Homes sell at fastest pace recorded as asking prices soar

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According to the latest research from the property website, the number of sales agreed in March increased by 55 percent on the same period two years ago, which has reduced the number of homes available for sale to the lowest ever recorded. As a direct consequence, not only has the time it takes to agree a sale from when a property is first advertised reduced significantly with the number of homes selling within a week reaching its highest ever level but asking prices are beating records too.

Rightmove’s figures suggest that the average UK asking price rose to £327,797 in March, a monthly average increase of 2.1 percent, which in cash terms equates to £6,733.

This represents an average annual increase of 5.1 percent.

The data indicates that semi-detached houses with two or three bedrooms are in highest demand, which may be further driven by the re-introduction of five percent Government-backed mortgages as of today.

Many in the industry believe that this will boost buyer demand even further, as those who may have previously not had a large enough deposit will have the opportunity to get on the housing ladder.

Rightmove’s Director of Property Data Tim Bannister explains: “The new mortgage scheme could help some first-time buyers bring their plans forward if they have a lower deposit but are still able to pass the affordability checks and will be welcomed by those who last year were struggling to come up with a 15 or 20 percent deposit.”

On the record low numbers of homes available for sale, Tim observes: “Although the number of new properties coming to the market is improving, it’s still nowhere near enough to satisfy the buyer demand that is already at record levels, and so more people choosing to trade up will be vital to open up more choice at the start of the property ladder.”

Tim adds: “This spring surge means that it’s a good time to come to market and achieve a good price and a quick sale, especially if you don’t have an onward purchase.

“These rising prices will cause some buyer affordability challenges, as mortgage lending criteria are still constrained, and the record low available stock proportion will make it difficult for buyers to find the right property.”

For those who are just starting the moving process, there is growing concern that while they may be easily able to sell their current property, finding somewhere else to buy within their budget could be problematic, particularly as demand and asking prices are both increasing almost daily it seems, although this isn’t an issue everywhere in the UK.

As Tomer Aboody, director of property lender MT Finance observes: “Interestingly, London price changes vary depending on the distance to Central London, with the closest boroughs experiencing minimal-to-no growth over the past year, with some even seeing prices reduce.

“This can be put down to the high property values already seen in these boroughs and the lack of people being able to buy, whereas further out is still affordable and demand therefore higher.”

Elsewhere though, with many homes attracting competitive bids between keen purchasers, and many agents moving to ‘sealed bids’, it’s very clear that this is perhaps one of the strongest sellers’ markets seen in over a decade.

Jeremy Leaf, former RICS residential chairman, explains: “The increase we’ve seen recently in the number of buyer enquiries, sales agreed and transactions has persuaded many sellers to raise asking prices, particularly while stock remains low.”

Jeremy continues: “The faster rollout, especially of second doses of the vaccine, is prompting more appraisals and listings but not at quite a fast-enough pace yet to bring more market balance and keep a lid on prices.

“We expect momentum to ease once stamp duty relief is tapered from the end of June, although the availability and low cost of credit, as well as the government’s new mortgage guarantee scheme, are likely to result in a price softening rather than a correction.”

Ged McPartlin Managing Director of Manchester, Leeds and Liverpool estate agents Ascend Properties has seen exceptional levels of buyer activity across the North and observes: “At the rate the current market is moving, there will be no houses left to sell.

“It’s great to see the North is the engine room powering this immediate market performance with some astonishing nine percent plus annual rates of growth in both the North West and Yorkshire.

“Yorkshire alone has enjoyed a 4.2 percent increase on a month-on-month basis which is usually a rate of growth reserved for annual performances and really highlights how quickly the market is moving at present.

“If this rate of growth were to continue, Yorkshire folk could expect to see the value of their home increase by £116,000 in a single year.”

With many, many buyers seeing any saving they may make on stamp duty wiped out by the increase in house prices over the next few months, some may be tempted to take a step back and wait for the market to calm, although there is of course a question as to when this will happen.

Tim Bannister concludes: “Some of the froth is likely to come off this spring surge later in the year as the challenging economic conditions come to the fore, some of the Government support to individuals and businesses unwinds, and the stamp duty holidays finally end in England and Wales.

Nevertheless, we expect activity to remain robust for the rest of 2021.” 

You can hear more from Louisa on the UK housing market in latest episode of The Property Show.

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