UK asking price reaches all time high but growth is slowing

Taylor Scott International News

October has seen a new all time high for the price of property coming onto the market in the UK at £296,549, according to the latest index figures to be published. However the month on month rise of 0.6% was relatively modest for the time of year and it the lowest October increase since 2010, the data from Rightmove shows. Year on year prices are up 5.6% and the new record asking prices is being fuelled by high demand for first-time buyer properties, with prices in this sector up 4.9% on last month and 9.6% over the past 12 months, the firm’s report says. It also points to a ‘vicious circle’ as high tenant demand leads buy to let investors to go head to head with first time buyers and many letting agents report ‘same day’ rentals and little or no property to rent. At the same time the number of first time buyer properties, usually regarded as two bedrooms or fewer, coming to market is down by 8% on same period a year ago, exacerbated by first time sellers struggling with second step price gap. ‘There are signs of a slowing pace of price rises in some sectors of the market, with the overall October rise the lowest we’ve recorded at this time of year for five years. We still have another national average record however, as prices continue their upward trend,’ said Miles Shipside, Rightmove director and housing market analyst. ‘This is mainly being fuelled by the heady price rises of typical first time buyer homes. A near 10% price surge in this category in the last year proves that despite tighter lending criteria in last year’s Mortgage Market Review, some first time buyers can still afford the higher prices being asked for by sellers in this sector,’ he explained. ‘It’s also symptomatic of a shortage of properties coming to market with two bedrooms or fewer, combined with demand from both first-time buyers and landlords investing in reaction to the huge rental demand for smaller properties,’ he added. Letting agents report extraordinary demand from tenants in many parts of the country, with new or existing households looking to the rental sector to fulfil their need for quick and flexible housing arrangements. A growing number of people like the transience of renting, without the complications, commitments and costs of buying and then selling, the report says. With inadequate supply from housing associations and the public sector, private landlords are one of the few active providers of smaller homes for rent. However, when this need is combined with first time buyer demand, boosted by the return of low deposit mortgages and lenders competing to reduce their rates, it creates a vicious circle due to the limited supply of suitable properties for sale in this most active sector. ‘With local authorities, housing associations and developers no longer satisfying the country’s housing needs, those in particular looking to rent or buy smaller homes must hope for… Taylor Scott International

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