Latest index figures released by Rightmove suggest that the residential market has seen a positive start to 2016.
According to the data, property prices in England and Wales have risen by 0.5% month on month. In addition, values are up by 6.5% year on year, taking the average price of a property to £290,963. This represents the second highest festive period rise since 2007.
Positivity
There was good news for people looking to get onto the property market, with prices in the lower reaches of the sector, typically two bedroom homes, increasing by just 0.1%. Rightmove also said that traffic to its website was up by 21% on the same period in 2015.
Miles Shipside, Rightmove director and housing market analyst, said, ‘upwards price pressure remains, with the second highest rise seen at this time of year for nine years but encouragingly for first time buyers there’s more fresh choice with more property coming to market in their target sector.’[1]
‘With their asking prices pretty much the same as a month ago, perhaps the knock-on effects of the more punitive landlord tax regime have arrived early and they now face a dilemma over whether to buy now or wait to see if prices drop in this sector over the next few months,’ he added.[1]
Location variation
Further analysis of the data indicates that there are variations in different regions. Prices dropped by 0.9% in Greater London over the month to an average of £610,741, but were up by 7.8% year on year. In the East Midlands, monthly prices slipped by 1.8% to £182,318 and by 0.2% in Yorkshire and the Humber to £165,722. However, prices were up by 2.9% and 2.8% respectively in these regions over the course of the year.
The largest monthly increase was in the South West, up by 3.5% in the month to £282,373 and by 5.5% year on year. Prices also increased by 2.3% in the West Midlands to £198,595 and by 0.6% in the South East to £383,787. Year on year, prices in these regions rose by 4.9% and 7.3%.
In Wales, prices were up by 1.6% month on month and up 5.5% year on year, with prices standing at £166,051.
Property market enjoys positive start to the year
Shortage
Rightmove’s report also shows that a shortage of property being made available on the market was the catalyst for both higher prices and unsatisfied demand. Encouragingly, there has been an annual increase of 1.8% in fresh to market properties.
The most prominent increase has been in two-bedroom homes, with the likely beneficiaries first-time buyers or investors looking to purchase buy-to-let property before the stamp duty hike in April.
‘Perhaps because of the increased competition among sellers and a keenness to attract buy-to-let investors before the April deadline, prices have hardly increased month-on-month for properties with two bedrooms or fewer,’ Shipside noted.[1]
‘Rather than waiting until later in the year, having a good look around now while choice is up and interest rates remain unchanged could get you onto the ladder sooner and at an acceptable price. For several years buy to let investors have been enticed by high tenant demand and attractive returns, but as their window of opportunity starts to close it already appears to be opening wider for first time buyers,’ he concluded.[1]
[1] http://www.propertywire.com/news/europe/england-wales-home-prices-2016011911450.html