There's been a raft of house price statistics published in the last few days, all of which give slightly different prices and growth rates. But, the overall trend remains clear – house price growth is set to continue, albeit at a slightly slower pace than that witnessed over the past year, and it's the supply/demand imbalance that's the driving force behind these rises.
How much you put your property on the market for is a fairly good indicator of the state of the housing market as a whole, and according to the latest Rightmove House Price Index, asking prices have increased at their fastest pace in almost a year. The figures show that the price of a typical property now stands at £279,004, up 2.1% (£5,729) on January's average asking price (£273,275), marking the highest monthly growth rate seen since May 2014. There are signs of moderation when looking longer term – on an annual basis, asking prices were up 6.6% compared with February 2014, down from January's annual growth rate of 8.2% – but the increase is clear.
You may think that this is good news for sellers, but it isn't that simple. Their level of equity might be nicely increasing as a result of rising prices, but if they're thinking of moving up the ladder, the cost of their dream home will be rising, too, so it could still be tricky to make the jump. Those further down the ladder, particularly first-time buyers, could find these continually rising asking prices even tougher to cope with, an issue compounded by the fact that the supply of suitable properties is lacking.
The figures also revealed that demand for properties is at a record high, with visits to the Rightmove website in January reaching over 100 million for the first time, and house-hunters looking through a record 1.5 billion pages of property. Email and phone enquiries to agents on Rightmove also hit a new record, reaching 4.3 million, equating to around 100 enquiries every minute.
The desire to move is clearly there, but unfortunately, the properties aren't there to accommodate. The figures show that supply remains muted, with the average number of homes for sale per estate agency branch standing at 58 in January, down from 64 in January 2014, while new seller numbers are down 4%. The report also noted that housing transactions have risen by 31% in the last two years, far outstripping the 11% rise in the number of properties coming to market in the same period, and it's this that is further driving the supply/demand imbalance and fuelling price rises.
"For the right property at the right price, demand is outstripping supply and leading to some further upwards price pressure," said Miles Shipside of Rightmove. "Many who are contemplating moving will have noticed a lack of suitable property for sale in their area, and may be hoping that it's a temporary shortage. What they may not fully appreciate is that this is the new norm, and is the consequence of over 20 years of not enough homes being built to meet the burgeoning growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of the UK."
Unfortunately for would-be buyers, it doesn't look as though this situation will change in the near-future. Lower owner-occupation levels, which have fallen from a peak of 71% in 2003 to 65% today, are adding to the problem, with this shrinking sector being less able to meet growing demand. Many are reluctant to put their property for sale, too, as they can see little suitable to buy, further adding to the reduced supply.
Meanwhile, the growth in the buy-to-let sector, which has risen by 2.6m properties since 1996, could have further fuelled this drop in owner-occupation levels, with investors snapping up properties that could otherwise be used to serve house purchasers. It could become a growing issue, too, noted Shipside: "More property could be effectively removed from the market when the BTL sector sees a further boost from April, as agents are already reporting preliminary enquiries from retirees planning to cash in their pension pots and invest in BTL properties to secure a steady inflation-proof retirement income."
It isn't all bad news – mortgage rates are at record lows, so even if your dream house is getting more expensive, your repayments won't be! Check out our mortgage calculator to find the deal that can fund your move.
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