New figures were published last week showing significant positivity in the housing market. This comes by way of an unprecedented rise in the average asking price of properties. Since the General Election in December it would appear confidence has returned to the market, leading to a new record in property asking prices. But, is an increase in house prices a good thing?
The figures for January
The data came via online property search portal Rightmove and their January 2020 House Price Index. Their figures showed the largest monthly increase in property prices for this time of year, since as far back as 2002. The average increase in asking prices came through at 2.3%, which works out to be an average increase of £6,785. Between the 8th December and the 11th January, close to 65,000 properties were brought to market, with enquiries to estate agents up 15% compared to the same period the year before.
What’s caused the increase?
Post-election optimism has been cited as the biggest cause for the increase, with potential home-movers feeling confident to act. And they’ve done so quickly. The year on year increase of 7.4% in the number of sales agreed over the last month shows a significant surge over and above the typical start to the new year. Buyers could be keen to make their move early, before competition for homes begins to heat up. As it stands, there’s plenty of positivity for an active Spring market ahead.
Is it set to continue for the year ahead?
The outlook is promising based on the January figures, but the market is still sensitive in some areas. Price is one of them with buyer affordability stretched. While news of house price growth signals optimism, there ought to be caution around pricing to sustain a seller’s market. Supply of housing is another, although the uncertainty stemming from Brexit was a major cause for sellers stalling their property sales. With those Brexit deadlines out the way, there’s a window of time for anyone looking to sell, to get their property on the market and complete before Spring.
First-time buyers and new build homes
2019 was a particularly successful year for first-time buyers. Several factors contributed to this; from the Help to Buy Scheme to low interest rates and competitive mortgage deals. The high cost of renting played its part too. However, the continual demand from this sector is creating a new dilemma. And that’s affordability. Add to that the fact new build properties still aren’t coming through quick enough to meet demand, and we’re seeing these property prices hit a new record high.
Contributing to the increased property price growth in the new build sector, is the fact more buyers over and above first-time buyers are being drawn to buying a new home. Why? There are the long-term positives of owning a new home; they are more energy efficient, helping to reduce running costs. Of course, a brand-new home doesn’t require the hassle and cost of upgrading or modifying an older property. But also, buyers see new build homes as better investments. Looking to the future, homes on these new developments are able to hold their price better, thanks to the quality of them.
Positivity has to be a good thing
Despite the increased prices, we have to take the positives from the current upturn. With less uncertainty in the market, developers themselves see a more positive environment for starting new construction projects. This is imperative, to make sure the supply of new homes meets the ever-growing demand. And we’re seeing an increase in properties coming to the market with those homeowners who decided to sit and wait for the past couple of years, now feeling confident to sell. Yes, overall demand still outstrips supply, but the market is heading in the right direction thanks to a new sense of stability. With some great fixed-rate mortgage deals for buyers to take advantage of, altogether, it’s going to make for a very interesting first quarter of 2020.
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