Property asking prices shoot up nearly 5%

Asking prices for properties that have come on to the market in the last month have gone up by 1.6%, Rightmove reported this morning.

It means that asking prices for properties new to the market have shot up by 4.9% so far this year.

It is the largest first-quarter increase since 2004, with the average new asking price now standing at £236,939 – up from £233,252 a month ago.

Average asking prices are now 2.2% higher nationally than this time a year ago. The biggest price rises have been in typical first-time buyer territory, with terrace houses up by 2.8% and flats by 3.1% in the last month.

Average asking prices in London have reached a new record of £455,159. In Kensington and Chelsea, the average asking price is now an astonishing £2,000,120.

Rightmove said that the price rise was fuelled by the continuing shortage of suitable stock, and a jump in potential buyer demand, as evidenced by a rise of 16% in search activity on Rightmove in the first three months of this year.

It said that early indicators suggest that property market activity this year is on course to be more robust than last year, but warned that, because transaction levels remain low, the market is ‘very sensitive to external influence’.

In particular, Rightmove highlights the ending of the Stamp Duty holiday for first-time buyers. It said that there were signs that this has played an important role in boosting housing market activity.

Rightmove director Miles Shipside said: “The question is, can the Chancellor afford to spring  a surprise and extend the Stamp Duty exemption? If not, what are the potential costs of leaving the UK re-sale property market without any incentives?

“The recent launch of NewBuy may well counteract some elements of the removal of the Stamp Duty exemption. However, due to its focus on the new-build sector, to support Government’s efforts to create jobs, this is of little consolation to those people looking to buy or sell on the resale market.”

Rightmove’s asking price is ahead of actual selling prices by some distance – £236,939 against Halifax’s £160,118 and Nationwide’s £162,712.

Sellers’ asking prices also look too optimistic, said Nick Hopkinson, director of distressed property acquisition firm PPR Estates.

He said: “A continued shortage of home sellers, the annual New Year burst of enthusiasm from agents, temporary relief from the Euro crisis and the massively distorting effect on the national house price data of Millionaires’ Row in the ‘Royal Borough of K&C’ have all combined to put a false gloss on UK house prices. In effect, national statistics are meaningless.

“Kensington property asking prices grew 13% last year, while almost all other areas outside London saw house prices falling or static at best.

“The average estate agent has only 68 properties on their books currently – even less than this time last year. This shortage of stock for sale is probably leading to agents naively directing sellers to price themselves out of a sale in most parts of the country.

“As a result, transaction levels remain less than half what they need to be for a functioning market.

“This makes assessing the true price of most properties very difficult, with only the financially desperate and the very rich moving at the moment.

“Many thousands of home owners are effectively mortgage prisoners with too little equity or job security to be able to afford to move even if they wanted to.”
 
He added: “2012 is very likely to see a repeat of 2011 overall for house prices, with a short burst of enthusiasm at the beginning of the year leading up to the Queen’s Jubilee  and Olympics followed by the reality check of growing unemployment and grinding recession bringing us all back down to earth in the second half of the year.

“Any further ‘black swan’ or unforeseen financial shocks such as Eurozone contagion, Iran-related oil price surge, for example, could see things getting a lot worse.”