The latest Rightmove price index suggests that homes are at their most affordable level for some years thanks to wage growth handsomely exceeding increases in the prices of homes on sale.
The index, out this morning, shows national average asking prices of newly-marketed property up by 0.7 per cent in the past month. Rightmove says this is consistent with the recent norm for this time of year which saw an average 0.6 per cent February uplift over the previous two years.
However, the annual average asking price rise is just 0.2 per cent - this is the most subdued increase recorded by Rightmove in early spring since 2009.
As a result, and with average wage growth now running at an annual rate of 3.4 per cent, buyer affordability is improving at the fastest rate against average new seller asking prices since 2011.
Miles Shipside, Rightmove director and housing market analyst comments: “Longer daylight hours and green shoots appearing in gardens herald the start of the traditionally more buoyant spring market. Buyers are also being given the leg-up by cheap mortgage rates, if they can meet lenders’ criteria and lay their hands on a large enough deposit.
“In theory the scene would be set for an active spring if it were not for the uncertain political backdrop. As it is, the extent of that activity will depend on the degree of hesitancy among sellers to try to sell and be realistic on price, and buyers overcoming short-term uncertainty and taking a medium-term view that this is a good time to buy. As always those decisions will also be influenced by local market dynamics.”
Rightmove says that while seller pricing-power is generally diminished compared to previous years, spring buyers should again note the north/south divide that is a regular feature of the UK property market.
New sellers in all northerly regions, plus the Midlands, have sufficient pricing-power that they can ask for modest increases compared with a year ago. Six of these seven regions are seeing annual asking price growth in excess of 2.0 per cent, with Yorkshire & the Humber as the highest riser at 3.6 per cent.
Scotland is the poorest performer year-on-year, but new seller asking prices are still 1.6 per cent higher.
In contrast, all southern regions fall below that figure, with three having average prices cheaper than a year ago - London is down 2.1 per cent, the South East down 1.4 per cent, and East of England dipping 0.2 per cent.
Shipside observes: “Prospective buyers in three of the four southern regions are seeing new seller asking prices cheaper than a year ago, indicating that buyers have the upper hand over sellers when it comes to negotiating a price. This has obviously been a factor for some owners in those regions deciding not to come to market.
Market conditions are more favourable for sellers further north though agents say that it’s still a very price-sensitive market where asking too much at the outset scares off buyers.
The number of sales agreed by agents in January was 4.0 per cent behind the previous January.