ASKING PRICES CLIMB BACK TOWARDS RECORD LEVELS AS NEW
SELLERS CONTINUE TO DEFY LOGIC
March February
Average Property Asking Price £194,962 £193,830
% Change in Month +0.6% +2.3%
% Change in Past Year +8.6% +11.1%
Monthly Index (Jan 2002=100) 158.6 157.7
• Asking prices rise by another £1,132 (0.6%), after last month’s 2.3% increase: only
£1,236 off the record set in July 2004
• 110,000 new sellers add to the growing over-supply, as stock levels per estate agent
rise 6% this month to stand a third higher than a year ago. The number of properties
coming on the market is almost twice that coming off, the biggest imbalance in 3 years
• Over-optimistic sellers face months on the market, while agents report realistic sellers
agreeing deals at 10% below last year’s boom prices
• Serious sellers need to capitalise on the traditionally busier ‘spring window’ and
confidence boost given by the doubling of the stamp duty threshold
• Compiled from measuring 110,701 asking prices of actual properties put on sale by
estate agents from 13th Feb to 12th Mar 2005 – over half the market
Each month Rightmove uses asking price data of up to 140,000 properties coming onto the market to produce its House Price Index.
The onset of the traditional Easter home hunting season sees buyer interest continue to
grow, though actual sales agreed remain below average for the time of year. As a result,
properties coming off the market are far outweighed by new sellers coming on the market
this month. Combined with a backlog of properties on the market from last year and a large
volume of new instructions since January, stock levels remain at historically high levels.
Prospective purchasers, including first time buyers encouraged by the budget, are faced
with a wide choice of properties in many areas, and can afford to be choosy in terms of what they want and tough on the price they are willing to pay.
While some new sellers have embraced the new market reality, many have not and are still
being optimistic on price, surprising given this over-supply and the relative shortage of
available buyers in a position to proceed. This over-optimism has pushed the price of
properties coming onto the market over the past 2 months up to within £1,236 of the
record set in July last year, the height of the price boom.
If they wish to take advantage of the busier spring market and sell before the summer lull,
sellers need to be keen on the price they ask and ensure their properties are well presented
to prospective buyers. Sellers who have curbed their price optimism appear to be selling
quite well in an active ‘under market’… but at asking prices at around 10% below the peak
boom prices of last year.
Asking prices increased by an average of £1,132 or 0.6% over the past 4 weeks, on top of
last month’s sharp rise of £4,321 or 2.3%. This increase takes the average price at which
properties are marketed almost back to the record level seen in summer 2004, wiping out
all but £1,236 of the declines that have occurred since then.
“In the second half of 2004, sellers began to trim asking prices in response to slowing
market conditions, as buyers reacted to the Bank of England’s successive rate rises,” says
Miles Shipside, Rightmove’s commercial director. “However, it was not a big outbreak of
common sense, and asking prices only fell by a total of about 3.4% from the peak of
£196,198 to the trough of £189,509. Since New Year, over-optimistic sellers and estate
agents competing for market share of new instructions have pushed asking prices up again.
At £194,962 it’s now back at the levels seen in late July 2004, before the last base rate
hike. It defies the commercial logic that over-supply should lead to more competitive
pricing”
In the slowing market, the number of properties on estate agents’ books progressively rose
in late summer and early autumn, to peak at 68 properties per branch. With some
properties withdrawn from the market over Christmas and New Year, stocks dipped slightly.
“Since New Year, there’s been a surge of properties newly listed with agents who advertise
on Rightmove.co.uk. In the last 3 months we’ve had over 280,000 properties coming onto
the Rightmove.co.uk site which equates to around half a million for the whole market as we
advertise just over 50%.
“If they’re selling quickly, supply is kept in check… but recent sales volumes reported by
some estate agents are around 30% lower than this time last year. That matches the last
Land Registry figures which showed a decline of 24% in transactions completed in Q4 2004
as compared with the previous year.
“The result,” continues Miles Shipside, “is that stock levels per estate agent branch are
heading up again, from 63 to 67 in one month. That’s a third up on this time last year.”
At the same time, there has been a moderate pick-up in activity on the part of buyers, both
in terms of their research of properties on the Internet, enquiries to agents, viewings of
properties, and a resultant seasonal increase in transactions agreed .
Miles Shipside continues: “We’ve continued to see record levels of site traffic on
Rightmove.co.uk as interest from prospective buyers continues unabated. February saw
site visits of 8.2 million, compared with 5.3 million in February 2004.
“Estate agents are also reporting higher levels of interest and increased numbers of
viewings. Out on the country’s streets, properties are being sold where they are realistically
priced.” This is witnessed by a significant reduction in time on market, from 91 days in
January to 82 days now, though still much longer than 59 days this time last year. The
London market is recovering more quickly, with a drop to 75 days.
While transaction activity is clearly on the increase, it remains low relative to the growth in
stock levels. The Total Housing Market Indicator shows almost twice as many properties
coming on the market as coming off, the biggest imbalance seen for over 3 years, with
almost 200,000 properties coming onto the market, compared with 120,000 coming off.
