The price of property coming on to the housing market has leapt to an all-time high as the stability of a surprise majority-government leads to the biggest ever rise in month of June, up three per cent (+£8,460) to £294,351.
According to property website Rightmove, six out of ten regions have set new record price highs as supply/demand imbalance continues to head north.
Election certainty has boosted buyer activity but the anticipated rise in new seller numbers has failed to materialise resulting in higher demand and tighter supply highlighting the urgency for delivery of more new-build homes, such as those being developed by Larkfleet Homes.
The unexpected political certainty has helped to fuel a post-election price surge, with new seller asking prices rising by an average of nearly £8,500 compared to the previous month. The average price of property coming to market now stands at a new record high of £294,351, boosted by a near-instantaneous uplift in buyer demand and an unforeseen post-election drop in fresh property supply.
Miles Shipside, Rightmove director and housing market analyst said: “Some buyers had been holding back in the weeks before the election, leading to some sellers suffering an unseasonal price standstill in the late spring. In particular, sentiment and prices got hit in the mooted Mansion Tax price brackets. Now the unexpected election outcome has caused a strong rebound, prompting an upturn in buyer demand and helping new seller asking prices to hit their highest ever levels.
“While would-be buyers have been able to respond quickly, many potential sellers have so far failed to come to market. This has pushed up some of the asking prices of those properties that have been marketed, meaning that buyers are faced with paying a new average record price high for the more limited choice available.”
The previous asking price record was £286,133 set in April of this year, £8,218 below this month’s record. Pre-election jitters contributed to a small fall of 0.1 per cent in Rightmove’s May index, which has made the size of the rebound in June appear somewhat more dramatic. However, while June’s three per cent rise is partly catching up on lost ground from last month’s fall, it is also a reflection of strong housing demand not being matched by suitable supply in many parts of the country.
Evidence of this is that six out of ten regions have set new record price highs this month as the supply/demand imbalance and consequent upwards price pressure continues to head further north.
As well as the four southern regions, both the East Midlands and West Midlands reached all-time price highs this month. London has seen the strongest monthly price performance, up by 5.7 per cent, aided by the higher-priced boroughs seeing more top-end owners willing to come to market now that the threat of the Mansion Tax has been removed. Indeed much of this month’s national average asking price rise is due to a strong increase at the upper end of the market.
Shipside added: “While much of the price momentum has emanated from the south where the supply/demand imbalance is more acute, the strength of demand for the right property is resulting in a record price wave rolling further north, with the Midlands also at new highs. Sentiment and momentum seem to be flowing up the housing ladder too, as early year activity at the bottom and middle is now filtering through towards the top.”
According to Rightmove, the aftermath of the previous general election in May 2010 saw a 17 per cent surge in fresh stock, and a similar increase would have been a welcome — albeit temporary — relief for the under-supplied housing market, as well as for choice-starved buyers. Instead supply has tightened further, underlining the effects of the historic lack of new build.
Miles Shipside continued: “The top end £2m plus market sector has bucked the supply shortage with an 86 per cent leap in new-to-market properties in the 30 days after the election compared to the previous 30 days. That will be of no comfort or use to the mass-market which needs more choice in the right locations at more affordable prices.”
An active second-half housing market in 2015 is expected barring any external shocks to the economy. However, it remains to be seen whether stretched buyer affordability can reach sellers’ post-poll pricing. The new government and other stakeholders now need to urgently deliver more new-build homes, to stop asking prices being pushed up further as demand continues to outstrip supply of suitable homes in many areas, including the East Midlands.
Peter Woodthorpe, director of Readings in Leicester, said: “While we’ve had even more prospective buyers come into the market after the election we haven’t seen an increase on the supply side. The demand has been strong from people looking for all types of property, from flats to large detached houses, and it’s not just in the sought after locations. Over the past year prices in the area have increased by around 10 per cent, so it’s not surprising to us that this month sees a new asking price record in the East Midlands.”