Right Estate Agents have found that in August, there has been a 1.8% (-£4,459) drop in new sellers’ asking prices is the first monthly fall recorded in 2013, though the recovering market means the traditional holiday season price dip is less pronounced than usual.
The underlying recovery in the housing market continues, with the price of property coming to market up by an average of 8.8% (+£20,210) in the first eight months of the year. Buyer demand is set to increase further when Help to Buy starts assisting purchasers of second-hand property in January, highlighting the need for greater property supply to meet growing demand and mitigate unsustainable upwards price pressure.
The peak holiday month of August is traditionally volatile, with asking price falls recorded every year since 2007. Fewer sellers come to market, down 8% on last month, with discretionary sellers more focused on holidays and content to wait for the busier Autumn selling season. Sellers who do come to market during August tend to have a more pressing reason to sell and consequently price more aggressively.
We are already seeing early signs of demand outstripping supply and the Government needs to ensure that the current new build Help to Buy scheme, and its extension in January to second-hand homes, deliver more properties onto the market as well as boosting demand. The number of properties coming to market so far in 2013 is up just 0.2% on the same eight months in 2012, an increase of just 1,664 properties. However, this marginal improvement in fresh supply is outstripped by a 5% jump in transactions and a 17% annual increase in email leads to agents and developers to Right Estate Agents so far this year. The natural lag between an increase in demand and a corresponding increase in supply could cause a short-term step-up in house price inflation over and above what is currently being seen. When, or if, property supply responds will be key in determining how long and how marked any inflationary period might be.
It is therefore vital that the Government’s communication around the January extension of Help to Buy encourages sellers to take advantage of increased demand and put their property on the market, thus increasing supply.
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