stamp duty trap

Affordability constraints will reach a level where buyers, ability to pay more for their home will be limited by the level of their wage increases. This is especially true for first time buyers who have traditionally formed circa 40% of all buyers. While the market is less dependent on them than before, the threshold would have to be set at £166,000 for 40% of property for sale across England and Wales to be excluded all together from the burden of stamp duty. At a regional level the threshold would be highest in Greater London (£238,000) and lowest in the North (£128,000).

Only 16% of properties advertised on rightmove.co.uk fall below £120,000, the minimum stamp duty threshold

The demand for housing means that buyers are faced with no other realistic choice than to stretch themselves further if they can. First time buyers fare best in the North region, where 36% of property is priced under the £120,000 trigger. However the option of buying a property that does not attract stamp duty recedes in the south, with the South-West at 11%, the South-East at 8%, and Greater London at less than 2%.

Stability in the property market

There are signs, however, that the pace of increase in asking prices is being kept in check by affordability constraints. The 0.9% increase this month is down sharply from the 2.7% last, resulting in a modest increase in the annual rate from 4% to 4.3% . In addition, the 6 month downward trend of average properties for sale per estate agency branch has come to a halt as we see the expected seasonal increase in properties coming to the market. It has increased from 61 to 63, indicating that at the national level buyer and seller activity are balancing out. Time on the market continues to fall, but again at a reduced pace, dropping from 81 days to 75.

Conclusion

After several months of confidence building activity, it could be that we are entering a period of stability. We expect prices to fluctuate within a fairly narrow range according to local supply and demand, with property having to be accurately priced or it will not sell. The exception will be the hotter areas of demand, especially in the south where there has been a disproportionate increase in disposable income.

To read the full article, please click here, The Rightmove, House Price Index, March 2006 Edition.

Overview of March edition of the Rightmove House Price Index

The media speculate on the housing market as one of the key elements of the UK economy. Rightmove.co.uk has access to vast amounts of relevant data from its members; helping us to report in an independent and unbiased manner to remain a respected commentator - helping to support you and the industry in the long term.

The continuing ability of buyers to pay record prices is one of the conundrums of the current property market. In the absence of a surge in the supply of new build, the need for housing continues to drive demand.

Asking prices reach a new record of £203,399, though the pace of monthly rises slows to 0.9% (£1,799)

The national average asking price of 132,123 properties put on the market in the last 4 weeks rose by 0.9% (£1,799) to a new record of £203,399. Consequently, increasing numbers of both first time buyers and those moving up the housing ladder find themselves caught in a pincer movement between rising prices and the stamp duty trap. As a result, homemovers will follow the Chancellors forthcoming budget statement with great interest.

Buyers are caught in a pincer movement between rising prices and the stamp duty trap

Affordability constraints will reach a level where buyers, ability to pay more for their home will be limited by the level of their wage increases. This is especially true for first time buyers who have traditionally formed circa 40% of all buyers. While the market is less dependent on them than before, the threshold would have to be set at £166,000 for 40% of property for sale across England and Wales to be excluded all together from the burden of stamp duty. At a regional level the threshold would be highest in Greater London (£238,000) and lowest in the North (£128,000).

Only 16% of properties advertised on rightmove.co.uk fall below £120,000, the minimum stamp duty threshold

The demand for housing means that buyers are faced with no other realistic choice than to stretch themselves further if they can. First time buyers fare best in the North region, where 36% of property is priced under the £120,000 trigger. However the option of buying a property that does not attract stamp duty recedes in the south, with the South-West at 11%, the South-East at 8%, and Greater London at less than 2%.

Stability in the property market

There are signs, however, that the pace of increase in asking prices is being kept in check by affordability constraints. The 0.9% increase this month is down sharply from the 2.7% last, resulting in a modest increase in the annual rate from 4% to 4.3% . In addition, the 6 month downward trend of average properties for sale per estate agency branch has come to a halt as we see the expected seasonal increase in properties coming to the market. It has increased from 61 to 63, indicating that at the national level buyer and seller activity are balancing out. Time on the market continues to fall, but again at a reduced pace, dropping from 81 days to 75.

Conclusion

After several months of confidence building activity, it could be that we are entering a period of stability. We expect prices to fluctuate within a fairly narrow range according to local supply and demand, with property having to be accurately priced or it will not sell. The exception will be the hotter areas of demand, especially in the south where there has been a disproportionate increase in disposable income.

To read the full article, please click here, The Rightmove, House Price Index, March 2006 Edition.

Houses ,fly off the shelves,!
The February edition of the Rightmove.co.uk House Price Index is now available, showing trends in asking prices up to 12th February 2006. Based on over half of the property market, the House Price Index is the leading indicator of residential property prices in England and Wales.

The first full view of buyers, and sellers, activity in 2006, based on 154,812 properties marketed since 8th January, shows an increase in average prices of £5,281. The average asking price is now £201,600, the first time prices have ever broken through the £200,000 barrier.

Demand from increasingly confident buyers and a shortage of quality stock gives rise to the largest monthly increase since April 2004. However, January,s optimism traditionally sees a significant price rise and annual growth therefore showed a marginal increase from 3.6% to 4%.

Estate agents, stock levels usually rise in January as new sellers come onto the market after the Christmas break, anticipating rising demand in spring. In spite of the highest level of new instructions ever recorded on Rightmove, the 6 month downward trend of average properties for sale per estate agency branch continues. From a high of 72 in August 2005, it now stands at 61.

Time on the market fell sharply from an average of 94 to 81 days. Agents report that competitively priced property in areas of limited supply is ,flying off the shelves, and selling as soon as it comes on the market.

Miles Shipside, Commercial Director of Rightmove comments "The market,s picked up quickly this year. As a result, properties are selling more quickly and stock levels are declining. House prices have stormed through the £200,000 barrier to record levels several months earlier than the market anticipated!"

For the first time in 11 months, all property types saw prices rising. The largest increases are at the lower end of the market as the recovery is driven by growing demand for terraces and flats. Agents report increasing numbers of first time buyers, partly assisted by parental help with deposits as well as more flexible lending criteria. More activity from buy to let investors, and downsizing divorcees are also adding to the activity in this sector.

Miles Shipside adds "Buyers are back, particularly at the lower end of the market. We believe this will lead to further sales as successful sellers move up the property ladder. However, sellers must not get too ambitious or the recovery could run out of steam as affordability is overstretched again."

For the first time since May 2004, every region in England and Wales has seen a positive monthly increase. Whilst this reflects the regional picture, a number of agents do report pockets of low activity. In some instances asking prices have risen too high in comparison to more sought after locations nearby.

Miles Shipside concludes "Some settling down of pricing differentials which became distorted during the boom is still required for all parts of the country to get moving".

To read the full article, please click here, The Rightmove, House Price Index, February 2006 Edition.